Today I want to talk about CapTrader, an introducing broker to Interactive Brokers, and my own experience since I made the switch.
CapTrader enables you to have a fully-featured Interactive Brokers account without any monthly inactivity fees that Interactive Brokers normally charges.
Update: On July 1st 2021, Interactive Brokers removed all inactivity fees! That means you can now sign up directly with Interactive Brokers, without the need of using an introducing broker like CapTrader to get rid of monthly fees. I left the rest of the post unchanged.
In case you’re wondering what the heck Interactive Brokers is, I don’t blame you. They’re one of the best known and most reputable international brokerage firms in the world, founded all the way back in 1977. They’re also listed on the stock exchange.
In my opinion, they are an excellent alternative or addition to Degiro for buying stocks and ETFs, especially since Degiro isn’t available in every country.
I also want to use this post as a bit of an update regarding my own Interactive Brokers account, as I recently moved it from TradeStation to CapTrader and I received plenty of questions about it. If you’re in the same situation, I’ll show you how you can easily switch as well.
Last but not least, since many of you are probably new to Interactive Brokers, I also want to show you how investing works on the platform. So at the end of the video, I’ll show you how I invest 1.000€ into my favorite ETF, the Vanguard FTSE All-World.
TradeStation Global: Here’s What Happened
Last year I recorded this video, where I showed you that I was using TradeStation as an introducing broker to get access to Interactive Brokers without paying monthly fees.
However, I recently received an e-mail mentioning that TradeStation was going to introduce monthly fees for European residents starting in March.
If you also have an account on TradeStation, maybe because you watched my video about them, here’s what happened:
- TradeStation has a license for the UK & some other countries, but due to Brexit the UK license is not valid for European residents anymore.
- Meanwhile, internally on Interactive Brokers, all European residents were moved from IB UK to IB Ireland or IB Hungary (if you’re based in Eastern Europe) for regulatory reasons after Brexit.
- As a result, TradeStation is now basically disconnected from its own European clients and doesn’t earn any part of the trading fees any more, which are now entirely managed by Interactive Brokers.
- Well, that was their entire business model and how they were able to offer the accounts without the monthly 10$ inactivity fee you normally get with an Interactive Brokers account.
So the subscription fee that they announced was more or less a last resort to still earn something from their European clients. From what I heard, they’ve been trying until the last second to find another solution to still be able to manage their clients without monthly fees, which is also why the whole thing was announced with such short notice.
Alright, I hope now you understand the situation. I’m guessing you probably don’t want to pay for that subscription. Here is how you make sure it is removed:
- Log in to your account on Interactive Brokers
- Click on user settings
- Research subscriptions
- Make sure the subscription is removed.
However, after doing that, you might still be charged a monthly inactivity fee by Interactive Brokers itself.
CapTrader: The Solution For European Investors
If you’re anything like me, you likely want to avoid extra costs whenever possible, so that you have more money to invest.
I spent plenty of time looking for alternatives to TradeStation over the past few weeks. Ultimately, I found one that I’m very happy with, CapTrader.
CapTrader is another introducing broker to Interactive Brokers. They were founded in 1997 and are based, licensed and regulated in Germany.
Interactive Brokers Without Monthly Fees
Update: On July 1st 2021, Interactive Brokers removed all inactivity fees! That means you can now sign up directly to Interactive Brokers, without the need of using an introducing broker like CapTrader to get rid of monthly fees.
The most important part for most of you is probably that they still allow us European investors to have an Interactive Brokers account without paying any monthly inactivity fees, as they are licensed in Europe. They also have very low fees for buying and selling ETFs and stocks. I’ll go into more detail on their trading fees later in the article, when I show you how to buy an ETF via the Interactive Brokers web interface. However, one thing you need to know is that there is a minimum deposit for opening an account via CapTrader, 2.000€. Of course we can use and invest that money straight away, for example into ETFs using Interactive Brokers. CapTrader’s support is also excellent, which is great since Interactive Brokers itself is a bit lacking in that department.
Interactive Brokers Tutorial: How To Buy An ETF
For this section, I’m making the assumption that you already have an Interactive Brokers account and that you want to know how investing works on the platform.
Let me preface this by mentioning that I’m a simple long-term investor and not a professional trader. As a result, I haven’t played around with any of the more specialized trading tools that are available. I just use the Interactive Brokers website for my needs, that’s it.
What I can tell you is that I usually place my orders at a time when the markets are open, typically Monday – Friday, 9AM – 6PM CET. This way I ensure that I’m paying market price and not buying at a small premium when there is less liquidity.
The 3 tools I use to buy an ETF or stock via this broker:
- JustETF to find the ETF I want to buy and its ticker
- The Interactive Brokers web interface
- TradingView to double-check market prices
Buying The Vanguard FTSE All-World ETF (VWCE)
It’s a lot easier for me to show you this part on video, so here is me investing close to 1.000€ into my favorite ETF, the Vanguard FTSE All-World (VWCE) on Interactive Brokers (jump to 5:07 minutes):
Alright, at this point you should know how you can buy ETFs or stocks with minimal fees using CapTrader and Interactive Brokers.
Speaking about the trading fees, let’s have a closer look.
When you use the IB web interface like I did in the video, your orders are routed via Interactive Brokers smart routing system (NBBO) by default.
The integrated smart routing feature always tries to find you the lowest available price for your ETF or stock on all available exchanges when you place an order. The web interface also shows you your estimated fees before you place an order, so there should be no surprises.
I paid 2€ in commissions (fees) for an order close to 1.000€.
My order was executed on the German Gettex exchange, which has the same fee model as a few other available exchanges. You can see the full list on CapTrader’s website. Gettex was added recently, I was informed that the list will be updated soon to reflect that.
For my order, the fee was 0,1% of the amount I invested, with a minimum of 2€.
That means I could have also placed an order of 2.000€ and I would have paid the same 2€ fee, as that is exactly 0,1%.
A 5.000€ order on the other hand would have been 5€ in fees (-> 0,1%) for example.
If for whatever reason, you want to use a specific exchange instead of the integrated smart routing system, then you can do that by using the other free available tools for your account, like Trader Workstation (TWS). I haven’t tried those myself yet.
CapTrader vs. Degiro
There are 4 more things you might be curious to know about CapTrader (Interactive Brokers), especially if you’re coming from Degiro:
- Like Degiro, the brokerage account is free of monthly charges and inactivity fees
- There are no dividend fees
- No yearly exchange connectivity fees
- There is no share lending by default. You can activate it manually if you want to, and get 50% of whatever interest is earned from lending out your shares against collateral.
Also, if you receive a lot of dividends in USD on Interactive Brokers and you want to convert them to EUR, here is a bonus tip:
- You can either convert USD to EUR directly on IB and pay a small exchange fee
- Or you can send the USD from IB to a free Revolut bank account and convert them there without conversion fees. I already tried this last month and it works!
Conclusion: Great Degiro Alternative
In summary, all I can say is that I’m very happy that I found CapTrader and that I was able to move my Interactive Brokers account there.
Update: On July 1st 2021, Interactive Brokers removed all inactivity fees! That means you can now sign up directly with Interactive Brokers, without the need of using an introducing broker like CapTrader to get rid of monthly fees. I have since delinked my account from CapTrader and am using IBKR without CapTrader as a “middle-man”.
I think Interactive Brokers is an excellent alternative or addition to Degiro, especially since Degiro isn’t available in many countries.
I can easily recommend Interactive Brokers to any investor that is looking for a reliable, low-cost broker to buy ETFs or stocks.
You just need a minimum of 2.000€ in capital, in order to open your account. You can then of course invest that money according to your own investment strategy on Interactive Brokers.
Admittedly, the Interactive Brokers interface is not the most beginner friendly, but I hope I was able to at least show you how to buy ETFs using your account and to provide you with a bit of extra information.
Just so you don’t get me wrong, I’m still keeping my Degiro account as well. I like having several brokerage accounts running in my name and to have the option to choose were I place my next order.
If you’re based in Austria or Germany, make sure you also check out my list of local brokers. We have quite complicated tax laws compared to many other European countries. As a result, choosing a local broker that takes care of everything for you, could make your life easier.
That’s it! I hope you’ll like the broker as much as I do!
If you found this article helpful and you’d like to support me, you can get your own brokerage account on Interactive Brokers using this link.
- My Investment Tools
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Disclaimer: Investing involves risks of losses. You should always do your own research before investing into anything. Also, some of the links are affiliate links, which help support me, the website & YouTube channel. I only link to services I use myself, none of them are sponsored.