Can you open an Interactive Brokers account with the minimum amount of $10,000 and then withdraw like $9,000 to trade with the remaining $1000?

By | August 7, 2018

Can you open an Interactive Brokers account with the minimum amount of $10,000 and then withdraw like $9,000 to trade with the remaining $1000?

I would like to start trading, but the minimum amount is huge. Is it possible to just open the account with it and then leave just the amount I can trade with? Will they allow that, or is it going to automatically refuse to proceed because the account can’t stand with less than the minimum amount? More @ Reddit.

I intially wrote: “Read IB’s fees and cost structure. Do a couple of paper trades, then figure out for yourself if it is worth it. Don’t forget the possible inactivity fees too. If you can’t manage that, I wouldn’t suggest you buy stocks. Because you will have trouble determining your true cost basis.

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Accounts with balances under $100,000 must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20.”

So it will cost you at least $100 per year, if you only do 2 trades (one purchase, one sale) in that time. That is way too expensive for your investment… IMHO.”

In short, the answer is no. If you’d done your research, you’d know that for 10 months of the year you’d attract a minimum fee of $10 a month (or $100 in a year, if you traded twice in separate months). So for that $1000 investment, you’d be paying a minimum of 10% in fees for each and every year. Of course, this assumes that you don’t lose money on your investment, that exchange fees on sales aren’t included, and that taxes on capital gains aren’t included.

So you buy a stock in January, then sell in July. You’d pay $50 dollars in inactivity fees just for the seven months from January to July. That’s 5% fees out of your investment. You’d also need to know that you’re assuming that all the money is invested; you’d be liable to pay additional fees to transfer money in to cover that expense, as well (this might be free). Where I live it could be $30 to wire $10. Doesn’t make sense.

The biggest reason it doesn’t make sense is that 2 factors determine your overall profit in the stock market: 1. your expenses and 2. your initial purchase price. Get either of these wrong and you risk running a loss. Determine your actual cost basis first!

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