Alpaca vs Interactive Brokers: Which one is Better?

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If you’re searching for a Brokerage platform with API access to your financial endeavors, Interactive Brokers and Alpaca are two names that come up frequently. In this post, we’ll go over the capabilities of both and potentially help you decide which one to use.

Alpaca vs Interactive Brokers

First, we’ll start with Alpaca.

What is Alpaca?

Alpaca is an investing platform that provides its investors with the ability to invest in ETFs, stocks, options, and bonds through a single interface. They also provide API access to these features which is a huge benefit for developers.

So What Are the Benefits of Using Alpaca?

  1. Alpaca is designed to provide user-friendly access to their API which allows you to build financial applications. Their API provides instant access to features like alpaca’s portfolio, positions, orders, etc.
  2. The ability to use multiple exchanges through a single interface. If you are trading stocks, and wish to access the New York Stock Exchange (NYSE), as well as NASDAQ and LSE, without using two separate platforms, then you can do so with Alpaca. This is a huge plus since it helps traders save time and improve efficiencies by reducing the need to switch back and forth between platforms, as well as gives them access to the stocks they wish to trade at a cheaper commission rate due to volume discounts offered by Alpaca.
  3. Alpaca can handle US retirement accounts. This is another huge plus for Alpaca, since it can handle regular and Roth IRAs in addition to regular taxable accounts. If you would like to start trading stocks or options but your investment capital is in a retirement account, then this is the best platform for you.
  4. Use the same interface on both mobile and desktop. Alpaca is user-friendly, and it can be used on many devices: iPad, iPhone, Android Phone, Windows Desktop or Laptop, and even Linux Desktops. This gives traders the ability to switch devices without having to learn a new trading interface.

Ok, So What About Interactive Brokers?

Interactive Brokers (IB) is an online brokerage that provides traders the ability to trade equities, futures, mutual funds, exchange-traded funds (ETF), bonds, warrants, and options from over 50 countries.

They also provide access to an API, but the consensus in online financial communities is that it can be difficult to set up initially, especially if you’re new to software development.

Advantages of using IB

  1. Ability to trade futures and options. One of the reasons why IB is so popular among traders is because you can trade commodities and futures, as well as buy and sell stock options through a single interface. If you are an individual trader who likes trading these asset classes, then this is the platform for you.
  2. Global market access. If you are a trader who trades US stocks but would also like to trade foreign markets such as Japan, London, Hong Kong, and Germany, then this is the perfect platform for you since they provide access to all these exchanges through a single interface.
  3. Ability to trade from different types of accounts: Taxable, Joint Tenant (with rights of survivorship), and Traditional IRA. If you are interested in investing through your retirement account, then IB is capable of handling all types of IRAs.
  4. Ability to get started quickly with little to no minimums for opening an account. If you are only trading on a small scale and don’t want to spend more than you have to upfront, then Interactive Brokers has one of the lowest initial investment requirements compared to other discount brokers.

Alpaca vs Interactive Brokers

What is the benefit of using Alpaca over IB?

Alpaca offers more hand-holding for beginners. Interactive Brokers has free real-time streaming quotes but lacks any kind of customer service to get started with investing properly. Alpaca provides education for its users, while Interactive Brokers does not offer much in the realm of learning material. This is because it simply isn’t necessary. Interactive Brokers is made for experienced traders who already know what they are doing; it isn’t user-friendly to beginners.

What is the benefit of using IB over Alpaca?

Interactive Brokers is much more difficult to use than Alpaca, but it has far more in the way of stock/equity trading strategies. Users can program algorithmic trades through Interactive Brokers that will fulfill their investment needs when they cannot do so themselves.

The Bottom Line

In conclusion, Alpaca is better for beginners who are just trying to figure out how the stock market works, have less available capital to invest in the market with, and wish to trade with lower volume in each transaction. Interactive Brokers is better for experienced traders who already have a firm grasp of how the market works, have more available capital to invest in the market with, and wish to trade with high volume in each transaction.

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