Using Interactive Brokers

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justyn

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I have been Intra Day Spread Betting the Daily Dow and Dow Futures but have gotten fed up with the Spread making it difficult to make a profit. You really need to catch a good move to make it worthwhile.

I was looking at Interactive Brokers as an alternative.

Sorry for the naive questions, but if I don't ask then I won't understand!

If you want to trade only US Indices would it be better to open a Dollar account or can you open a Sterling one? Being in the UK it would add an extra complication having to convert Sterling to Dollars and vice versa when adding or removing funds.

I have looked at their demo "Trader Workstation" and the "Book Trader" facility and they are confusing me.

If I want to make very quick trades then their Trader Workstation seems too complicated to use quickly.

The Book Trader system is supposed to allow one click trading but I don't quite understand how it works. If I look at the screen right now it has "1 @ 10096" and in the "Bid Size" there is 10 next to 10102 and in the "Ask Size" there is 30 next to 10104.

I have read their online help and it isn't very intuitive!

Why does one price field have "1 @" in it?

Where you have 10 next to 10102, does this mean someone is offering 10 lots of $5 for sale? And if I want to trade 1 lot of $5 can I buy just 1 lot - and how do I configure it so when I click the Bid Size it doesn't buy all 10? Is that what the "Size" box is for at the top?

Lastly I don't understand what they will charge for each transaction I make (assuming I am trading YM futures)?

Thanks in advance for any help you can give me!

Justyn.
 
Hi justyn

The problem with having a dollar account is that you will have to transfer funds to/from the account in dollars, which will cost you big time from a UK bank unless you have a dollar account already somewhere.

I use a sterling account and trade US futures with IB, including YM. What happens is that as soon as you take a position in another currency, they open a loan account in that currency linked to your main account. Your sterling balance will remain static, while your US trade gains/losees will show up in the dollar account, along with commission charges, interest etc. You also can choose to make a currency transfer to/from your dollar/sterling accounts very easily and quite cheaply at any time. Your margin position is calculated (in real time!) on the overall value of your accounts, all of which you can see from Trader Workstation (TWS) at any time. I like the way this works, as it leaves me in control of when I want to incur currency conversion charges, or take the currency risk of having a large balance (I wish :)) in a foreign currency.

I can't help you with Book Trader, I've never used it. There are several different ways of placing a trade in TWS, but for me the simplest is clicking on the bid/ask and then clicking the transmit (T) field. If you set up your trade defaults for a session (# lots, limit/stop/market etc. order type) it is as easy as 2 quick clicks - admittedly not so great for scalping but fine otherwise.

YM futures commissions are $2.06 per contract, that's the CBOT mini-dow in this table (click on Fees/Commissions/Futures and Futures Options in the IB Web page menu):

http://www.interactivebrokers.com/php/generalAccount/commission.php?ib_entity=IB-UK#futures

KenN
 
You really don't need to worry about the bid and ask sizes. Just ignore them.

On your order line you will have the size you want to buy or sell (I believe the default is 1 for futures), and so you will only be buying/selling one contract, irrespective of what is in the bid/ask size fields. I altered my layout so that I don't see the bid/ask size as it can mesmerise you.

Here's a piccy of what my TWS layout looks like - very simple, no bid/ask size.
 

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Justyn,

Backing up what others have said.

You are better off having a GBP account as it is much easier to administer as well as saving on complications of opening a USD account.

Using TWS is very easy and just needs a bit of time in understanding it but once you have, in my view, it is as good as anything else if not even better. From identifying a trading opportunity and deciding to trade it, I am able to send my order in less than 3 seconds by using hotkeys.



Paul
 
Thanks everyone who took the time to reply and for being patient with a relative newbie, we all have to start somewhere!

I spoke to someone over the weekend who said it took him 3 days to work out how the interface worked when he first used it, but once used to it he said it was a piece of cake.

Cheers!

Justyn.
 
justyn said:
Thanks everyone who took the time to reply and for being patient with a relative newbie, we all have to start somewhere!

I spoke to someone over the weekend who said it took him 3 days to work out how the interface worked when he first used it, but once used to it he said it was a piece of cake.

Cheers!

Justyn.
Click to expand...

Take some time to read the manual and use the online tutorials: http://www.interactivebrokers.com/php/tws/twsTutorial.php as there are plenty of excellent features and order types that go far beyond the basic limit and market buy orders.

once you play with the demo, you'll find it is fairly intuitive and easy to use. I suggest you learn how to set up some hotkeys for quick entry. as for the book trader, it is simple as clicking on the left side to place a bid and the right to place an offer. the 1@ is the size of the last trade. try it on the demo before going live to make sure you are entering orders correctly and to gain additional confidence before going live.
 
justyn said:
Thanks everyone who took the time to reply and for being patient with a relative newbie, we all have to start somewhere!

I spoke to someone over the weekend who said it took him 3 days to work out how the interface worked when he first used it, but once used to it he said it was a piece of cake.

Cheers!

Justyn.
Click to expand...

Hi Justyn,

Wish you luck! I confessed to not having the ability to day trade a few months ago. The main problem being, I think, my preference to swing trading over a few days. Staying in front of a screen all day was beyond me and that is essential for day work.

Apart from that, I found IBs explanations very difficult to follow but, once that was past, the TWS platform was great. No trouble about that, at all ,and the commisions and spreads are reasonable. the main problem being that the shares have to go up when you buy and go down when you sell!. Get that part right and the rest of it takes its course.

Regards Split
 
Thanks again for the replies. I am getting the hang of it now, it is daunting when you are used to a simple SB screen.

the main problem being that the shares have to go up when you buy and go down when you sell!. Get that part right and the rest of it takes its course.
Click to expand...

"Touch wood" I am doing ok so far. I have been intraday trading Dow Futures having started spread betting the Dow a couple of months ago.

I have set myself a target of 40 pips per day or 200 per week and this is my first week (on target so far). I have a strategy mapped out for gradual growth based on 200 pips profit per week, but if this turns out not to be attainable in the long term then it will just take a bit longer, we'll see.

Anyway, stay lucky everyone!

Justyn.
 
If I had a GBP account with IB, every time I traded Emini's they would have to convert my margin to USD?

Am I right in thinking....

a) I am only liable to beneficial or adverse cable movements while I hold open positions, ie while I have money in USD to cover margin requirements.

b) If I traded 20 times in one day , would IB transfer GBP to USD and back again 20 times to cover my margin requirements. Would they charge a commission every time they converted currencies?

c) Does any realised P&L stay in USD until I have used IDEAL to convert it back to GBP?
 
No, the other way round. They convert the $ margin requirement for ES to £ based on the ex. rate at the time and do all the margin calculations in your base currency (£).

a) Your overall account value (value of £ account, value of $ account and value of open positions) is converted to £ to calculate margin requirements. You see this fluctuate in real time as the exchange rate moves!

b) No they don't charge commission for these currency margin loans. If you close all your positions by the end of day, you don't get charged anything, all you see is your gain/loss in the $ account at the end of the day. If you leave positions open overnight you will pay interest.

c) Yes

KenN
 
Hi Justyn

Have a look at Brachet Trader you can automate your trading with one click for order entry, stops and frofit targets.

I am a bit concerned with you blaming the spread, sounds like your trading method is not up to scratch and changing to IB is not the answer.
 
My IB TWS just froze (ftse and dax) for maybe 3or4 minutes until 9:43,anyone else?
 
Justyn -

some other IB frontends you might look at are (I could never get on with TWS, despite Skim and Paul's comments - sorry guys ;) )

Ninja Trader - costs $30pcm but great interface. Allows trailing of stops, auto target and reversal and strategies.

Tsim - free. Run by another member of this site, Henry.

There are others - Amigo Trader and Auto Trader - but I cant remember the URLs. Do a google for them.

Bracket Trader is a pain in the bum imo because of all the noises it makes (unless you pay for it, which I have a serious dislike of).
 
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