Interactive Brokers Platform Walkthrough
Interactive Brokers (IB) comes from a long tradition of open outcry pit trading. It has brought this tradition to its comprehensive, standalone trading platform built for the active, sophisticated trader. IB offers low commissions, best price execution, super low margin rates, and access to thousands of global instruments to invest in – from stocks, bonds, currencies, and commodities to simple and complex derivatives strategies using options and futures. U.S.-based traders can also access and trade international markets without having to fund their accounts in multiple currencies.
IB gives its clients the latest in trading software on the front end and execution technology on the back end. For the intermediate trader to the professional, Interactive Brokers is a powerful and customizable platform. In this walkthrough, we will cover IB's desktop trading platform, showing how you can trade as well as access its powerful technical and fundamental analysis tools.
Homepage - Interactive Brokers (IB) is designed for the sophisticated trader looking to harness the full power of global markets and nontraditional assets. IB's proprietary software provides innovative charting tools and ultra-fast, low-cost execution.
Interactive Brokers Demo Page - Unlike many other online brokerage platforms, Interactive Brokers relies on a standalone application that runs on your computer instead of through its web site. Click the Download Demo button to download and install the software. You can run it as a free demo or sign up and use it to trade for real.
Login - After you've downloaded and installed the Interactive Brokers software, you'll be asked for your login credentials. If you have an account, enter your username and password and click Login. If you are new to Interactive Brokers or just want to take it for a spin, click Try the Demo on the top right corner. The software is compatible with eight international languages, including English, German, Chinese, and Japanese.
Front Page Mosaic - Once you've logged in, you'll see the front page Mosaic. This dashboard displays a quick-order entry panel on the left and a monitor of selected tickers and market news on the right. On the bottom of the panel you'll see an activity log that summarizes your open and completed orders. As you might be able to tell, Interactive Brokers is geared toward active traders who don't want a lot of hand holding. To return to this screen at any time, simply click on the Mosaic tab at the bottom left of any page.
Browse Layouts - IB's Mosaic dashboard is completely customizable – you can rearrange windows, add or remove boxes, and more. There are a number of pre-configured layouts that you can pick from – under the File menu at the top of the window, choose Open Layout Library, and you will be able to select the layout that works best for you. You can also save your own custom layouts for later use.
Account Overview - If you want to see your account balances, positions, and funds available for trading, click on the Account menu at the very top of the window and choose Account Window. The Account menu is also where you go to change your profile settings, fund your account, transfer in or out, or view and download statements and reports, including tax forms.
Dropdown Menu - Interactive Brokers has quite a lot of functionality. You can trade U.S. and international stocks and bonds, foreign currencies, options, and other derivatives. If you click the blue New Window button on the top left of the dashboard, it will produce an extensive dropdown menu to navigate to various parts of the platform.
Cheat Sheets: Order Entry - For each window in the IB system, clicking on the question-mark icon will load up a cheat sheet to help you use the features and functions in that part of the system. For example, opening the cheat sheet for the Order Entry box brings up this annotated tutorial.
Order Entry Settings - Interactive Brokers is a highly customizable platform. You can change how the Order Entry box looks and behaves, add or remove buttons and shortcuts, program hot keys, and much more. Click on the small wrench icon at the top right of the Order Entry box to load the settings manager. In fact, nearly every box within the Mosaic dashboard is customizable to some degree using the appropriate wrench icon. Advanced traders may want to consider the Rapid Transmit setting, where orders can be placed immediately, simply by clicking on Buy or Sell. Many platforms require multiple clicks to place a trade. But by using this setting, combined with suppressing the confirmation box, you can create true one-click trading from your workstation.
Classic: Trader Workstation & Mosaic - If you don't care for the customizable layout of the Mosaic dashboard and its dropdown menu, IB lets you choose an alternate format. Click the Classic TWS tab at the bottom of the dashboard window to switch to a Classic Trader Workstation. The top horizontal menu bar now lists quick links to popular screens, and the main window displays a monitor of real-time price quotes.
Classic: Orders - To place an order in the Classic TWS, click on the Order icon on the top left of the menu bar. This will open the classic order window. Simply enter the asset symbol, quantity, and order type, and you're ready to trade.
Classic: Account - Click the Account button on the menu bar for a snapshot of your account balances and status.
Trading Stocks & Funds
Buy & Sell From the Mosaic - You can buy and sell stock and other assets directly from the front page. On the top left corner is the Order Entry box. Input or look up the ticker symbol you're interested in and you'll be asked if you want to trade stocks, options, or other investment products attached to that symbol. To trade stocks, choose Stock from the dropdown. Then choose Buy or Sell and enter the quantity of shares. You can choose from a customizable dropdown menu of standard quantity sizes (for example, 100, 200, or 500) or enter your own quantity. Choose your order type and then click Submit. You can generate this Order Entry window at any time from the dropdown menu by choosing the first option, Order Entry. In addition, if you right-click on quotes or monitors, you can quickly buy and sell the item you've selected.
Mosaic: Advanced Options - If you click on the small Advanced button in the Order Entry box, you can include some additional directions with your order. For example, you can route your order to a specific exchange or use a routing algorithm such as the SMART router to send your order to the best location for the best execution. You can also have Interactive Brokers hide the size of your order; execute large orders in smaller, discrete chunks; or add an automatic hedging order. If you want to see the market depth and liquidity for a stock, choose the Market Depth (Level II) option from the dropdown menu.
Mosaic: Order Confirmation - After you've submitted your order, you'll get a confirmation screen with an overview of the order details and funding requirements. If everything is correct, confirm the order. Otherwise, cancel it and fix any mistakes. For active traders who don't want to spend extra time on a confirmation screen, you can eliminate this step by clicking the check box on the lower left that says Don't Display This Message Again to activate one-click trading.
Mosaic: Activity Window & Orders - You can see all of your orders in real time in the Activity window, found on the lower left of the default layout of the Mosaic workstation. Open orders can be modified or canceled before they are filled. Click on the Trades tab for a history of executed trades or the Summary tab for another way to visualize your trading activity.
Options Chain - If you're interested in buying or selling options or just want to see some quotes, click on the Option Chain button on the top right of the Order Entry box. This will give you a new window with quotes for near-the-money calls and puts for the stock ticker that was loaded. To enter an order to buy or sell an option, click on it to load it up into the Order Entry box on the main screen.
Options Chain: Strategy Builder - If you're planning to trade more sophisticated options strategies, such as spreads and combinations, choose the Strategy Builder link from the dropdown menu. This will open an options chain linked to a window where you can construct various complex options strategies by adding individual legs (parts of a spread). You can customize your spread by changing the relative volume of each leg (for example if you wanted to do a 1x2 ratio spread). Click Submit Order to enter the whole strategy as a package to buy or sell.
Options Chain: Complex Orders and Trades Scanner - Once you've entered a complex options order, it will appear in the Complex Order Book (COB). You can view the COB by selecting the Complex Orders and Trades Scanner, which you'll find in the dropdown menu under the Technical Analysis heading. Here you will also be able to browse and trade any other options spread on the order book. The spread description is spelled out, along with the size of the order and the bid/ask for the strategy. Hover over a particular spread to get more information about it. Clicking on a spread will populate the Order Entry box with that order for you to trade.
Buy & Sell FX Matrix - Users of Interactive Brokers can trade more than just stocks. If you want to trade foreign exchange (FX) markets, select the FX Matrix option in the dropdown menu under the Quotes heading. Once you click on that, a new window will pop up with a matrix of real-time quotes in the top six global currencies (USD, GBP, JPY, CHF, CAD, and EUR). You can add additional currencies to the matrix by clicking on the wrench icon for settings. You can trade any of these currency pairs by clicking on one of them. That will populate the Order Entry box in the Mosaic dashboard.
Monitor: Portfolio - To view your investment portfolio and a snapshot of its relative performance, click on Portfolio from the dropdown menu. Here you can see the daily profit and loss for your portfolio, as well as the individual holdings in your account.
Monitor: Menu of Options - The monitor window is also a springboard for a ton of functionality. Right-click on a ticker to bring up a menu full of options – including trading tools, analytics, charting, and more.
Monitor: Performance Details - Click on the Profile button at the top of the window to open the Portfolio Performance Profile window. This screen will show you some sophisticated performance and risk metrics, including the calculated value-at-risk (VAR) for your portfolio, and predict your portfolio's performance given simulated scenarios – for example, what would happen if the S&P 500 index moved by +/- 10%. You can bring up this screen at any time from the dropdown menu by using the Portfolio Performance Profile link under the Technical Analysis heading.
Portfolio Builder - Interactive Brokers has some really powerful tools for building custom portfolios that follow the strategy of your choice. Click on Portfolio Builder from the dropdown menu to get started. With the Portfolio Builder, you can backtest your strategies, create portfolio alerts and notifications, and manage multiple strategies all in one place.
Create New Strategy - Click on the + Create New Strategy button at the top of the window to start building your portfolio. You can choose from among pre-loaded strategies or create your own. Simulated historical performance is displayed on the top left, with a sector breakdown on the top right. Below this is a detailed list and summary of the components of the proposed portfolio. Like the strategy? Click on the green Invest button on the top to execute the strategy based on the dollar amount that you want to dedicate to it. Click on Edit Rules to change the strategy at any point. Other buttons let you Divest from the strategy or Rebalance your portfolio to the original strategy weights with one easy click from this window.
Alerts - Alerts are useful for monitoring prices and market activity while you're focused on other things. Open an Alerts window from the dropdown menu to set up alerts based on price changes, time of day, volume spikes, and more. Build in complex logic to your alerts and even have them activate trades when triggered. The Preview will let you know exactly what the alert is programmed to do. When alerts are triggered you'll be notified on your workstation – and also by email or push alert to your mobile device.
IBot - One really cool feature is the IBot chat bot – it's still in beta but well worth trying out. Click IBot from the dropdown menu to load the chat window. Here you can enter text (or speak using a microphone), and IBot will interpret your query and return the appropriate results. You can ask for quotes, see charts, place orders, and more from IBot. Type "help" at any time in the chat box to get a list of common commands and more.
News & Market Insights
Event Calendars - There are numerous corporate and government events each day in the U.S. and around the world. Here you'll find when companies are scheduled to report earnings or go ex-dividend, or when the next federal unemployment report will be released, for example. You can view the whole range of events – or filter them by region or by stocks relevant to your portfolio – by clicking on the Event Calendar button at the top of the Mosaic dashboard.
News - Interactive Brokers offers access to a variety of corporate and economic news and headlines. Click the News button at the top of the Mosaic dashboard, or find the News link on the dropdown menu under the IB Information Systems heading. Go here to select news tailored to your portfolio or strategy, select which feeds you'd like to subscribe to, or simply view top headlines or trending stories. Headlines also update in real time and appear on the lower right corner of the Mosaic dashboard. Filter or screen news items by ticker, asset class, region, or other keyword. In addition to feeds by news outlets, you also have access to social media mentions such as Twitter via an integrated StockTwits feed.
Bloomberg TV - If you'd like to view real-time financial news, you'll have live access to the Bloomberg TV feed (both audio and video). Find Bloomberg TV under the News options in the dropdown menu.
IB Daily Lineup - For a digest of the day's market news, corporate actions, economic events, and more, all in one handy place, go to the IB Daily Lineup link in the dropdown menu under IB Information Systems.
Market Signals - If you're a market technician, you can get a summary of emerging Market Signals based on spikes in volume, price moves, or patterns that are setting up. Click on a signal headline to load that ticker into the Order Entry box.
Analyst Research - While Interactive Brokers does not provide its own in-house research, it does offer access to a number of useful research feeds. Click on the Analyst Research button at the top of the Mosaic dashboard or find this link in the dropdown menu. If you want to see a digest of recent analyst upgrades and downgrades, select Analyst Action. You can also view research provided by Zacks, Altavista, Briefing.com, Slingshot, and Reuters.
Charts - Are you more of a visual learner? IB's charting tools are a powerful way to visualize market prices and trends. These charts are fully customizable and can be saved for later reference. You can also trade directly from the charts, using the Buy and Sell buttons on the top right corner of the chart window, or set an Alert. You can open a chart from the dropdown menu or by right-clicking in the market Monitor.
Charts: Studies & Settings - You can add an overlay on your charts from dozens of studies, indicators, trend measures, and more. Right-click on a chart and choose Studies, or find the Studies link from the Edit menu in the window. You can also use this box to change chart parameters to fit your preferences.
Quote: Market Depth - Level-II quotes with market depth and liquidity from across all subscribed exchanges are accessible via the dropdown menu. This information is useful in seeing how likely an order is to be filled at a good price and in a reasonable amount of time. Click on a price to populate the Order Entry window.
Time and Sales - You can also get a trade-by-trade history of the market activity for a particular ticker symbol. Choose Time and Sales from the dropdown menu to see exactly what has traded and when.
Toolbox - For a quick reference to many of the most frequently used tools – quotes, options chains, fundamentals, news, charts, etc. – open a Toolbox from the dropdown menu. This will create a separate window with these functions at your fingertips.
Analysis: Fundamental & Technical - If you like to get under the hood of your investments, IB has some nice analytic tools for you. In the dropdown menu, there is a heading called Technical Analysis. The first option is Fundamental Analysis. Here you have access to all sorts of stock analytics, including financial ratios, analyst ratings and forecasts, and more. Click on the Financial Statements link to bring up the current and historical income statement, balance sheet, and cash flow statement for the company you're interested in.
Analysis: Analyst Forecasts - Do you have an idea about what the price of a stock should be? Why not compare your judgment to what the professionals think? Click on the Analyst Forecasts link under the Fundamental Analysis sub-menu to bring up a slew of consensus estimates and trends for everything from share price to dividends, book value, and future cash flows.
Analysis: Stock/ETF Benchmarker - One neat tool to check out is the Stock & ETF Benchmarker, found under the Technical Analysis heading of the dropdown menu. Here you can compare your investment portfolio strategy against a number of benchmarks to see how you're performing and to analyze more closely which is the appropriate benchmark for your investments.
Analysis: Advanced Market Scanner - If you want to search for individual stocks, bonds, or other asset classes in the U.S. and abroad, find your way to the Advanced Market Scanner under the Technical Analysis heading of the dropdown menu. Here you can screen and filter investments based on a host of criteria and search functions.
Analysis: Mutual Fund/ETF Replicator - Another neat tool is the Mutual Fund/ETF Replicator, found under the Technical Analysis heading of the dropdown menu. This tool lets you search for the ETF that best matches an existing mutual fund. You can enter the mutual fund symbol or search for the one you are interested in. Then the replicator gets to work, telling you which ETF or combination of ETFs comes closest to that mutual fund. This is a useful feature if you like the low-cost and stock-like attributes of ETFs.
Analysis: Options Analysis - If you're interested in trading options, IB has some very good analytic tools. Under the Technical Analysis heading of the dropdown menu, find Option Analysis. From there, choose the Probability Lab. This tool will help you develop options strategies based on how you judge a particular stock's odds of success. You can then trade these strategies in the market.
Advanced Trading: ScaleTrader - ScaleTrader is an automated trading algorithm that you can customize to buy dips or sell rallies. This tool scales your total order so that it fills at progressively better prices in a trending market. This can translate into better fills and be more effective than setting a series of stop loss orders.
Advanced Trading: Baskets - For more advanced traders, IB has a sub-section of its dropdown menu called Advanced Trading Tools. One handy tool here is the Basket Trading screen, where you can create groups of stocks to be bought or sold all at once as packages.
Advanced Trading: Risk Navigator - For advanced traders who want to know more about their risk exposures, the Risk Navigator tool lets you analyze your potential downside in real time, with tools like value-at-risk (VAR). The Risk Navigator also has a What-If portfolio feature for playing out the impact of hypothetical scenarios on your P&L.
Advanced Trading: More Advanced Tools - There are many other advanced trading tools and features for sophisticated investors that are beyond the scope of this walkthrough. Click on More Advanced Tools to see what else IB has to offer.
Client Services - If you need help with anything related to your IB account or the software platform, you'll find the Help menu at the top of the dashboard window. Click on Customer Service/Customer Service Info for ways to get in touch with support staff by phone, email, or live chat. You can also view quick tips and FAQs here.