TWS Advisor Webinar Notes

Overview

IB provides a complete turnkey solution for Professional Advisors that provides trading, clearing, and reporting capability for advisors of all sizes. Our Professional Advisor accounts let Registered Investment Advisors (RIAs) and Commodity Trading Advisors (CTAs) execute and allocate trades among multiple clients from a single order management interface.

Professional Advisors enjoy the following IB benefits:

  • Manage all your client accounts and trading from our comprehensive suite of tools.
  • Automate multi-client trade allocations and portfolio rebalancing.
  • White Brand statements, customer registration and other informational materials with your own organization's identity.
  • Create professional, client-ready performance presentations with PortfolioAnalyst.
  • Configure access rights to assign different managerial roles and client accounts to individual employees within your organization using our flexible User Access Rights system.
  • Access stocks, options, futures, forex and bonds electronically on over 100 markets worldwide from a single account.
  • Assume the role of Wealth Manager by assigning registered Money Managers to multiple clients for trading purposes. Shop for registered Money Managers at our Investors' Marketplace.
  • Enjoy the security of Interactive Brokers' financial strength.

View Quick Start Guides
On the Interactive Brokers web site click on the Open Account button and select Advisor to access the Getting Started Guides for Advisors guide and also has more information on how to become an RIA.

Access Account Management
Handle all of your IB account administrative functions in Account Management, which you can access from the Login menu.


Trader Workstation

IB's market maker-designed Trader WorkstationSM (TWS) lets traders, investors and institutions trade stocks, options, futures, forex, bonds and funds on over 100 markets worldwide from a single account.

  • A simplified but sophisticated workspace that puts order management, analytics, account monitoring and more at your fingertips.
  • Comprehensive News and Fundamentals subscriptions from leading providers that integrate seamlessly into the TWS workspaces.
  • Real-time account balance and activity monitoring, with a real-time margining system that notifies you of margin deficiencies before liquidation becomes necessary.
  • Task-specific trading tools to enhance efficiency for all trading styles, including the Accumulate/Distribute algo, FXTrader, ScaleTrader, SpreadTrader, OptionTrader and more.
  • Sophisticated, built-in risk management and option pricing applications.
  • An optional Paper Trading account, linked to your production account, which lets you experiment with the full range of TWS features in a simulated environment.

Login

  • Click on the Login button on the top right of the IB website to access our most up-to-date TWS trading software.
  • Or, choose to download and run locally by clicking Trading | TWS Downloads – You then choose when to apply the upgrades.
  • Both versions require Internet access to view your quotes and transmit your orders, so the major difference is in how upgrades are handled.

Auto Save

Software settings are stored locally on your computer the first time you log in and changes will be automatically saved when you log out. If you intend to access your account from other computers, you can choose to store a copy of your settings on IB's servers. Settings are only accessible with your login credentials, so you can view the same trading configurations, regardless of the machine you use to access your account.

TWS has two workspaces:

  • Mosaic – A pre-configured workspace that has color-linked windows for intuitive, out-of-the-box usability. With the same color icon in each title bar, all windows will update simultaneously when you select a ticker.
  • TWS Classic– a spreadsheet interface for more complex orders and legacy TWS users. Quote Monitor tabs display quotes and orders in a spreadsheet format. There's quick click order entry with a single order row.

Once logged into TWS, you can easily switch between the Mosaic workspace and the TWS Classic spreadsheet by clicking the tabs on the bottom left of the workspace. Both set-ups provide access to any of the specialized, self-sufficient trading tools with embedded order management fields.


Mosaic

In Mosaic, windows are grouped using the colored link icon on the top right of each title bar. All windows with the same color are part of the same group. When you change a ticker, all color-linked TWS windows will update immediately. Mosaic uses separate order entry and order activity windows to create and manage your trades.

  • Customize Mosaic's workspace to suit your own trading needs by snapping your favorite TWS trading tools together.
  • Use the Portfolio window for at-a-glance account summary and position detail, the Order Entry window to formulate and transmit orders instantly, and the Activity Monitor to track and modify live orders and review filled and cancelled orders.
  • Create sophisticated attached orders directly within the Mosaic Orders panel, including bracket, stop limit, profit taker, One Cancels Other, beta, fx order and pair hedging orders.
  • Add multiple Watchlists to view groups of contracts and create customized Market Scanners.
  • View interactive, customizable charts that support studies and trendlines.
  • View real-time streaming general news that you can filter by subject, as well as real-time streaming news for a selected underlying.

Pre-Trade Allocations

TWS provides Advisors the ability, pre-trade, to distribute shares among multiple client accounts when you create an order. For multi-structured account types, the Order Entry window includes an account selector and pre-trade allocation fields allowing you to create and manage orders directly from the Mosaic workspace.

The Mosaic Order Entry window for Advisors includes the ability to specify Account Groups or Allocation Profiles when placing orders.

Existing Advisor clients using the IBIS research platform will need to click the blue New Window button to add the Order Entry and the Order Management windows to their workgroup.

The two primary methods for defining allocations are:

  • Account Groups – pre-define a subset of accounts and associate allocation method based on a system calculated ratio or percentage.
  • Allocation Profile, which distributes shares to each account in a profile based on a percentage, ratio or absolute number that you define.

Both of these methods require that you create a group, assign accounts to the group, and define the group's allocation method.

First, you will need to define groups and profiles using Global Configuration – File | Global Configuration, Advisor section.


Creating Account Groups

When you create an order and choose an Account Group, the order uses the pre-defined method to automatically calculate ratios and allocate order shares to a group of accounts based on a selected allocation method.

  • In the Global Configuration window, Advisor section, select Account Groups.
  • Click the Create button and enter a name for the new account group.
  • Select the Allocation method from the drop down.

Percent Change – will increase or decrease an existing position.

  • Positive percentages will increase a position; negative percentages will decrease a position.
  • You don't enter a quantity in this type of allocation since the order quantity is calculated by TWS by the change in position, the order quantity populates after the order is acknowledged.

Available Equity – distributes shares to each acct in the group based on the available equity in each account.

  • TWS calculates the ratios based on Equity with loan value in each account and then allocates shares based on these ratios.

Net Liquidation – distributes shares based on Net Liquidation in each account. TWS calculates a ratio based on each account's Net Liquidation and allocates shares based on these calculated ratios.

Equal Quantity distributes shares equally between all accounts in the group. (For a 100 share order, if your Account Group includes 3 accounts, each account receives 33 shares, then (in order as described in the group) an additional share is allocated until entire quantity is distributed. So in this example the first account gets 34 shares and each of the other two accounts would get 33 shares apiece.

Tip: When placing a closing trade involving multiple accounts use the Pct Change method. If you use the same method to close a position as you did to open the position (for example Net Liq) it will result in a total net position of zero -- but it may create a situation where one account is short one contract while another account is still long one contract.

  • All accounts you have access to appear in the Non-Group Accounts list.
  • Choose the account(s) to add to the group and Click Add to put the accounts in your new Allocation group.
    (CTRL+Click will allow you to select multiple accounts.)

Creating Allocation Profiles

An Allocation Profile applies to a group of accounts but unlike Account Groups, (where a single method applies to all accts in the group) the Profile requires you to manually specify a value for each account in the group. In Mosaic, setup Account Profiles by selecting the Allocation pull down list and choosing Setup.

  • In the Global Configuration window, Advisor section, click Allocation profiles.
  • Click the Create button and enter a profile name. Choose the allocation type.
    • Percentages - split the total number of shares between accounts based on the percentages you indicate. For example, an order for 1000 shares using a profile with four accounts at 25% each would allocate 250 shares to each listed account in the profile. Percentages allocated must equal 100.
    • Ratios - calculates the allocation of shares based on ratios you enter. For example, an order for 1000 shares using a profile with four accounts set to a ratio of 4, 2, 1, 1 would allocate 500, 250, 125 and 125 shares to the listed accounts, respectively. If you use ratios, the system automatically calculates.
    • Shares - allocates the absolute number of shares you enter to each account. DO NOT ENTER TRADE QUANTITY the order size is calculated by adding the number of shares specified for each account.
  • Select Accounts to add to the profile.
  • Assign a value to each selected account. Enter the percent, ratio or number of shares to be allocated to the selected account.
  • Tab to create a new account line.
  • When all accounts have been added you MUST hit ENTER to get an additional empty line for the system to recognize the completed profile.
  • Select OK to save the profile.

Now when you create an order, the account groups and allocation profiles will be listed along with the individual account numbers in the Allocation pulldown in the Mosaic Order Entry window and in the TWS Classic order row.


Set Clearing Default

Execution only clients can configure allocation templates to quickly allocate one or multiple trades to a pre-defined clearing broker.

  • As an IBExecution Services customer, you can instruct TWS where you want to clear your trades on a per order basis but you must first apply, and then enter your give-up instructions through Account Management.
  • You can use IBExecution Services from both the TWS Classic Order Ticket and on an order management row to define pre-trade give ups.
  • Click the Create button in the Clearing Defaults section and then select the Clearing dropdown to select a Clearing Account.

Set Default Allocation

The default allocation will be used automatically when you create an order. You can modify the allocation on a per trade basis, and change the default allocations at any time.

If you select an Account group, the default allocation displays in the Method field. Click in the Method field to select a new method, applied to all accounts in the group, for this order.


Trading in Mosaic

When creating orders from the Order Entry window, Advisors can allocate shares using the Allocation pulldown list to specify the account(s) for your order. You can select:

  • a single account number from the drop down list
  • Account Group – a pre-defined subset of accounts with an associated allocation method. The Account Group allocates shares based on a ratio or percentage percent change of an existing position. TWS does the calculations and distributes to all accounts in the group.
  • Allocation profile – you can manually specify how an order will allocate among a group of accounts– a percentage, ratio or absolute number to be allocated to each account in the group.
  • Model Portfolio - Models provide an efficient process for advisors to manage multiple trading strategies for their clients without requiring them to open multiple accounts. Client investments are allocated amongst instruments in the Model based on the Model's allocation ratios as defined by the advisor.

If an Account Group is selected, then choose the Allocation Method - Percent Change, Available Equity, Net Liquidation or Equal Quantity. If Percent Change is selected, enter the value in the Pct. Change text field. You don't enter a quantity in this type of allocation since the order quantity is calculated by TWS by the change in position, the order quantity populates after the order is acknowledged.


View Activity & Portfolio

The activity window displays all orders and trades. Using the account selector pulldown list at the top right, you can track the activity for the master account, a Group of accounts, specific Models or any of the individual accounts. Right click on the column header to insert additional columns, i.e. Allocation method.

The Portfolio tab in the Monitor window also includes an Account Selector on the title bar.


TWS Classic

Quote Monitor

The TWS Classic Quote Monitor tab displays the same common market elements that are in the Mosaic Monitor lists and also includes expanded quote details such as bid/ask prices and sizes, etc. for all tradable products. Position values including P&L, average cost and market value are displayed for your held positions. Colors are used to give you at-a-glance information – from directional movement, to order status and more. You can add/remove, rearrange and even resort the columns on each tab according to your trading preferences.

Before you begin to trade you'll need to populate the Quote monitor by adding tickers for real time streaming quotes. With access to over 100 global markets it's important to specify the ticker, instrument and regional exchange.

Where available, equity and options tickers use "SMART" for an aggregate price display and sets up your orders for IB's SmartRoutingSM. This dynamic technology scans competing market centers seeking to automatically route orders to ensure that each piece of an order is filled at the exchange with the best price and liquidity.

You can display an unlimited number of symbols, but only 100 tickers show active quotes at any one time on the platform. Additional Quote Monitors can be created using the "+" icon in the title bar.

Quote Monitor pages serve as the main trading pages with quick click order capabilities for TWS Classic.

  • Column headers – the top row of displays real-time market quotes,
  • The second row of column headers shows Order Row fields.

Trading in TWS Classic

Quick click order entry in the TWS Classic interface means you can instantly create orders with a left click on the Bid or Ask price of an interactive quote line. Each order row appears directly beneath the market data row.

The order row contains additional columns for Advisors: Allocation, Method and Pct. Change.

Select the Allocation pulldown to specify the account(s) for your order. You can select an Account Group, Allocation profile, individual accounts or a model portfolio. Alternatively, you can use the account selector on the top left of the monitor to choose the allocation.

If an Account Group is selected, then choose the Allocation Method by left clicking in the Method field. Choose from Percent Change, Available Equity, Net Liquidation or Equal Quantity.

If Percent Change is selected, enter the value in the Pct. Change text field. You don't enter a quantity in this type of allocation since the order quantity is calculated by TWS by the change in position, the order quantity populates after the order is acknowledged.

The active order fields are context-sensitive, so only valid selections for the ticker and routing destination will display. As you enter order criteria, fields become active or inactive based on your choices. Use the arrowhead to expand menu selections.

For a Limit order, you can attach order(s) to activate once the parent trade fills. Right click on the parent order row and choose Attach.

  • The attached orders are considered child (dependent) orders of the parent order and use the same order criteria as the parent. They are submitted one time with the parent order and will not continuously update. Child orders activate after the parent order fills.
  • Profit Target, Auto Stop, Auto Trailing Stop or Bracket orders can easily be set-up with the Attach right click command on the primary (parent) order row.

Modifications can be made to a working order up until the order fills. Make the edits on the order management row then be sure to use the Update button to transmit your changes.


Order Ticket

In TWS Classic, you can also create an order using the Order Ticket icon. The same fields available on the order row also appear on the Advisor tab of the Order ticket.


View Activity

  • You can view and manage working (open) orders on the system generated Pending tab, as well as on any trading page that displays the ticker symbol.
  • Once an order has been executed, the order row is removed and the execution report is displayed in the Trades Log. Select the Trade Log icon from the menu at the top of the window.
  • The Master Account will begin with an F and client accounts begin with a U.
  • You'll see the trades are executed in the master account – but then immediately allocated to the pre-defined accounts.
  • Completed trades also show in the Mosaic Activity window.
  • Use the Account Selector at the top of the window to choose from all accounts, an individual account or account group.
  • Show Trades line allows you to view completed trades from the previous 5 business days. After which, your trade activity can be accessed through the Account Management Activity reports.

View Portfolio

The Portfolio tab on the Monitor displays your held positions, current prices and market values as well as total equity and margin balances. Use the account selector at the top to view the portfolio of an individual account, account group or model portfolio.


Real-Time Activity Monitoring

IB provides real-time data that gives you the edge you need to react quickly to the markets. The Margin Requirements section of the Account window allows you to view your trading risk at any moment of the day by calculating requirements for initial margin (at the time of the trade) and maintenance margin (when holding positions) on a real time basis.

In Mosaic, click the Account button from the Monitor portfolio tab or select Account from the main menu to bring up the Account window. In TWS Classic, click on the Account icon.

Use the account selector at the top of the window to view Balances, Margin Requirements, Available Funds and Portfolio's by account group, master and sub-accounts and models.

The Account window is divided into the following sections:

  • Balances - displays your account balances for securities, commodities and in total.
  • Margin Requirements - shows your initial and maintenance margin requirements based on your current positions.
  • Available for Trading - check if you have sufficient funds to put on a trade, based on your balance information and margin requirements.
  • Market Value - Real FX Balances - total value of all positions, by asset class, sorted by currency.
  • FX Portfolio Virtual FX Position - shows contract style view of trades executed in the FX market. Please note that these do not reflect real-time FX balances, which can be found and traded in the Market Value section above.
  • Portfolio - lists all current positions sorted by underlying, and displays the total current market value for each position.

Account Summary Tab

While the Account tab will give you an in-depth look at values and positions for an individual account or for a group of accounts, the Summary tab on the advisor Account Window has been enhanced to provide you with a summary view of these account balances, including P&L values for each sub account contained in a group.

The window includes two panels; a Balances panel that can be configured to include virtually all of the information included on the account tab such as net liquidation value, initial and maintenance margin requirements and available funds.

The Market Value panel can display Unrealized and Realized P&L, as well as total cash, net liquidation value, total value of all positions by asset class and more.


Model Portfolio

A Model Portfolio is an advisor-constructed group of financial instruments similar to a mutual fund that the advisor funds and trades on behalf of his clients. Models allow Advisors to create groupings of financial instruments based on specific investment themes and invest client funds into the Model, rather than taking time to invest in a single instrument.

Model Portfolios simplify the tasks of managing and investing multiple client accounts by allowing advisors to:

  • Manage multiple trading strategies for each client without requiring their clients to open multiple IB accounts.
  • Quickly and automatically allocate investments from multiple client accounts into a single Model.
  • Spend more time focusing on client services and less time making individual trades.
  • Use Model Portfolios like mutual-funds but without the tax considerations of mutual funds.

Models can invest in any asset type including stocks, options, futures, forex, bonds and funds.


Model Set-up & Initial Funding

Click on the Portfolio tab in TWS Classic to create and manage your Model Portfolios. Click the Display Selector pulldown and then Model Setup on the top right of the menu , then click the Create Model button enter a model name and code.

There are three ways to specify the model's instrument allocation percentages with initial funding:

  • You can specify the target percent allocation for each investment instrument first and fund the model second. In this case the system will automatically create orders to purchase assets in proportion to the defined target percentages when the model is funded.
    • In Model Setup, select an unfunded model and click the button Set Target Allocations. Add tickers and the Target % for each asset, then click Save Targets.
    • To fund, on Portfolio page, use the display selector to choose a client account that is investing in the model and select My positions by model. Rick click on the model, if you do not see the model on the list then click the green '+' sign to expand model list, then click the blue button and invest in the model. Enter the investment amount in the Invst Amnt column and click the Create Investment Orders button.
    • Orders will appear in the Investment Orders panel, click Transmit All to transmit the orders.
  • Alternatively, invest initial cash investment in a model and then populate the model with investment instruments. Perform this action as if you were purchasing shares for a client account but select the Model as the allocation. From a Quote Monitor, use Select Account dropdown, select the Model you want to populate.
    • Create orders for all assets that you want to include in the selected Model and transmit the orders.
    • From the Portfolio page, use the display selector to choose the Model and view the position, market value & P&L values.
  • Advisor can transfer clients' independent positions to an unfunded model using the Transfer Cash and Positions to Model button in model setup.

View Models & Positions

To view the total positions per model on the Portfolio page, choose All in the display selector and then select My positions by model. To view models by account, use the display selector to choose the account, then click the '+' sign by a Model to see a drill down list of investments.

When you invest new client funds into an existing, populated Model, the new capital is invested using the Model's existing investment allocations. Use the Rebalance window to update the target allocation percentages.

You can withdraw cash from a model and transfer it to the independent holdings for all accounts invested in the model. Access Model Setup on the Portfolio page, choose the model and click on the Withdraw Cash from Model and enter the amount of cash to withdraw.


Divest Funds from a Model

To divest from a Model, use the Display Selector and choose the client account that will be divesting from the Model. Right-click the Model from which the client wants to divest, and click Divest from [model name]. Enter the divestment amount and click Submit. This action triggers orders to sell assets in the Model equal to the value being divested, in the same proportion they are held in the Model. The model's available funds is decreased by the divestment amount and the client's cash balance is increased by the divestment amount.


Rebalance for Advisors

The TWS Rebalance window displays all positions held in an account, and shows the percent contribution each makes to the portfolio.

  • In TWS Classic, use the Select Account dropdown Advisors can elect to have TWS automatically Rebalance ALL accounts, a single subaccount, or a pre-defined Account Group (a subset of accounts). If you have selected "All" in the Account dropdown, the rebalance percent for the instrument will be applied to all of your sub accounts' portfolios.
  • Click the Rebalance link on the top right.
  • Use the Target % field to define a new percent for all positions.
  • Click the Create Rebalance Orders button instructs TWS to automatically create buy or sell orders to rebalance the selected portfolio(s) according to the new percentages you enter.
    • Orders appear in the order management panel with the quantity (±) indicated.
  • Use the Transmit All button and TWS opens and closes positions to rebalance the selected account(s) portfolio based on the Target % you entered.

Advisor Alerts

You can subscribe to alerts for specific accounts with the Account Selector drop down. Alerts can be based on margin thresholds, trade executions or price movements. In Mosaic, select the blue New Window button and choose Alerts. In TWS Classic, click on the Alert icon on the toolbar.