TWS - Trader Workstation
Interactive Brokers Trading Platform

The TWS Trader Workstation offered by Interactive Brokers is a beast of a trading software!

In order to use this platform you have to be a client of Interactive Brokers ("IB"). If you are serious about trading you definitely want to consider IB as your broker. 

You can trade any asset class from TWS. This day trading software has a ton of features for scanning opportunities, analyzing ideas, managing your positions and reporting performance. 

The one major thing everyone says though...the learning curve is steep. They have a web platform that is very easy and intuitive to use. However, the desktop TWS trading platform will take some time to wrap your head around all the robust capabilities.

There are so many different UNIQUE FEATURES! 

Check out the review below! I'd like to note that many people that trade might use IB as their broker but rather use another trading platform for executing orders. The great thing about IB is you can have their data feed connect into many other trading platforms since IB is so widespread in the industry. Or perhaps you might want to use TWS when managing other people's money (see "model portfolio" details under Advantages below). 

Asset Classes     All

Ease of Use     2/5

Features     5/5

Charting     3/5

Value for Money     5/5

Customer Support     3/5


Cost

For $20/month is an IB account Worth it??

If you do on average more than 2 trades a month, signing up for an IB account is worthwhile (if you are basing your decision solely on cost). Most top known retail brokers like Schwab, E-Trade, TD Ameritrade charge $10/trade. Two trades in the month and you already paid off the minimum IB fee.

Cost of the platform is FREE!

HOWEVER, I would like to describe the charges you will need to pay to trade with IB (apart from general commissions) which you might not be aware of. Not that they hide any of this information - they are explicit about it, it just might be overwhelming to figure out quickly as there is a lot of info on their site.

Overall I think the fees are very reasonable.

The basic breakout is: 

$10 - Min. Activity
+
$10 - Market Data
=
$20/month 

Minimum Activity

These guys cater to active traders. They charge $10/month if you do not trade at all. However, for any trade that you do, the commission from that trade reduces the $10. So if each stock trade is $1, if you get in and out 4 times your total commission will be $4 which will reduce the activity fee down to $6 for the month. 

Really this fee is nothing - if you do ONE trade with one of the "big names" like Scottrade, Fidelity, they charge about $8-$10 per trade. If you did ONE trade with them you would reach the "minimum activity" fee that IB charges. It is funny because if you are not active, it will actually be hard to hit $10 in commissions per month with IB since they are so cheap. 

*Note: If you have less than $2,000 in your account then the minimum activity becomes $20/month. Once again, they cater to more serious/active traders and not those with barely any capital to trade. If you think having $2,000 in your account is a lot of money, you probably do not have much capital and you should save up a bit more - there is not a whole lot you can do in trading with $2,000.

** If you are less than 25 years old, they charge $3 in minimum activity. If you generate at least $3 in commissions, no fee is charged.

Market Data

Interactive Brokers offers some of the lowest commissions in the industry. That does come at a price though - if you want any sort of charts populating with data, you will need to subscribe to their data feeds. (Regardless if you want to trade live or just want to use the platform for paper trading).

Depending on what you trade you will need to subscribe to multiple feeds which have a monthly fee. 

You can view the costs here

IB has a great option of a value bundle which costs $10/month. IB makes it really easy to subscribe to data. This package pretty much gives you everything you need to get started trading. 

This value bundle includes:

  • 4 main US stock exchanges 
  • Top of book OTC Markets
  • Top of book quotes for CBOT, CME COMEX, NYMEX (futures)
  • US Bond quotes
  • US Mutual Funds quotes

*Top of book means gives you the current bid and ask with no market depth as to what orders are sitting below these prices. (i.e. Level 1 pricing vs Level 2 pricing)

The bundle is free if you generate $30 of commissions in the month. 

Stocks
If you want Level 2 data for stocks, NASDAQ Totalview is a good option which is $15/month - this is pretty standard no matter where you go. You won't find cheaper.

Futures
If you want market depth for futures - I recommend getting a futures broker separately. It'll be cheaper.

Forex
Free


Advantages

General

  • Product/Exchange Offering - trade all security types from one platform. Leader in giving access to large amount of international markets

  • Order types - over 50 order types and algos supported! Also has hot keys which allow you to execute orders instantaneously.

  • Security - printed card is mailed to your home with 200 random unique 3 letter conbos. Even if a hacker gets your username and password, he/she can't access your account without that card.

  • "Easy" and "Hard" mode - although platform has steep learning curve, there is a much more intuitive easy to use version of it called "Mosaic." It is laid out differently with the standard look and feel of most platforms. 

  • Market Scanner - scan products from around the world, create custom scans or used predefined ones that come with the software

  • Popularity - IB is big in the trading world so there are many third party add-ons and applications that can connect to TWS (e.g. NinjaTrader, Sierra Chart). If you want to use a different interface for trading, such as Ninjatrader platform to trade futures (which I like to do!) it is easy to have this set up.  

  • Option Trading Features:

    Choose from up to 18 different strategy templates and manually define leg by leg 
    IB has an algo that finds most cost-effective solution to achieve your objective (factoring in both commissions and premium decay)
    Option Strategy Lab - compare P&L and risk/return ratio of up to 5 strategies simultaneously in a performance comparison chart

Unique Features

  • Model Portfolio - if you are an investment adviser and have your own clients for which you invest, this tool offers a great organized approach to investing their assets. 

Business Opportunity
Take trading seriously? Thinking of starting your own business?

Perhaps once you develop your skills you might want to start managing money for others for extra income.
You can manage up to about 15 accounts in IB. Once you get a few clients, using the Model Portfolio tool might be very useful for you. 

Check out the TWS user guide and search for "Model Portfolio" for details on this unique feature.

  • Shorting features - when shorting stock, the platform can show you how easy it is to borrow various stocks. Displays how many shares are available for shorting and the fees to borrow. The TWS Yield Optimizer allows you to compare borrow rates on hard-to-borrow stocks before you sell short. 

  • Mutual fund replicator - if you like a certain mutual fund this tool tries to find ETFs that replicate it as close as possible. This is benefical as ETFs usually have lower fees, easy to get in or out (trades like a stock) and can have more beneficial tax treatment. 

  • Volatility Lab - shows you a summary of past and future readings for volatility on a stock and some measure of broad market. Helps you analyze what option market is projecting for a stock's future direction based on historical movement. You can also view open interest across all expirations to see traders' positioning.

Disadvantages

  • Complex - The biggest con that I find across multiple opinions for TWS is that the learning curve of the trading platform is quite steep.

    They do offer a user guide which can help figuring out the various features. They also offer webinars explaining features of the platform which are recorded for viewing later.

    There is a internet based version called "WebTrader" - this one is very intuitive and easy to use however lacks many of the advanced features TWS offers.

  • Charting - the view, manipulation of charts is not as great as with other platforms. Off the chart trading is weak. It is much easier and intuitive for example clicking and dragging entry points/targets/stops. 

  • RAM hogging software - slow to start. If too many charts it can slow down computer.

  • Scalper? IB filters data in 250 ms packets, this is still good enough for naked eye. During busier periods when activity is high (i.e. non-farm payroll release) the data feed can be more reliable than a pure data feed however you do not have tick by tick data - for backtesting, automated trading you would likely want this. 

Final Thoughts on TWS Trader Workstation

TWS Trader Workstation is definitely a platform for those who are serious about trading. There are tons of features and the capabilities of this trading software are huge. Obviously with that comes the fact that learning it will dedicate some time. Interactive Brokers has various resources to help you learn the platform as at the end of the day they want you to enjoy what it has to offer! Take a tour of the platform and see if you like it.

Note that some people just use IB as the broker and hook up other platforms to the IB data feed as they don't feel like dedicating the time to learn the platform. 

Even if you are not expecting to use TWS because you do not trade actively nor have complicated strategies, I would strongly consider using IB as a broker since they offer such cheap commissions - believe me commissions sneak up and take out huge chunks of your account. If you do more than 2 trades a month, opening a brokerage account with them would be worthwhile. 


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