Interactive Brokers 101: Key Takeaways

It’s been a long time in the making, but finally on October 20th we were able to offer our GJWHF$ community an introduction to the Interactive Brokers platform. We share some of the session key takeaways below:

Interactive Brokers is a brokerage account which lets you execute trades. It's low fee as opposed to a no fee.

A short summary on how markets work using a car analogy…if you have a car to sell you might be able to find someone that's looking to buy but it's a lot easier to just go to a used car dealership and have them buy right away.

The dealer is what we call a market maker, they're willing to buy and sell the product at any time. The person trying to buy or sell a car is the market user. Individuals buying and selling securities are market users looking for a price.

Bid price and offer price are the prices the market maker would buy and sell the stock. The difference between the two is called the spread.

An order is an interest to buy or sell a security. There are many types of orders, but the two main types are a limit order, which is to buy or sell at a specific price and a market order which will buy or sell at whatever price is available in the market.

Opening an account can be done in a few steps; go to the website, create a username and password, confirm your email, complete an application (information including your address, tax details and so on), a Know Your Customer (KYC) document and a risk questionnaire - your risk profile limits what you can and cannot trade.

When you first log in, you'll have two tabs, one is your portfolio which will show you your open positions, net profit/losses and your liquidity (how much money you can deploy in trading).

You can create a watchlist by adding the symbol of the security you would like to track - if you don't know the symbol you can look it up.

Buying and selling - You will see on screen the bid and the offer, the 52 week high and some news headlines and other information relating to the security. You’ll need to add in your quantity and specify the order type. If you trade FX it’s the same idea.

When you have a currency pair, you're buying the first currency and selling the second one, and the sell means that you're selling the first currency and buying second.

Mobile vs. desktop - You can set up different views but ideally, you want them to look the same. The mobile view can show you the same data as desktop, but the mobile app can look friendlier vs. the desktop view which is like the view professional investors use. The functionality is the same.

Many reports are available for users to run, for example, your daily, monthly and annual activity.

The simplest way to fund and make withdrawals from your account is via bank wire - the names of the accounts need to match exactly.

Once you set up your main account, you can set up additional accounts however each account needs to be funded separately and the margin has to be managed separately.

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