{"id":1209,"date":"2020-02-07T18:00:02","date_gmt":"2020-02-07T18:00:02","guid":{"rendered":"http:\/\/algotrading101.com\/learn\/?p=1209"},"modified":"2020-06-24T17:12:37","modified_gmt":"2020-06-24T17:12:37","slug":"interactive-brokers-paper-trading-demo","status":"publish","type":"post","link":"https:\/\/algotrading101.com\/learn\/interactive-brokers-paper-trading-demo\/","title":{"rendered":"How to Sign Up for an Interactive Brokers Paper Trading Account"},"content":{"rendered":"
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Interactive Brokers (IB) is a highly regarded broker in the retail trading industry. It is known for a broad range of markets and competitive commission rates. <\/p>\n\n\n\n

If you’re interested in signing up with them, it’s a good idea to start with a paper trading account.<\/p>\n\n\n\n

What is a Paper Trading Account (Demo Account)?<\/h2>\n\n\n\n

A paper trading account attempts to simulate your trading experience without the involvement of real money. For the most part, the functionality is the same as a live trading account but we will highlight some of the differences between the two.<\/p>\n\n\n\n

Each broker varies in the way they do things so whether you’re a veteran trader or someone just starting, it’s a good idea to test the waters with a paper account. Paper trading offers a way to get familiar with the platform and test out strategies in a live environment.<\/p>\n\n\n\n

What are the differences between a paper and a live trading account?<\/h2>\n\n\n\n

The main difference is that you don’t have real money on the line with a paper account. Starting with a new broker, it’s not uncommon to accidentally submit the wrong order or use an incorrect position size.<\/p>\n\n\n\n

Traders with an automated system can ensure that their orders are going through and work through any bugs in their code without fear that orders will get executed with real money.<\/p>\n\n\n\n

But there are some caveats. The big one is access to data. IB offers a free data feed to some markets but there are several that require a subscription. In a paper account, or otherwise known as a demo account, IB’s market data subscription manager is disabled.<\/p>\n\n\n\n

There are three ways to get around this: <\/p>\n\n\n\n

  1. If you already have a live funded account with Interactive Brokers, the demo accounts can be tied to it so that you can access subscribed data on both accounts.<\/li>
  2. IB supplies delayed data for most of the markets offered. <\/li>
  3. You can use a third-party data feed.<\/li><\/ol>\n\n\n\n

    The Market Data Pricing Overview<\/a> page on IB’s website offers more detail about the various data feeds available if you require more detail. Forex, metals, and commodities live data is free for the spot markets and doesn’t require a subscription. Some stock data is also available depending on the exchange.<\/p>\n\n\n\n

    A paper account is a simulated environment<\/h3>\n\n\n\n

    Lastly, it’s important to note that a demo account offers a simulated environment. While it’s fairly precise, there are scenarios where the behavior will be different from a live account.<\/p>\n\n\n\n

    For example, if you trade an asset with a wide spread between the bid and ask, and you place your order in the middle of the two, execution results may differ. IB’s algorithms do a good job determining whether the order is likely to get filled or not, but without actually sending it to an exchange, there is no way of knowing for sure.<\/p>\n\n\n\n

    Getting Started with Paper Trading<\/h2>\n\n\n\n

    Interactive Brokers has simplified the process of setting up a paper trading account. Simply download their platform and supply an email address at the login screen to get started.<\/p>\n\n\n\n

    If you already have a live account, Interactive Brokers will have automatically created a paper account for you. Simply click on paper trading at the login screen and use the same credentials that you would for your live account.<\/p>\n\n\n\n

    p.s. If you are new to algorithmic trading, check out this guide: What is Algorithmic Trading and How Do I Learn It?<\/a><\/p>\n\n\n\n

    \u00bb If you are looking for trading ideas that might work (to some extent at least), check out this guide: 4 Quantitative Trading Strategies that Work Today<\/a><\/p>\n\n\n\n

    Installing TWS – The IB client<\/h2>\n\n\n\n

    IB’s Trader Workstation (TWS) is the trading platform that you will be using.<\/p>\n\n\n\n

    To install TWS, head over to the Interactive Brokers home page<\/a>. From there, click on the log in dropdown box. Under the downloads section, you will have three options: TWS Latest<\/strong>, TWS<\/strong>, and TWS Beta<\/strong>. Click on TWS Latest to download the installer.<\/p>\n\n\n\n

    \"TWS
    Interactive Brokers TWS download page<\/figcaption><\/figure>\n\n\n\n

    The website will automatically determine which operating system you are using and direct you to the download link for that os.<\/p>\n\n\n\n

    Note<\/em>: Java is a dependency of TWS and you will need to have Java virtual machine (JVM) installed. If you don’t have it on your system, the installer will attempt to install it for you.<\/p>\n\n\n\n

    Installing TWS on Windows<\/h3>\n\n\n\n

    Navigate over to the directory where you’ve saved the TWS installation file and double click to run it. Alternatively, click on the downloaded file within your browser.<\/p>\n\n\n\n

    You might see a prompt indicating that the app isn’t a Microsoft-verified app. TWS isn’t currently in the Microsoft app store so click install anyway.<\/p>\n\n\n\n

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    This should take you through the install wizard. Follow the wizard and it will install TWS and place a shortcut on your desktop.<\/p>\n\n\n\n

    Installing TWS on a Mac<\/h3>\n\n\n\n

    Navigate over to the directory where you’ve saved the TWS installation file and double click to run it. Alternatively, click on the downloaded file within your browser.<\/p>\n\n\n\n

    You might see a prompt indicating that the app was downloaded from the internet and asking if you want to open it. Click on Open to continue.<\/p>\n\n\n\n

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    This should take you through the install wizard. Follow the wizard and it will install TWS and place a shortcut on your desktop.<\/p>\n\n\n\n

    Installing TWS on Linux<\/h3>\n\n\n\n