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Interactive Brokers - Paper trading provides misleading results

Discussion in 'Brokers' started by NickF, Jul 8, 2016.

  1. NickF

    NickF

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    Hi All,
    I created an IB account and for the last six weeks I've been doing paper trading. My account is steadily growing and apparently I am so successful I could quit my job. I usually make up to ten trades per day, each trade is about $4000 - $5000. In one month I made about $10000, if I am to believe IB reports.

    Just yesterday I made nine trades, in total over $2800 in unrealized profit. I usually place some trades at a good price and some of them take place. What is concerning to me is that some stocks never reach my price and yet the transaction takes place. I know there are some transactions happening after the market closes, but if the day price ranges between $4.00 to $5.00, why would anybody be willing to sell at $3.00.

    For example, it appears I made $1176 on ADMP alone. Apparently I bought it at $2.681 and it closed the day at $3.10. But the low of the day was $3.01. I have no idea if during the day or after hours the price reached $2.681.

    The trade statement show that I made two purchases for ADMP, on 07/07/2016. I purchased at $2.55 at 20:00:18 and also at $2.91 at 20:00:51. Would I have been able to make the purchase at these prices in real life?

    I got in contact with IB support and I told them I am concerned about the statements of my paper trading account. They insured me the statements are very accurate. However, after I started asking questions about the value shown in Mkt Val, they got tired of me and they told me this is just a paper account and the Mkt Val shows combined results between my account and MGKS Asset Management account. Which I don't believe, because Mkt Val for MGKS is separately indicated ($621284). At the time I contacted them, the Mkt Val just jumped from about $10000 to $15000, while the market was closed.

    So, perhaps the statements are accurate to cents and inaccurate to thousands?

    The contact from IB also told me that once I have my real account, everything will be accurate. I explained to him that based on my performance on the paper trading account I will decide whether I will fund my real account or not. And if I can not trust my paper trading performance, I will not put any real money in the market. But that was not his problem...

    So, did anybody else discovered that the exercise of paper trading with IB is useless and misleading? Or maybe I am wrong and in this case, I am so right!

    Nick

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  2. skyQuake

    skyQuake

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    Looks like you're right, ADMP didnt get anywhere close to that price in regular or pre/post trading.
     
  3. NickF

    NickF

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    Just a few hours later from taking the first screenshots, the Market Valuation now jumped to $20260 (and the trading day didn't even start yet), Perhaps this is all caused by the botched addition of the MGKS account. They explained to me that is a marketing decision and that it can not be removed from my demo account. Apparently a lot of people are confused or unhappy, because they get a lot of extra support questions about it.

    While IB are regarded as one of the best brokers out there and especially considering they offer the possibility of Aussies to trade the US and other international markets and their platform is so advanced, I must admit I had higher expectations about their paper trading. Despite this, I will still open a real account with them because I like to be able to trade small and pay competitive fees, but I will definitely keep an eagle eye on the trades I will make and keep my own records.

    I think they have a few bugs to iron out from their software.

    Nick

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  4. CanOz

    CanOz Home runs feel good, but base hits pay bills!

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    I had big problems with the paper trading account trying to sim trade the HSI. In the end they said the same thing....its a paper trading account, we don't guarantee prices. I always found it good value for learning the platform though.:2twocents
     
  5. elbee

    elbee

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    I think you must be using the IB demo account rather than a true paper trading account. The demo account (per IB's website ) "mirrors the production version in both form and function, except that market data is simulated based on the previous week's ticks, and orders are not actually executed and cleared."

    The purpose of the demo account is to familiarize users with the operation of the software and to test user API programs. It is useless for testing trading strategies.

    The true paper trading facility is available to clients with an active account and accesses live data for which they have subscriptions.

    IB does confuse the issue by sometimes referring to the demo account as a "paper trading account".
     
  6. NickF

    NickF

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    Hi Elbee,

    Thank you for your feedback. Do you have a link that highlights the "previous week's ticks"?

    If that's the case, I would understand there is no point to test my picking skills using the demo account. However, I found this link: https://www.interactivebrokers.com/en/index.php?f=1286&ns=T&conf=am&amref=1 where it states that once a user creates a demo account, it offers the following:

    The ability to test strategies, products, exchanges, order types, with prices and account values determined by actual market conditions including commissions and fees – all without risk;
    10 - 15 minute delayed market data for all products except OTC spot FX and OTC spot Metals, which is free and non-delayed;

    I also figured out why the market valuation changes suddenly outside of trading hours, while the USD Cash does not - for whatever strange reason the software believes the price dropped under my buy price and it "purchases" the shares, therefore increasing market valuation. But the USD Cash remains unchanged until the market opens.
    Even if they use the previous week's ticks, I don't see a valid reason not to respect the same hours - i.e if the price reaches $2 at 1 pm last week, in simulation it should also reach $2 at same hour and not at 8pm, when the market is closed.

    I submitted the required documents to create a real account and I'll probably put AUD 10000 next week into my account and I'll see if the paper trading account becomes more rational.

    Nick
     
  7. NickF

    NickF

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    I found the link which you quoted from: https://www.interactivebrokers.com/en/index.php?f=7411

    The other link is https://www.interactivebrokers.com/en/index.php?f=1286&ns=T&conf=am&amref=1

    If I had read about TWS demo further down the page, I would have found the same info as you did. At least now it's clear why it's not working as expected. Thanks again for explanation.

    Nick
     
  8. Wysiwyg

    Wysiwyg Everyone wants money

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    It's USD 10k (or AUD 13,213.09) to open an account. :2twocents
     
  9. NickF

    NickF

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    Hi Wysiwyg,

    They approved my intention to transfer AUD 10000 into their account, so I will see if I will be able to trade after I transfer the money.

    Nick
     
  10. NickF

    NickF

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    You were right. I spoke to them and they confirmed it is minimum USD 10000. Thanks for letting me know.
    If I had put AUD 10000, the account would be activated, but I would not be allowed to trade.
     
  11. tech/a

    tech/a No Ordinary Duck

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    No you can trade.
    You can also withdraw after a month or so $7k or so and just keep using the paper trade account.
     
  12. NickF

    NickF

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    Thanks Tech/A, good to know I can widthraw $7k after a month.

    Can I do real trades if I only deposit AUD 10000? I spoke to support online earlier today and they told me that the USD 10000 is indeed required for trading. I asked them what happens if I only place AUD 10000 and they told me I can deposit it, but I will only be allowed to trade once I put all of it. She also calculated the equivalent of USD 10000 in AUD.

    Went to St George Bank with a print of the paper provided by IB and the lady at the office was very confused about the money transfer. She told me she is not sure if she has to send it to the account in Australia or overseas. Eventually she rang her contacts and asked them as well. She told me the information on paper is contradictory, because the bank account address was in USA.

    Got home, asked IB, they told everything on paper is correct and sufficient. I found out I can also do the transfer by myself in online banking. They asked me to provide the real account details when I deposit the money, so they know where it is from. St George online banking has a description field, which is marked "Optional. This field will appear on YOUR statement". That's not good enough for me. I need a field that appears on THEIR statement, where I can enter my account. Called St George, found out the field is for BOTH statements. The guy I spoke to could not understand why I advised them to change the description, because it means the same thing... I got a bit crazy, he assured me he will contact the IT department to make the change right away. My wife is laughing at me for believing him :)

    Anyway, I will deposit the money once they get my certified copies of documents. Maybe I'll put just $10000 and see if I can place real trades, if not, I'll add more.

    Nick
     
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