Interactive Brokers (IB) offers an excellent trading platform for retail and professional traders.
As traders and funds grow they often find the need to expand beyond the base capabilities of the Trader Work Station (TWS) software. IB saw this need and implemented Application Programming Interfaces (APIs) to allow these growing needs. For sophisticated traders, that require a custom trading solution, IB offers several options.
In order to build a custom trading system or a trading algorithm, two things are required: Market Data and Order Routing.
There are 3 API options to receive Interactive Brokers Market Data/ Chart Data
- IB API – IB API requires the Trader Workstation (TWS) platform to be running on the same machine as the trading algorithm. This is a good option for an individual trader who is not very latency sensitive, but not a good option for server-based algorithmic trading applications.
- IB Gateway – IB Gateway has a minimal interface and offers a lower latency / faster speed than IB API. IB Gateway is a good option for server-based algorithmic trading applications.
- WT Web API – WT Web API is a newer offering in 2017-2018. WT Web API allows a charts to be imported into a custom trading application.
IB allows traders to build their own trading applications using two APIs:
- IB API – IB API requires the IB Trader Workstation (TWS) to be running on the same machine as the trading algorithm. All order flow is routed from the custom trading algorithm to IB API to TWS, which adds some latency to the algorithmic trading applications.
- FIX CTCI API – FIX CTCI API is a machine to machine communication language based on the trading industry standard FIX Protocol. Majority of professional trading firms, asset managers, hedge funds will choose to use FIX CTCI API as it offers several advantages.
- Less Computing Resources. Trader Workstation (TWS) does not need to be running in order to use the API, which allows the computer to free up computing power for the trading algorithm
- Higher Order Throughput. FIX CTCI allows more order flow than IB API. Whether using High-Frequency Trading or not, higher throughput and lower latency allow trading algorithms to receive market data faster and allow orders to travel from the algorithm machine to the exchange faster.
Since 2008 Edge Financial has been meeting the needs of growing buy-side firms with bespoke tools that meet mission-critical needs.
- Proprietary trading algorithms
- Position management
- Trade and position analysis
- Customized spread trading
Buy-side clients typically don’t have institutional budgets. They need to avoid costly delays and bugs from expensive software engineers who rarely understand the business.
Edge Financial Technologies is aware of a firm that had a quickly developed application built by a competent engineer. The engineer, however, believed that GTC meant “good till close.” This simple misunderstanding resulted in a significant trading error when weeks later an order was filled without the trader knowing it was still in the market.
The biggest bugs in any software are not part of the source code. They are in the mind of the programmer. Failure to understand the business transaction almost always is the most expensive bug.
As a professional trader you know that IB has the platform that provides you with:
- Market Data
- Exchange Order Processing Connectivity
- Account Information
There are multiple IB APIs. Choosing the correct API, setting up your trading, reconciliation, or risk management system feeding and being fed by the API is something that will take valuable time.
Edge Financial Technologies measures time and technology differently. We measure time to functionality. We measure the success of your FINTECH applications.
What is the time to functionality? The time to functionality is the time when the user of the technology actually receives acceptable functionality from the program. Programmers are plentiful. They exist on the internet and are available to be hired from many sources.
Programmers who know trading, and market data, and investment algorithms are a much rarer breed. This is where Edge Financial Technologies excels. Our team understands the technology and the business. We bring that experience along with fully functioning components to any bespoke application development project to allow you to achieve faster time to market for your FINTECH project.
Our experience with the Interactive Broker APIs includes:
- Custom algorithms
- Custom spreading logic and screens
- Custom account management
- Market data integration
- Trade reconciliation
- Order processing
- Historical Analysis
- Forward testing
- FIX Protocol
- C++, C#, and Java integrations, applications, and analytical programs
- Excel RTD Programming and integrations
- Execution algorithms including custom TWAP, VWAP, and priority of filling orders or getting the best price.
Experience in both IB technology and in the trading, clearing, and risk management results in new FINTECH initiatives with lower time to functionality and a very high probability of success.
For more information see our case study on a Long-Short Fund Trading Algorithm Solution.