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daveyjones

IB Paper Trading

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I've developed an algorithm that I've been testing with IB's demo account. I've done absolutely everything I can with the demo account, but I've come to realize that the simulated data is not very realistic at all. I need to start testing my algorithm with real data. However, the only way to get a paper trading account is to open a real account. Since I don't have $10,000 to open a real account (and I won't for a while), I seem to be a bit stuck. My plan is to have the algorithm tested and ready to go by the time I have the $10,000 saved up to open an account.

 

In the meantime, does anyone know how I could get access to a paper trading account without opening a real account? I know they allow students to get accounts. Is there a legitimate online trading school that doesn't cost too much that would be able to register an account for me?

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Just stocks for now. The problem is that the algorithm is completely automated and set up to work with IB. I haven't found a broker that offers an API that competes with IB. (If there are legitimate competitors, please enlighten me!)

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what's wrong with IB's demo data?

 

At first I thought it was real historical data, but that's not the case. The volatility of some of the securities is through the roof - sometimes a standard deviation of several dollars in a single day. When you review the actual history of the same security, you will find no such fluctuation.

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you can always open a real account with IB,

then you get to access the papertrading account.

 

The papertrading account streams real time data,

the same data as in your real trading account.

 

I believe you only need $3,500 to open an account,

plus a minimal data fee if your commission do not reach a minimum amount.

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you can always open a real account with IB,

then you get to access the papertrading account.

 

The papertrading account streams real time data,

the same data as in your real trading account.

 

I believe you only need $3,500 to open an account,

plus a minimal data fee if your commission do not reach a minimum amount.

Unless you're under 21 or live in India or it's an IRA or advisor/broker account, the minimum deposit is $10K.

 

Best wishes,

TB

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Just stocks for now. The problem is that the algorithm is completely automated and set up to work with IB. I haven't found a broker that offers an API that competes with IB. (If there are legitimate competitors, please enlighten me!)

 

There are ways of doing things using 3rd party software. A lot of charting apps have auto trading through (fairly) simple scripting. Multicharts, Ninja, Amibroker spring to mind. The biggest problem is that you want to trade stocks. There is more sophistication and choice on the futures side.

 

If you plan to do unattended operation you might want to use a broker solution (strategy runner for example). In that case the broker runs your script on their servers. Never used it myself but at least you don't have all the infrastructure worries. Again dunno if anyone offers stratergy runner and stocks, you'd need to talk to some brokers.

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... with the demo account, but I've come to realize that the simulated data is not very realistic at all.

 

Right.

 

 

The demo data is real, it is a replay of old data.

However they don't tell you which date/time they are playing.

 

Wrong.

 

 

Demo data is basically a replay of old data with an offset of 1-2 weeks.

But then it is superposed with random moves.

Therefore you will never see the true historical data.

The random process amplifies trends (as daveyjones stated also) by extending the ranges.

 

This is probably done with some intent from IB's side:

The demo account is thought to motivate people to get into trading.

That is certainly easier if people see positive results with their (demo) trading which is more probable if there are stronger trend moves than in reality.

 

Demo account is only good for checking if a program connects properly and if the handshake with IB API works properly. Trading results may not be trusted at all.

 

 

To open an account with IB you only have to put up the 10k in the first place. Then you can withdraw it after a short time. Therefore you might borrow the money from friends or a bank.

 

Btw did you already look into the Yahoo group "TWSAPI · Interactive Brokers TWS API Discussion"?

They have also in-depth discusssion of demo data properties and much more that might be interesting to you.

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Actually IB's public (edemo) data isn't "real;" its sole purpose is to demonstrate tws and it is deliberately munted.

 

The internal demo data (for users) is real and fine for testing.

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The demo data is real,

it is a replay of old data.

However they don't tell you which date/time they are playing.

 

 

Wrong.

 

Demo data is basically a replay of old data with an offset of 1-2 weeks.

....

 

if it makes you happier...

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I'm also looking at automated trading with IB, but having just visited their site is it true that you need $25k, not $10k, to start actual trading because of Pattern Day Trading rules?

 

http://www.interactivebrokers.com/en/p.php?f=margin&p=dt&ib_entity=llc

 

you can trade with less than $25k,

you just cannot make 4 or more Day Trades within a 5 business day period.

 

Day Trade is interpreted as any trade pair wherein a position in a security (stock, single-stock future (SSF), bond or stock option) is increased ("opened") and thereafter decreased ("closed") within the same trading session.

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