Question re: Invest feature

I have two questions related to the INVEST feature here on P123 …

  1. Is Interactive Brokers the only broker currently authorized to process orders submitted from this website, or are there others?

  2. For those using this feature, does it work smoothly for the most part, ie fairly seamless trades, etc?

Thanks.

Interactive Brokers and Tradier are the only two currently supported per the Linked Account help.

I use it for Interactive Brokers and it works very seamlessly, especially for margin accounts. For non-margin accounts, rebalances are a little trickier if you don’t carry a sufficient cash balance. Usually one or more buy orders are rejected when I send a wave rebalance orders in a non-margin account due to insufficient funds, so I manually reschedule them (via the p123 trade page) till later in the day. It would be handy if p123 had a way to schedule orders based on cash balances rather than by time, e.g. submit this buy orders for 1000 shares @ 25.00 when the cash balance is >= 25k USD, so that it didn’t require as much manual tending.

That said, the biggest limitations for me are:

  1. Only US markets are currently supported
  2. Only a handful of IBKR algos are supported (VWAP, POV, and pegged)
  3. No integration with IBKR short sale borrow rates and shares available

The latter is really more of a data issue and not a trading issue, but the combination of the three may cause me to explore alternative methods for order submission.

I forgot to mention that I only need to login to IBKR once a month to download a monthly report do cash reconciliation between my linked IBKR accounts and P123. Trades and commissions are linked seamlessly, but interest credit/debits, SYEP credits, borrow fees, and special one-off fees like foreign transaction taxes or dividend taxes for ADRs do not automatically show up in P123. I manually enter them as journal transactions which takes about 10 minutes total once a month for my two accounts.

Once in a blue moon, a dividend does not match exactly between P123 and IBKR, maybe off by a penny per share or so, so occasionally I manually edit an auto-generated dividend transaction in my P123 ledger, but this is very rare.

Overall, I’m very satisfied with the process.

Main problem with our IB linked accounts is that they don’t come with real time data which is a real problem if you want to enter limit orders quickly (w/o typing the limit price for example). But since IB connectivity is only for IBKR PRO, those come with algos, which alleviates the problem for.

We have restarted dev work with linked accounts. At the moment we’re working on enabling IBKR for Canada and Europe and revisiting the algo orders.

Then we have to decide what’s next. Do we work on supporting other brokers, or finally automate the entire process of following a strategy, as in: set it and forget it, with some fail-safes, and order mgmt? We’re a bit divided on this; I’m for automation. I hate placing orders, it makes me do subjective things, and it’s just mechanical and boring. Some feel it’s too risky (lawsuits). But automation is just too appealing…

Thanks for a peek behind the curtain, Marco. Personally, the lack of real-time quotes for limit orders doesn’t matter for me since I exclusively use algos.

I would agree that Canada/Europe and expanded algos support (3rd party algos like Fox River too, please!) should be A1 and A2 priorities.

I was originally in the same mindset as you that full automation would be great, but I’ve backed away from that position given that weekly trading isn’t that high of a frequency, so a once a week click of a button to approve a wave of orders is not too onerous. And more importantly, it could provide a safeguard if there were a p123 bug, for example, that instructed a model to liquidate all of its positions.

That being said, I think there’s are several things that could be done to alleviate some pain points:

  1. With no short sale fee integration, I find myself manually checking these rates before approving short trades. There are some stocks that are periodically above 200% annualized borrow fees, and I’m omitting these. If we had integration of historical borrow fees, I could automate this to find suitable thresholds for new and existing positions. I’m aware of couple vendors that provide this history if you want to talk offline at some point.

  2. Without news sentiment integration, I’m also manually reviewing news stories before short sale trades, especially for BIOPHARMA stocks. I’m going to send a recent example of this in the Estimize thread later today.

  3. IBKR does not support GTC orders for certain algo orders like POV, so at the end of each trading day, I need to manually reschedule expired, partially filled orders until the next morning. It would be nice to emulate GTC behavior in p123 when it doesn’t exist at the broker level.

  4. As mentioned above, I have to manually watch/schedule buy orders for my non-margin account. Would be very helpful to have p123 automatically intelligently schedule them as liquidity becomes available.

  5. I’m currently manually assigning order types to my orders. It would be handy to be able to assign a default order type at the account level, or even better, set a weighted configuration at the account level (e.g. randomized 50% of orders should be 10% POV, 50% of orders should be 20% POV) to facilitate proper transaction cost analysis between different algo types or parameters.

Hope this feedback helps!

I think it would be good allocation of resources to look into how non-margin accounts can be better managed though P123’s INVEST options. For one, tax-sheltered non-margin accounts (e.g., IRAs) are the most tax efficient vehicle for short-term trades (holding period less than 1-years) that incur short-term capital gains. IRAs are the IDEAL account for P123 trading, and these accounts are cash (non-margin) accounts.

One solution could be to move to a Buy order queue, whereby by the Buy orders are sequentially sent based on the condition that there are available funds to in the account to cover the next order. I have worked with developers to develop similar trading platforms for TradeStation.

This is the same systematic approach that most use for manual rebalancing. Send all the Sell order at once, and then send the Buy orders as funds become available from the execution of the Sell orders.

You can schedule your buy and sell orders through our Manage tools. That’s what I do with IB accounts: I place my orders to sell in the morning and buy in the afternoon.

Yuval, I already schedule my buy orders for a later time in the IRA account, but the question is when? Some sell orders take all day, or multiple days, so I often have one or more buy orders that are rejected even later in the afternoon, so I have to manually guess another time to reschedule. Or the opposite occurs: I have a sell order that fills quickly and then my afternoon buy order was unnecessarily waiting a few hours unless I manually check it to reschedule it immediately.

Short answer: the time-scheduling is useful, but far from optimal in terms of cost and attention required.

Scheduling orders in advance on Portfolio123 is still far better than what you can do with most brokers. With Fidelity, I can’t schedule any orders in advance. If I want to sell in the morning and buy in the afternoon, I have to log on in the afternoon. Even worse, I can’t place VWAP orders until after market opens. Perhaps IB offers a way to schedule orders without going through P123, but if so I haven’t been able to find it. And I haven’t seen any other brokers that allow you to schedule orders. This is a major drag if you have a day job that doesn’t allow you to place orders while working, or if you’re traveling abroad. I would pay handsomely for a service that would allow me to place orders that would execute on Fidelity at, say, 9:30, 11:00, 12:30, 2:00, and 3:30 EST. But with Portfolio123 and IB I can do exactly that.

Thanks for the feedback.

Seamlessly handling non margin accounts is one of the next things for our broker integration. Something simple like waiting for liquidity before sending buy orders. Without it fully automated rebalancing is impossible.

I though unfilled orders are resubmitted the next day. Need to check on that. But there should be an option to choose.

The other suggestions are great too. We’ll restart dev work soon on this. Thanks

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Hi Marco, thanks for all the great work on P123!

I've spent a fair bit of time designing a number of strategies I would like to start automatically trading.

I have a fairly demanding day job and likely won't be in a position to manually rebalance and send orders, even if weekly.

Is there any update on automated rebalancing/trading of strategies as yet?

Thanks!
Jens