Welcome to Traders’ Academy online courses. This is lesson four of Bonds and Fixed Income Trading for
TWS. This lesson will address order entry for bonds and help you understand some of the differences
between regular order entry for stocks and any other items you may need to be aware of.
My Mosaic panels are color-linked using these green chains. If I click on one of the bonds on my Monitor
page, as usual the chart will populate. Seasoned bond traders will be aware that many bonds trade
irregularly, which is why bar or candle charts over a longer period might not look so good.
Use the Chart Parameters icon (or find it under the Edit dropdown menu) to edit the display. You may
want to consider setting the view to line from the chart time period drop down menu for whatever
period you wish to see. You should also see the available settings from the What to Show menu. Here
you can select from various yield settings. I will choose Bid/Ask yield and click Apply and OK at the
bottom of the menu.
The Order Entry panel has also populated with the bond I clicked on – again, because my panels are
chain linked. Let’s discuss the items on display when the bond is loaded in the Order Entry panel. You
will see in the Ticker input field the description of the bond, including bond Type, Coupon, Maturity date
If you want to locate another recently used ticker, click on the dropdown arrow to the right of the input
field and click on it if you wish. Below, you can see Buy/Sell buttons. You must select one of these
before an order can be submitted. I will click the Buy button. This makes the background change from
black to blue. You can also see that if I click on the Sell button, the background changes from black to
The default quote display shows the best bid price to the left and the best ask price to the right. The
price display also shows the yield associated with the bid and ask prices. If I hover the mouse over the
bid price and yield display, a pop-up description will display populated with information about the NBBO
and bid/ask definitions. At the top of the box, you will see a yield calculation using the current bid price
and the dollar amount of the current bid.
You can add columns for Bid Size and Ask Size to your monitor as you learned in an earlier lesson. You
will also see that this display is using the Net Price and so includes associated exchange fees. Remember
that you can use raw or net pricing in your display and this can be configured from Global Configuration
from the Display and ticker Row menus.
Hovering the mouse above the ask display quote will show you a similar image, except this time the
yield is derived using the current asking price and dollar size of the best offered amount.
Immediately below the quote display is a price slider. Here, users may slide the mouse and the quote
display will show a single price point in the event that you wish to choose a price relative to the bid or
the ask – either above or below. If I hover the cursor above the word Mid on the price slider, the display
will automatically calculate and display that price instead.
In the upper right corner of the Order Entry panel you will see summary data displaying the last traded
price of the bond and its current yield, based upon the mid-point of the live quote.
With the Order panel set to Buy let’s look at the Quantity field. Typically, bonds can be bought and sold
in minimum increments of $1,000 dollars. So when you load any bond, you should see the Quantity field
display $1,000. However, some bonds are issued with statutory minimums greater than $1,000. If that is
the case, the Quantity field will reflect the higher minimum and if you click that input field, you will not
be able to choose a smaller amount than the hard-coded value.
You can see this using XS1063837741 for minimum of eur100k.
There may be other occasions when you may not be able to trade your chosen amount, due to market
minimums. It may help your understanding if I display the Level II Market Depth window from the blue
New Window button listed under Quotes. I’ll use the pushpin to keep this on top as I explain. For
example, to the left are bids at each price level and the quantity column specifies how much the bid is
good for. To the right are best offers, which again list the volume available for sale. On either side you
can see the value for the minimum trade size.
This should explain to you why, if you are trying to BUY $1,000 worth of a specific bond with a market
order, your order might not fill because the only seller at that time and price is offering a minimum bond
amount greater than what you want to buy.
Selling short – You can buy or sell using TWS using the minimums we just discussed. However, should
you wish to SELL short a bond, due to market practice and regulations the minimum order size is
$100,000 and the minimum increment is $25,000.
Most orders for bonds tend to be done as market orders. However, you are free to set limit prices, and if
you are displaying net pricing in the quote display, you can see the spread of the yield for the bond you
Choose the amount you wish to trade from the Quantity field. Use the Order Type input field to select
Limit or Market. If you are using a Limit order, use either the price slider above or the Price input field to
select your price. Note that the display highlights Ask, Midpoint and Bid orders and all prices in between.
Click to select or you may type in this field too.
Select Day or GTC from the Time in Force input field to the right. You are now ready to transmit your
order. You may create an Order preview ticket by also clicking the Submit button to the right. From here
you can verify the details of the trade as well as the estimated commission charged by Interactive
Brokers. The commission may be displayed as a range because it could execute on one of several
electronic exchange venues. You can also see the estimated impact on your available margin should the
When you are comfortable with the order details use the Transmit button to enter the trade. Live trades
resting on an exchange are displayed in the Activity panel below on the Orders tab. Under the Quantity
column on this tab you can see the current value executed as a proportion of the entire trade. The Fill
Price will calculate and display should the order fill. The grey Action Button can be clicked if you wish to
request cancellation of your order.
Make Changes to your Order – If you later decide to make changes to the price or other details of your
order, you can do so from this panel. Click on the order row and this will turn the background brown. In
this example, I will click on the price field and change the limit price. The Action Button has turned from
Grey to Yellow. When you are ready with your changes, click the Update button to reinstate the
remaining portion of your order with updated details.
This concludes lesson four in this online trading course for Bond and Fixed Income Trading for TWS. You
should now be capable of entering bond orders and tailoring the price and quantity inputs to your
chosen values. You should have an understanding of market and statutory minimums that you may
encounter across different bond issues.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Supporting documentation for any claims and statistical information will be provided upon request.
Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.