Target Orders

B

Bodrey

Hi All,

New to ET and new to IB (hoping to start paper trading soon). I'm trying to figure out how to specify a percentage for an attached Target Order's Profit Taker amount. I've watched all of the TWS videos and read all of the tutorial pages. None of them explain how to do this which I'm very surprised about because investors want to know how to take profits, right? I've since discovered that Target Orders can only be attached to trades that have already been submitted to market.

I used AMD as a test stock and placed a Put Credit Spread with a net premium of .44. So, when I attached a Target Order to the trade it enters a value of 0.05 (this must be the default(?)) in both the Order Entry and Activity windows...

https://1drv.ms/u/s!AvhUBZ0Ipt05jHdju74sR4tjgp1H?e=vgCWxN

So, am I to interpret that as 5% of the net credit I received when I sold the Put spread? If that's the case, then I guess changing the value to .50 would represent a 50% profit target?

Also, on that same topic if for example I wanted to always specify a 50% profit target amount by default using the Target Order Preset fields how would I set this up? Would I use a REL or LMT Order Type and would I enter 0.50 in the +/- field or 50?

https://1drv.ms/u/s!AvhUBZ0Ipt05jHZ4eB79bRN5COph?e=4aPcLi

TIA to all who read this and can help me solve this mystery once and for all. I hate to say it but IB has not been helpful in this regard at all and I'm growing frustrated.
 
TWS indeed offers a lot of default settings when placing orders and these default values can be changed. Go to TWS's upper left hand corner File -> Global Configuration ... Now you'll end up in a new menu window where you'll have to search for the category and specific setting which you want to modify (e.g. Trading Tools -> OptionTrader).

You want to set up a profit taker level based on a percentage gain on your trade. And want to set that up before entering into the trade. This is a "chicken & egg" problem. As the entry price is not yet known can the exit price not be determined.

IB is indeed not known for their responsive customer support.
 
HT,

I know how to find the presets for Options trading. I just don't know how to fill out the "Target Order (Profit Taker)" section as in the pic above. I'm looking for clarification on the settings for each of Auto-Attach Order Type and Limit Price. If I understand correctly if you choose Parent Order the "+/-" percentage or amount specified is relative to the premium collected (in the case of a Put Credit Spread). So, for example, if I took in a credit of $3 and specified a profit taker percentage of 50% then it should trigger a Buy order when the value of the option is at least $1.50(?)

Again, I don't know for a fact that this is how it works; hence the reason I'm posting this question. Very confusing and IB has been of no help. I just can't believe they don't provide instruction on this aspect of TWS in detail. I certainly don't want to have to babysit my trades in real time to know when to take profits. Surely, there has to be a better/easier way to specify profit targets for multi-leg trades. I mean, for those that aren't using this method how are they specifying their profit targets?

HT - how are you specifying your profit taker amounts or percentages? It's not that IB's Customer Support isn't responsive (their chat service is relatively quick but you can spend 20+ mins waiting to speak to someone). Regardless, no one I've communicated with at IB thus far seems to really understand the inner working of TWS. None of the chat reps could explain it and the support rep I spoke to didn't have a clue about where to even go to place a Target Order, much less how to use it or specify values.
 
Hi B,

I can tell you this about IB and documentation. It is incomplete and not intended to be complete. That is why you have paper trading. Setup your trade tactics in such a way that you want them to work, and they test them on paper. Tweak until you get a satisfactory set of trade order behaviors. Then test live with small amounts.

I have encountered about a dozen undocumented behaviors in advanced orders. The documentation is only for an overview. Paper trading is for testing actually behavior as best as it can be represented on an IB server, without going to the exchange.

Also know that there are differences in trade attributes depending on where the order is being sent or if it is held at IB servers or native on the exchange.

Hope that helps.
 
Hi BB,

Fair enough. I don't expect IB to document every single aspect of the program in minute detail. However, when it comes to setting up Profit Taker (Target) orders I don't think users should be left to figure out that aspect of the program by themselves. I mean, setting profit targets is a basic function of placing Options trades that I think most investors would want to understand how to use. Therefore, I think there should be detailed documentation on how to attach Target orders. At the least, their Support personnel should understand and be able to walk a user through the process.
 
Bodrey said:
HT - how are you specifying your profit taker amounts or percentages?
More...
I don't use TWS. I only use automated trading, using IB's API and the software I developed myself. This software includes code which determines whether a position should be opened, expanded, reduced, or closed. And places (and executes) the trades automatically.
 
It seems that it's not possible to specify profit-taking using percentages, anyway. I don't think IB's programmers did their due diligence by putting TWS through its paces before releasing it; a glaring oversight, to say the least. In other words, this functionality has never worked. I just can't believe I'm the first person to discover this bug. Surely there must be others out there that have wanted to use this feature(?). So much for beta testing. Crappy customer service AND a crappy platform.
 
Bodrey said:
It seems that it's not possible to specify profit-taking using percentages, anyway. I don't think IB's programmers did their due diligence by putting TWS through its paces before releasing it; a glaring oversight, to say the least. In other words, this functionality has never worked. I just can't believe I'm the first person to discover this bug. Surely there must be others out there that have wanted to use this feature(?). So much for beta testing. Crappy customer service AND a crappy platform.
More...

You say you are new to IB and new to ET - are you new to trading because you certainly sound like an amateur. Try the paper trader, place and order and set up a profit target. Or as it sounds like you want to scalp, look at the scale trader. Did you send in a ticket to client service? Try that instead of a chat as well. It works.
 
I am using my paper trade account and I'm sorry to say EW, but yes - I am new to Options trading (everyone has to start at the beginning some time). I fully understand how to place the order itself; that's not the issue. The issue is attaching a profit-taker order to the Parent. Specifying a profit target amount is fine for Naked Calls or Bull Debit Spreads. However, I want to place orders for Put Credit Spreads. So, I want to specify a profit-taker percentage (of the premium I collect).

Since I'm only using my paper account for now I suppose I could just place a PCS as is (sans profit-taking) and hope it expires worthless, but when it comes to trading using my live account (real capital) I'd like to specify a profit target percentage. If I knew with 100% certainty that every stock I traded would expire above my short strike then specifying a profit-taker amount/percentage would be a moot point altogether. However, I don't have a crystal ball and the market's not that predictable (I wish it was).
 
Using percentage gains to set an auto profit on options spreads isn't a great idea in my opinion.

If you want to place a spread order on a fill, consider using conditional orders with a real offset value (not a % as you are talking pennies).
 
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