How to use BasketTrader by Interactive Brokers for swing trading

In this article we’re going to be breaking down the BasketTrader tool from Interactive Brokers. We’ll cover exactly why it’s useful for traders, how we personally use it with our Trading Systems, and give you a step-by-step walkthrough on how to build your very own basket file.

This tutorial was originally published as a video walkthrough guide so it is highly recommended you follow along by watching the video below for the greatest detail.

 

What is the BasketTrader

BasketTrader is a tool within Interactive Broker’s TWS application that allows traders to submit a large number of orders all at the same time with one click of a button.

BasketTrader Interactive Brokers for Swing Traders - Image of basket creation

You can do this by building a spreadsheet of tickers using Microsoft Excel and saving that file for import or you can create your orders within TWS and submit them all together.

Order sizes, order types, and allocation methods can all be adjusted before transmission and you can even save the sheet to transmit at a later date or time.

 

Why would a trader use BasketTrader?

There are a lot of different use cases for BasketTrader.

  1. Portfolio managers that want to create their own custom indices around a basket of stocks which involves lots of rebalancing and order placement.
  2. Market makers and short-term traders that want to run arbitrage strategies across a large number of stocks.
  3. End-of-day swing traders like us can take advantage of cleaner order entries and a more hands off approach.

We’re huge fans of automating trading strategies, streamlining processes, and frankly, just reducing the likelihood of order entry errors. For all of the above reasons, we think a solution like Interactive Broker’s BasketTrader can be extremely beneficial for traders to take advantage of.

For the purposes of swing trading, it works best when you have multiple orders you need to submit and that you know ahead of time what levels or areas you want to transact at.

 

How to build your first basket of orders

You have two options when deciding to build for BasketTrader.

  1. Your can launch Interactive Broker’s TWS desktop application and manually prep your orders within a page. Once you have all of your orders stacked in rows, you can save the page as a basket file (.CSV) and then load the CSV into BasketTrader and transmit the orders when you’re ready.
  2. If you know what headers Interactive Brokers looks for you can build a basket file natively within Microsoft Excel and then save and load that file into IBKR’s BasketTrader tool.

How to use BasketTrader by Interactive Brokers for Swing Trading - Image of basket of orders in Microsoft Excel
We detail the exact steps and keystrokes in our video at the 10:25 timestamp.

Those headers are specific terms that BasketTrader is looking for and you can see a list of all available headers on this page.

 

How Trade Risk swing trades with BasketTrader

We run two automated trading systems here called Merlin and Lamorak and both of these strategies can produce a large number of orders at one time. Furthermore, both were built to run at the end of the day, in other words, once markets close, our strategies review the trading that went on that day, generate orders (signals) for the next market open, and then submit those orders to be live at 9:30AM EST the next morning.

This is a perfect use case for BasketTrader since we know ahead of time the levels we want to transact at and all of the next days orders are determined at the same time.

 

BasketTrader by Interactive Brokers for swing traders

We hope you enjoyed this brief tutorial. For more details be sure to watch the video version above. If you would like to learn more from Interactive Brokers, check out the following links:

Happy basket trading!

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Evan Medeiros

Evan is the founder of the Trade Risk. With 20+ years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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