Set Default Allocations

Instructions

A default allocation is used automatically when you create an order. You can modify the allocation on a per order basis, and change the default allocations and presets at any time.

To Set a Default Allocation

  1. From the menu select Advisor Setup.

  2. From the Advisor Setup top menu select Presets .

    The advisor default allocations window in TWS.

Define Settings Described Below:

No default accounts - you will have to select an account for allocation for each order.

Use currently subscribed account - check this button to automatically allocate trades to the account or group selected in the Account dropdown on a trading screen, as shown above.

Use specified default - check this button to set a specified default allocation:

Automatic Allocation - choose a user-defined Account Group and method to use for default allocation.

  • AvailableEquity - Requires you to specify an order size. This method distributes shares based on the amount of available equity in each account. The system calculates ratios based on the Available Equity in each account and allocates shares based on these ratios.

    • Example: You transmit an order for 700 shares of stock XYZ. The account group includes three accounts, A, B and C with available equity in the amounts of $25,000, $50,000 and $100,000 respectively. The system calculates a ratio of 1:2:4 and allocates 100 shares to Client A, 200 shares to Client B, and 400 shares to Client C.

  • NetLiq - Requires you to specify an order size. This method distributes shares based on the net liquidation value of each account. The system calculates ratios based on the Net Liquidation value in each account and allocates shares based on these ratios.

    • Example: You transmit an order for 700 shares of stock XYZ. The account group includes three accounts, A, B and C with Net Liquidation values of $25,000, $50,000 and $100,000 respectively. The system calculates a ratio of 1:2:4 and allocates 100 shares to Client A, 200 shares to Client B, and 400 shares to Client C.

  • EqualQuantity - Requires you to specify an order size. This method distributes the shares to bring all accounts in the group to equal quantities by the end of the trade

    • For example - say you have 2 accounts you are allocating an order to, account A has 100 shares and Account B has 50 shares. if you place an order for 150 shares using equal as the allocation method, instead of allocating 75 shares to each account it will allocate 50 shares to account A and 100 shares to account B, bringing both accounts up to 150 shares post trade.

  • User-Specified - This selection allows you to create group allocation methods that require user-defined values such as number of units, per-account ratios, per account percentages and per-account monetary amounts.

Manual Allocation - Choose an Allocation Profile to use as the default

Single Account Allocation - choose an individual account to use as the default allocation. NOTE: To allow the last selected individual account to be used for the default allocation going forward, select the Use currently subscribed account radio button at the top of the page.

Preserve default - select to always use the default set up in the Default Allocation window regardless of changes you make on a per-order basis. If this is checked, you will need to use this window to modify the default allocation.

Use last submitted as a default - select if you want the default allocation to change to the allocation you set on a per-order basis. If this is checked, the default allocation automatically changes when you change the allocation on an order.

Round allocation quantity to exchange board lot - A board lot is a number of shares prescribed by a stock exchange as a trading unit. Various non-US exchanges may use variable board lots that are dependent on the price of the stock.

If one or more accounts fails to meet the margin requirements when an order is submitted - For each order, all accounts designated for order allocation are vetted before the order is submitted, to ensure that each account has the capacity to support the designated allocation. In cases where one or some account(s) cannot hold the allocation as specified, the advisor can elect to:

  • Reject the entire order - The entire order is rejected.

  • Reduce the size of the order - The order size is reduced by the quantity that cannot be held, and this quantity is deactivated.

Note: Once the order has been submitted and is working, the quantity of the working order may still change. For example, if an unrelated fill results in one or more of the accounts no longer being able to support the allocation, the order size will be reduced by that quantity. In an opposite scenario, if an account whose allocation was deactivated can now support the allocation, a quantity that was deactivated during the initial order submission may be reactivated and submitted.

When closing positions - Applies only to orders that use the Available Equity or NetLiq automatic allocation methods described above.

  • Make positions be proportional based on method - Based on the selected method (Available Equity or NetLiq) shares are allocated first to the account where the position would be closed prior to opening new positions. New positions will be proportional based on the specified method.

  • Distribute shares based on method selected - Shares are allocated strictly based on the selected allocation method (Available Equity or NetLiq), but will first be allocated to an account where a position will be closed before any new positions are opened.

  • Distribute shares based on method selected - Do not prioritize accounts that are closing position - Shares are allocated strictly based on the selected allocation method (Available Equity or NetLiq), but a new position may be opened before an existing position is closed as no priority is given to accounts that would close positions.

 

Additional Resources

Learn About Allocating Shares in Trader Workstation at IBKR Campus

Visit the Trader Workstation Website