Does Interactive Brokers offer good charting as of November 2023?
Interactive Brokers has great charting tools, making sophisticated technical analysis possible for both short-term traders and long-term investors.
I've thoroughly tested Interactive Brokers services with our analyst team by opening a real-money account and these are my most important findings:
- Interactive Brokers offers great charting tools
- Long-term investors can use charts to identify price trends and potential entry points
- Charts are most often used by forex and other short-term traders
Data updated on November 15, 2023
How can I use charts at Interactive Brokers?
The charting features are almost endless at Interactive Brokers. There are 120 technical indicators.
What are charts for?
Price charts are usually the first thing you see when you log in to your trading platform. Charts can look intimidating to novice investors but can be useful even for those who don't primarily rely on technical analysis for their investment decisions.
What is technical analysis?
There are two major approaches to analyzing the performance of a stock. Fundamental analysis looks at the financial health and business outlook of the company behind the stock (such as its recent profits or product launch plans) to figure out where the stock price may be moving next. Technical analysis, on the other hand, focuses on analyzing past stock price patterns to predict future price movements. For technical analysts, a stock is little more than its price, and the company behind it is almost irrelevant. Charts are the main tool used for technical analysis.
Long-term stock investors can mainly use charts to identify price trends and find ideal price levels to buy or sell a stock. Many investors would use fundamental analysis to find the right stock to invest in, but turn to technical analysis to try and pinpoint the right moment to buy (or later sell) the stock.
The easiest way to see whether a stock is generally heading up or down is to draw a moving average (your trading platform can usually do this). If the current price is above a longer-term moving average (let's say 100 days), the stock is probably trending up; and if it's below, it is likely trending down. You can even draw two moving averages, a short- and a long-term one. A shorter-term moving average climbing above a longer-term moving average is interpreted by many investors as a 'buy' signal; and the opposite as a 'sell' signal.
Other useful chart terms for long-term equity investors include support and resistance:
- If a stock price is trending up, the moving average below it often acts as a support level, or floor - meaning the price will probably bounce back from this level in the case of a temporary drop.
- If the stock price is trending down, the moving average above it usually acts as a resistance level, or ceiling - meaning the stock is unlikely to breach this level even if it briefly rises during a general downward trend.
Moving averages or trendlines are among hundreds of indicators and patterns used by technical analysts. Head and shoulders? Cup and handle? Yes, these are actual price patterns. However, most of these are used mainly by short-term traders of forex, CFDs or commodities.
To find out more about how brokers can aid your independent stock research, read our overview of the most common brokerage research tools.
Other research tools at Interactive Brokers
Most brokers offer tools for both fundamental and technical analysis. These include fundamental data for stocks (such as earnings reports); trading recommendations by in-house or third-party analysts; market news; and release calendars for macroeconomic and company data.
In general, the quality of research tools at Interactive Brokers is acceptable, though probably not among the best on the market.
Data updated on November 15, 2023
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