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Build a Portfolio using TWS Risk Navigator

Lesson 3 of 11
Duration 5:15
Level Intermediate
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This lesson highlights the ability of Risk Navigator to upload an existing portfolio to it or build a theoretical portfolio using the tool.

Study Notes:

The Risk Navigator can automatically populate with your existing positions, or you can start with a blank slate and either manually enter in instruments or import them from a file. Either way you can edit the positions and add new positions or see the effect of closing out existing ones through the Risk Navigator What -if. In this lesson we’ll highlight several methods to build and alter a portfolio to measure the possible effects of market risk on the portfolio.

First we will bring up a new Risk Navigator What-if and a pop-up box will appear asking if you want to prepopulate the new portfolio with your existing positions – click yes.

The Risk Navigator will appear already populated with every underlying.

To drill down into the specific instruments, go to the Report Selector and click the plus sign next to Drill at the bottom. Notice the Risk Navigator is outlined in Red – this is an indicator that you are working in a what-if portfolio and can make changes to see the results.

I’m currently in the equity tab and showing are stock, options, futures, and future options for my portfolio. If I click on the Forex tab it will show my Forex positions. Let us go back to the Equity tab and go through a few examples of adding or removing positions to see the effect it has on your overall portfolio.

It is easy to remove a stock from the report, simply uncheck the white box next to the instrument you no longer want to see. Let’s uncheck a stock position and a future position. The Report Selector is currently set to Risk by Underlying so you can choose to either remove every item under a symbol or a specific instrument.

Once an instrument or instruments are unchecked a blue swirl will appear next to the Maintenance and Initial margin, Value at Risk, and Expected Shortfall in the Risk dashboard area. Click on the swirl next to either Margin and VAR or ES to update the values to reflect the new portfolio.

If you change the Report selection to Risk by Country or Risk by Industry.

You can omit an entire Country or Industry from your portfolio by clicking on the white box next to the industry or country name.

You can quickly isolate the report Viewer to a single underlying, currency, or trade date by clicking on the drop-down box next to the category in the Selector panel.

Next, we will add in positions to see their overall effect on the portfolio.

To add an instrument not already in your portfolio, click on the Green New button and enter the symbol and choose which instrument you want to add. Once selected it will populate the Report Viewer and the cursor will appear in the position column.

Enter the theoretical position you want to add. If you are going to be short the position use a minus sign.  Once you enter the “new positions” click on the blue swirls next to the Margins or VAR to see the impact. You may add as many positions as you like as well change around the size to see the effect they have on your current portfolio. You can save your portfolios to view and compare to each other by going to the Portfolio in the title bar and selected save as and naming the portfolio.

You can also use the Risk Navigator what-if to build a theoretical portfolio from scratch. This scan be useful in seeing various portfolio combinations for cash in your account that can be put to work.

We will close out this What-if and bring up a new one from the new window area.

This time when the pop-up box asks if you want to prepopulate the new portfolio with your existing positions select “no”.

The Risk Navigator comes up on the P&L screen. Enter the amount of cash you want to start with for your portfolio.  Let us add one hundred thousand dollars by clicking on the cell next to USD in the position column.

We’ll now click on the Equity tab, notice that the Net liquidity equals one hundred thousand and there are no other values populated.

We’ll add 3 long stock positions, 2 short stock positions, and an option position by clicking on the Green  “New” button.

After each position is added notice the change in values in the Risk Dashboard when I refresh them. Throughout adding and removing positions you can save the portfolios as different names to be able to access later and compare to each other.

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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.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.

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