IB margin policy is too conservative, agree?

[Trader_Herry]

IB intraday margin policy becomes increasingly more conservative recently. If you take a look Futures Maintenance and Overnight Margin Requirements, quite many markets whose margin requirements are really unreasonable - the intraday margin is exactly the same (100%) as the overnight margin, in contrast to 50% off intraday margin advertised in IB website.

You know, IB is a very special brokerage in that it never make margin calls. It hs a real-time margin monitor, in which will liquidate your positions instantly if you are short of margin.

Provided that IB has such a margin monitor in place, I don't really get why they still need such a unusually high margin requirement (intraday margin is 100% of overnight margin).

A real-time monitor us is really a forced money management system to us. This make sure we can't keep holding the losing position indefinitely. That protects us from going broke. Once the loss drop the margin level to a dangerous level, the system will post a non-cancellable market stop to get us out instantly.

But now what IB doing is no difference from telling us "a market stop", even if we are 200 ticks away before we go broke, is not enough. We need to place the "market stop" 400 ticks away to make us safe.

Perhaps it implies IB still don't believe in their own margin monitor, or Ib is so worried that price will move so ridiculously (eg 400 ticks up/down in a few seconds) so all maintenance margin is exhausted, even a "market stop" can't help us out.

I'm in the market for many years. I've never seen a popular market which will move so rapidly INTRADAY to justify charging overnight margin even if we are trading INTRADAY. If you have seen any intraday charts of any liquid market (I say INTRADAY, not overnight) which can justify such a margin policy, please show me one.

 

[Trader_Herry]

While not being too aggressive on margin requirement is good, being too paranoid is not.

IB real-time margin monitoring and liquidation is very effective and offer a very firm protection for both customers and firms. There isn't any need to raise the margin requirement, not to say by such an insane extent.

I have to say I really dislike what is happening now.

 

[blackjack007]

their real-time margin monitoring isn't accurate for futures options. they rely on yesterday's volatility values , so if there is a huge increase in volatility today, the real-time margin will be understated.

 

[The Swordsman]

IB stinks for intraday futures scalping IMO, their Depth of Market is weak compared to some other futs brokers. Plus their margin is way too conservative. I mean, IB is a good company, but if you focus on just futs there are better brokers out there.

 

[flipflopper]

Quote from Trader_Herry:

While not being too aggressive on margin requirement is good, being too paranoid is not.

IB real-time margin monitoring and liquidation is very effective and offer a very firm protection for both customers and firms. There isn't any need to raise the margin requirement, not to say by such an insane extent.

I have to say I really dislike what is happening now.

They did this in August when the VIX went over 25 and the little dipsters were getting wiped out.

Now that bubble ben has guaranteed no more downside risk they'll probably go back to their original margin offerings. Dipsters will get cash advances on their credit cards and second mortgages to buy more dips and we can repeat history again....

Thanks Bubble Ben!!!

 

[BCE]

Quote from The Swordsman:

IB stinks for intraday futures scalping IMO, their Depth of Market is weak compared to some other futs brokers. Plus their margin is way too conservative. I mean, IB is a good company, but if you focus on just futs there are better brokers out there.

I don't like IB's new margin requirements on futures at all. Which other futures brokers do you like? Anyone?

 

[TorontoTrader2]

how mant IB id's are on here and voted NO in that poll

 

[DirectTrader]

Hey, everybody.

IB still hasn't completely remove the special margin due the previous volatility states.

People may try to vote this while waiting for IB to take it all back to the previous states. Based on history, it should be still quick a hile before we can get back to previous margin requirements. Good luck!


Ticket 3185
=====================
Title: Pls bring intraday margin back to normal
Submitted by: master

In Margin Overview:
"IB calculates initial & maintenance margin requirements on a real-time basis... IB will liquidate positions on a real-time basis if there is a margin deficiency. Real-time margining allows you to see your trading risk at any moment of the day..."

In other words, IB issues no margin call & will liquidates your positions if you have any margin deficiency.

But it retains the most conservative margin policy in the world. IB is holding 4% Req. Policy, making intraday initial & maintenance margin of many instruments up to the same level of overnight initial & maintenance margin.
(Read http://individuals.interactivebroke...ginRequirements/margin_amer.php?ib_entity=llc
)

We can't have any margin deficiency, why do we need to keep such a high intraday margin? It is crazy & stupid. Pls bring it back to at least 50% intraday margin.

All futures traders, pls vote it up all the way to the top!

 

[NYOBScalper]

IB earns an interest rate spread on the money in your account. Even though they pay very competitive rates, they get more from the money markets they put your funds in than they pay you. The lower the margin requirement, the more money customers will maintain in their account to trade a given amount of contracts, thus more money for IB.

I would imagine, however, that the margin requirements drive away enough accounts such that it more than compensates for the increased accounts from people trying to maintain their margin and still trade at IB.

 

[ZRA]

Why do we need to read threads here to get the latest news or changes from IB? They don't notify you of the changes in any way. They don't like babystep. IB doesn't want to move 10% or 20% up but they choose to surprise you by changing the margin up by 100% without prior notification to cause you tons of headache. Other brokers have 2-4:1 leverage (moderate leverage) but they haven't been bankrupt for ages. IB has to keep 1:1 leverage in order to save them from bankruptcy. Why?

Leverage is as dangerous as a time bomb. Why?
HINT: You must spend any penny on leverage in your account when they offer 2:1 or 4:1 leverage
HINT: You must leverage every time you trade
HINT: Once you want to leverage, you're over leverage no matter what
HINT: If you want to leverage the remaining cash to the extreme, you are definitely over leverage
HINT: Once you leverage, you are gambling. Since you are called gamblers, you are destined to loss
HINT: Risk! Risk! Risk! Loss! Loss! Loss! Leverage is nothing but risky and lossy. Don't dare to try out!
HINT: 100% conservative rule: Leverage when you spot a golden opportunity = suicide!
HINT: Don't dare to get out until your margin falls below maintenance level
HINT: Magnify your risks. What if the market becomes crazy? What if it moves +/-5% in one second unexpectedly? What if 1 million orders sell at market all at once? It's time to urge the exchange to double or triple their margin. The exchange is in danger.
HINT: To keep yourself always well above maintenance level, 1:1 leverage makes perfect sense (even better 1:2 or 1:4 "leverage")
HINT: It is better to use extra cash to meet your 1:1 leverage requirement than buying other reliable stock or EFP and so on
Conclusion: Leverage is equivalent to suicide!