I am curious and I am trying to understand this statement. Here is my guess: you are a systems trader and your system was down because of the recent market crash but you would have made it all back and more on the latest upswing but IB's margin policies were so restrictive as to make this impossible?
IB Margin requirements rising as VIX falls, reaching nonsense levels
- Thread starter cruisecontrol
- Start date
I am curious and I am trying to understand this statement. Here is my guess: you are a systems trader and your system was down because of the recent market crash but you would have made it all back and more on the latest upswing but IB's margin policies were so restrictive as to make this impossible?
Been using IB for 15 years.
Safety of funds was good.
I have opened an account with AMP Futures today.
I only trade intraday, as i only need to keep a tiny percentage of my funds with someone like AMP compared to IB.
So if they blow up and take all my funds i wont lose that much anyway.
Looking at the Rythmic API, its not java and costs $100 a month, but i think it should do everthing i need. Havent got the API docs yet so not sure but it looks promising.
IB used to require about 4K margin for one NQ lot. That was high but just about bearable.
Safety of funds was good.
I have opened an account with AMP Futures today.
I only trade intraday, as i only need to keep a tiny percentage of my funds with someone like AMP compared to IB.
So if they blow up and take all my funds i wont lose that much anyway.
Looking at the Rythmic API, its not java and costs $100 a month, but i think it should do everthing i need. Havent got the API docs yet so not sure but it looks promising.
IB used to require about 4K margin for one NQ lot. That was high but just about bearable.
Last edited:
I have IB account.
I haven't use it for about a month already.
But I will still keep my account open.
perhaps many IB customers over traded and ended up very red,
and IB has to tighten the screw very hard.
There are other more attractive brokers
Almost, my systems were up on the downswing and would have been up also on the upswing as well but I have an expectation of leverage of about 3:1. Due to how I'm trading, I will hit the current margin limits much faster (I can get less than 2:1 now with portfolio margin) now than expected, which results in liquidation at unfavorable prices and at a time of IB's choosing.
I'm confused. Are you saying that:
A) you have been getting autoliquidated so many times that you lost 100k from slippage and/or being unhedged
B) you had to reduce leverage to avoid being autoliquidated, and this caused you to earn 100k less than you could have made with 3:1 leverage
The way you phrased it sounds like A, but I'm thinking B makes more sense
I'm confused. Are you saying that:
A) you have been getting autoliquidated so many times that you lost 100k from slippage and/or being unhedged
B) you had to reduce leverage to avoid being autoliquidated, and this caused you to earn 100k less than you could have made with 3:1 leverage
The way you phrased it sounds like A, but I'm thinking B makes more sense
It's both. I reduced leverage but I still hit the limits. One can only neuter the strategy so much...
I experienced the same, although not to such an extend. My main trade is to sell premium in SPX options, profiting from time decay, however, only to the extend I have sufficient capital to cover (with /ES futures), if need be. This strategy works like a gem and is very consistent, as long as you don't over leverage (i.e. write more than you can cover), which is what most people do and go bust once price goes against them.
The issue I ran into is that due to IB's margin increase, I was all of a sudden over-leveraged, and I couldn't buy/sell sufficient ES contracts to cover my SPX option position when it went against me. I had to close out part of the position for a loss, which would not have been necessary had I had sufficient margin. The annoying thing is that you don't get a warning they will increase margin as of next week or what ever. You are all of a sudden confronted with it.
I understand they do it to protect themselves, but in some cases, it can also increase risk, like in my case, as one cannot hedge to the same extend anymore as before the margin increase.
OK. Well I hope you still made a healthy net profit overall (unclear from your posts).
Btw it's really not that hard to stay inside IB's limits. You can query the margin requirements for all the stocks you trade using the API at the start of the day using "what-if" orders, and requirements don't change during the day. If you hold overnight you will need to keep a cushion large enough to absorb any one-day increase. 20% should be good for that.