IB Margin?!

[orange_trad]

Hurricane & OldTrader: Of course, I've seen these links, but thanks anyways.

There's nothing that would mention how the 'exchange rate' is calculated for margin purposes. Right now I'm at a point where I haven't found anything intelligible that could refute/confirm the claim of IB being a chop shop in forex. And what's really sad is IB doesn't show much enthusiasm in refuting the claim either.

 

[OldTrader]

Quote from orange_trad:

Hurricane & OldTrader: Of course, I've seen these links, but thanks anyways.

There's nothing that would mention how the 'exchange rate' is calculated for margin purposes. Right now I'm at a point where I haven't found anything intelligible that could refute/confirm the claim of IB being a chop shop in forex. And what's really sad is IB doesn't show much enthusiasm in refuting the claim either.

My understanding is that IB doesn't take a position in forex. How does one become a "chop shop" with no position?

OldTrader

 

[brocklanders]

It used to be that IDEAL and IDEALPRO could not be traded on margin at all, only cash. This could have changed but this was the way I remember it in 2006. Probably what is happening is that your forex position is taking up most of your available trading capital and they are closing you out when your available dips below the margin requirements to hold onto all your positions.

Why are you trading forex on IB anyway? There are better solutions out there if you want to trade retail forex. IB is good for most products but I wouldn't include forex unless you need the currency to go to Europe or something.

Also, remember that IDEAL is for positions less than 25K which is pretty small on forex. IDEALPRO is much more liquid but again if you are speculating instead of converting currency you should look elsewhere.

 

[def]

Quote from brocklanders:

It used to be that IDEAL and IDEALPRO could not be traded on margin at all, only cash. This could have changed but this was the way I remember it in 2006. Probably what is happening is that your forex position is taking up most of your available trading capital and they are closing you out when your available dips below the margin requirements to hold onto all your positions.

that's incorrect, IB offers margin on FX and also doesn't take the other side of trades. It's an ECN style model where a number of liquidity providers provide prices and clients can enter any price they like - including splitting the spread if they desire.

 

[brocklanders]

Quote from def:

that's incorrect, IB offers margin on FX and also doesn't take the other side of trades. It's an ECN style model where a number of liquidity providers provide prices and clients can enter any price they like - including splitting the spread if they desire.

Ok, but you didn't answer the OP's question. He is asking how the margin is calculated and maintained on IDEAL positions.

 

[TGM]

Quote from def:

that's incorrect, IB offers margin on FX and also doesn't take the other side of trades. It's an ECN style model where a number of liquidity providers provide prices and clients can enter any price they like - including splitting the spread if they desire.

Def,

When is IB going to offer a creative solution to the non-base currency crossrate double margining ----Eur/Jpy is about 60k in margin (per 1,000,00k position) in a dollar based account.

You guys were going to do a system wide type span margining or portfolio type of margining for this?

By the way, IB's Ideal pro is good for all those that have not used it. It is an ECN system that works like Interbank (in more ways than pricing). It is not intended for small traders. I have had good luck with getting my price on their ECN. But by all means, do your homework on any forex broker/ecns ystem.
My only compaint is the above crossrate margining.

 

[JackR]

Quote from orange_trad:

There's nothing that would mention how the 'exchange rate' is calculated for margin purposes.

Orange:

I don't trade Forex but I think the answer to your question is in this statement from IB's explanation of Forex margin calculation -
Convert all non-base currency positions to base currency using prevailing market rates between the asset currency and base currency....

So one of the margin factors is dynamic. As the relationship between your base currency (IB's example is US$) and the currency you are trading changes during the day, the margin amount as expressed in US$ will go up or down depending on what the foreign currency/base currency relationship is. The margin rate remains unchanged.

Jack