IB overnight initial for 1 YM contract $9153.54

Rickshaw Man said:
They are signaling they are adverse to risk. And that's fine. Some firms manage risk in different ways. IB prefers to pass the risk on to the client.
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Why is this "pass the risk on to the client"?

IB could charge minimum margin and get some more commission from risky trader. I for one am happy that they don't push risk to the limit.

The clients aren't risking anything, they just need to put in more capital to trade the contract they want.
 
This is good and expected.

However they have been slow decreasing margin back down in the past when volatility calms back down.

Which means if you want to increase lot size when that eventually happens IB wont let you, at least for a while.
 
alexpun said:
I for one am happy that they don't push risk to the limit.

The clients aren't risking anything, they just need to put in more capital to trade the contract they want.
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southall said:
This is good and expected.
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I agree.

(I don't still trade with IB, myself, for other unrelated reasons, but in principle I'd certainly want my broker to be risk-averse.)
 
Rickshaw Man said:
One little correction and they jack it up 20%. Imagine what it will be if we roll over into a bear market. By doing this they will chase off some traders, thereby having an adverse effect on the firm's liquidity. Some will say they are being careful. Maybe they are but there are other ways to hedge.
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Whoa man, I think you are waaaayyy off the mark.

1. In the '87, crash, Refco "discouraged SP trading.. but required $50,000 margin if the trader insisted". That high margin was to protect the trader as much as to protect the company.

2. Bull or Bear market... that's not the issue. It's a cushion against "expected volatility", up or down.

3. By "chasing off" weakly capitalized (and weak-hands) traders... that has a positive effect on all aspects of the "firm's liquidity". Commissions are small potatoes compared to uncollectible debits.

4. IB does not nor does it need to hedge traders' positions, though higher margins make trading safer for both the firm and the trader.
 
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I actually think futures offer too much leverage. Beginners blow up all the time from over leverage. I can lever up 3x based on notional value and still only using less than 25% of my buying powers.
 
I suspect if the volatility continues we could easily see YM initial at 10-15k...This will surely curtail retail. Then all you pros can trade with the pros.
 
If you have been very successful at trading futures for a good period of time, it is safe to say you are likely not trading at IB. Consistently high-profitable futures traders know very well how to trade optimally utilizing only exchange margins. And they have better use for idle excess trading cash. Albeit they are a distinct minority of those who regularly post, particularly in this site.
 
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