A reversal order is an order to go from short to long or long to short with a single transmittal to the broker. It's a simultaneous closing of the current position and opening of another position in the opposite direction. So if I'm long 10 contracts ES and I want to be short 10 contracts, I would short 20 contracts to give me the net 10 contracts short. IB requires margin on 20 contracts to enter such an order, even though at no time would the account hold a position exceeding 10 contracts. That is just a plain dumb policy.
IB reduced ES margins
- Thread starter gmst
- Start date
A reversal order is an order to go from short to long or long to short with a single transmittal to the broker. It's a simultaneous closing of the current position and opening of another position in the opposite direction. So if I'm long 10 contracts ES and I want to be short 10 contracts, I would short 20 contracts to give me the net 10 contracts short. IB requires margin on 20 contracts to enter such an order, even though at no time would the account hold a position exceeding 10 contracts. That is just a plain dumb policy.
Thanks a lot icarus for clearly defining it for me
However, it seems to me that your information is wrong or maybe a bit dated. I have switched from one side to another side many times over in the last few months, as recently as 2 weeks ago. And always I was trading 1 contract for every 2500 USD in the account. So I was fully margined already before I did these reversal trades. Best.
Quote from gmst:
Thanks a lot icarus for clearly defining it for me
However, it seems to me that your information is wrong or maybe a bit dated. I have switched from one side to another side many times over in the last few months, as recently as 2 weeks ago. And always I was trading 1 contract for every 2500 USD in the account. So I was fully margined already before I did these reversal trades. Best.
If that's the case now, my apologies to IB for making an inaccurate statement. Thanks for the correction.
Quote from gmst:
Thanks a lot icarus for clearly defining it for me
However, it seems to me that your information is wrong or maybe a bit dated. I have switched from one side to another side many times over in the last few months, as recently as 2 weeks ago. And always I was trading 1 contract for every 2500 USD in the account. So I was fully margined already before I did these reversal trades. Best.
Are you using TWS? I could not duplicate what you claim to be able to do - entering a reversal order after maxing out margin. Looks like the same dumb policy to me.
Thats so weird. Yes I am using TWS.
My account has less than 3000 usd in it and attached are two executions that I had today. I do it all the time.
Not sure what is wrong with your TWS - maybe you haven't updated it for a long time -- just guessing. TWS must be giving you some warning when you are tying to do reversal. What does it state. I think you should check with the IB help. I am sure they can resolve this problem.
I have also done reveral orders in the past, but I don't recall encountering your problem either.
Btw, you could have enough margin in your account to maintain a position but not always enough to reopen it. Since a reversal order is essentially just closing one position and opening a new one, I imagine this could be one reason why you had trouble executing an reversal order.
Btw, you could have enough margin in your account to maintain a position but not always enough to reopen it. Since a reversal order is essentially just closing one position and opening a new one, I imagine this could be one reason why you had trouble executing an reversal order.