I'm finding IB'S margin requirements are strictly enforced more than necessary. If you have a margin call IB will liquidate the account very quickly. They do not have the three day limit, like most brokers do. Should the market open badly say a 500 point drop you would be liquidated in the morning, and should the market rally in the afternoon, you would have lost most of your buying power and stocks. I know most people watch their margin levels, but i have found they are unnecessarily strict. Any opinions?
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IB Rules To Strict?
- Thread starter Kalparker
- Start date
Many of their longer term customers would take a position like:
"Sooner or later the shit will hit the fan and margin calls will wipe out not only a few stupid customers but more stupid brokers than has recently happened in Australia. Then we will be firken happy that IB is rigorous and conservative in closing out doubtful positions (and doubtful customers)."
IB's approach is part of my risk control. I don't want a bunch of undercaptialized wankers who don't manage their risks and capital carefully enough taking out my account just when the markets get really exciting!
Manage your account to avoid margin calls and I'll be happy to have you using the same broker I do.
"Sooner or later the shit will hit the fan and margin calls will wipe out not only a few stupid customers but more stupid brokers than has recently happened in Australia. Then we will be firken happy that IB is rigorous and conservative in closing out doubtful positions (and doubtful customers)."
IB's approach is part of my risk control. I don't want a bunch of undercaptialized wankers who don't manage their risks and capital carefully enough taking out my account just when the markets get really exciting!
Manage your account to avoid margin calls and I'll be happy to have you using the same broker I do.
IB documents how/when they liquidate. There are even settings in TWS where you get to determine what to liquidate first.
I like the fact that they work to ensure that margin calls don't spread beyond the accounts they happen in.
If you don't like it, there are many other good brokers who give you 3 days to transfer additional funds.
I like the fact that they work to ensure that margin calls don't spread beyond the accounts they happen in.
If you don't like it, there are many other good brokers who give you 3 days to transfer additional funds.
You signed the paperwork allowing them to do this. You can always use another broker if you find their margin rules better suit you. Not being flippant but if more lax margin rules are important to your business you should do what's best for your business.
I personally like the liquidation rules as it does keep IB's risk under better control. It also allows them to have the reduced overhead of much smaller margin desk which in turn allows them to have lower commissions.
As for SIPC, yeah I will get my money back.... someday. In the meantime I am out of business, probably at a time when volatilty is at record highs and trading is as good as it gets. I'd just as soon not get into that situation in the first place.
I personally like the liquidation rules as it does keep IB's risk under better control. It also allows them to have the reduced overhead of much smaller margin desk which in turn allows them to have lower commissions.
As for SIPC, yeah I will get my money back.... someday. In the meantime I am out of business, probably at a time when volatilty is at record highs and trading is as good as it gets. I'd just as soon not get into that situation in the first place.
Quote from Kalparker:
I'm finding IB'S margin requirements are strictly enforced more than necessary. If you have a margin call IB will liquidate the account very quickly. They do not have the three day limit, like most brokers do. Should the market open badly say a 500 point drop you would be liquidated in the morning, and should the market rally in the afternoon, you would have lost most of your buying power and stocks. I know most people watch their margin levels, but i have found they are unnecessarily strict. Any opinions?
as to the OP let me see somewhere else how many undercapitalized amateurs without a pot to piss in, who were hoping for an afternoon turnaround which doesn't happen, meet their margin calls. IB is not your trading partner and to Surdo neither are their other clients.
Quote from vikana:
IB documents how/when they liquidate. There are even settings in TWS where you get to determine what to liquidate first.
I like the fact that they work to ensure that margin calls don't spread beyond the accounts they happen in.
If you don't like it, there are many other good brokers who give you 3 days to transfer additional funds.
in a crisis watch that 3 day privilege disappear.
Quote from Kalparker:
I'm finding IB'S margin requirements are strictly enforced more than necessary. If you have a margin call IB will liquidate the account very quickly. They do not have the three day limit, like most brokers do. Should the market open badly say a 500 point drop you would be liquidated in the morning, and should the market rally in the afternoon, you would have lost most of your buying power and stocks. I know most people watch their margin levels, but i have found they are unnecessarily strict. Any opinions?
If your account is margined to the hilt such that it cannot withstand less than a 5% drop in the DJIA overnight then you have very poor risk controls and deserve whatever happens to your account.
Many traders trust their accounts to IB for the very reason that IB has no nonsense margin policies. IBKR stockholders also appreciate this. Have you noticed that IBKR stock has not taken a toboggan ride to the downside lately?
And to anyone foolish enough to think that insurance substitutes for good risk management by the broker ... stretch your tiny mind a little and imagine how long it will take to get that money trading again even if you get the money back.
No firking thank you.
Please, would all the low capital, gimmee more margin fools go to someone other than IB. IB are not a good choice for you.
Firk off!
No firking thank you.
Please, would all the low capital, gimmee more margin fools go to someone other than IB. IB are not a good choice for you.
Firk off!