Normally, margin is a way to double your position size (as you put up half of the capital to buy a stock, and the broker puts up the other half.) However, a few weeks ago I bought $40,000 worth of a stock, and it only reduced my buying power by $10,000. This isnt intraday margin either, as this $10,000 buying power reduction has remained the case the entire time I've owned the stock. I checked the "securities with special margin list" but this stock is set at standard 50% margin requirement. I dont have enough money in the account to qualify for portfolio margin, so Im curious as to what is going on. Don't get me wrong, Im a fan. But just curious if Im understanding this correctly (that IB offers more leverage than other brokers) Or am I misunderstanding something.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Is IB giving me 4x leverage?
- Thread starter iTradeOptions
- Start date
4X is good till 8PM EST. By then you have to reduce your account to 2X to avoid margin call. That is normal industry practiceMost likely the 4x leverage is the intraday leverage. After hours everyday should go back to 2x?
I have portfolio margin, but I think generally you need more money as "initial margin" (50%) to make an initial stock purchase, and later the margin is only 25% aka "maintenance margin" to maintain your position, so you get 2x leverage initially to make a purchase, which then increases to 4x immediately after the purchase:
https://www.investopedia.com/terms/m/maintenancemargin.asp
https://www.investopedia.com/ask/an...een-initial-margin-and-maintenance-margin.asp
https://www.investopedia.com/terms/m/maintenancemargin.asp
https://www.investopedia.com/ask/an...een-initial-margin-and-maintenance-margin.asp