Margin Increase

[Millionaire]

Yeah, we can blame the CME.

The CME didn't allow enough time for the internal programmers at FCMs to adapt all of their systems to negative pricing before the skullduggery went on.

It had nothing to do with margins in my view.

IB was fine with handling negative prices the next day.

It seems IB systems could handle negative prices, they just didnt know CL could do it, like someone at IB didnt read the CME memo sent out weeks prior and so no one checked the 'can go negative' check box in the CL backend setup page.

 

[Overnight]

IB seemed was fine with handling negative prices the next day.

It seems IB systems could handle negative prices, they just didnt know CL could do it, like someone at IB didnt read the CME memo sent out weeks prior.

Just a bloody mess. Do you get the sense that it was a one-off? I sure do. When they started warning about NG going negative later on, I was like...I dunno'. As if someone got their hand caught in the cookie jar and decided against trying more manipulation.

 

[Millionaire]

It had nothing to do with margins in my view.

When the price of CL was near zero the IB margin algo allowed traders to load up on the long side, because it calculated the downside risk was limited.
I read some small IB traders were able to buy over a 100 contracts when CL was trading around $1

 

[Overnight]

When the price of CL was near zero the IB margin algo allowed traders to load up, because it calculated the risk was limited.
I read some small IB traders were allowed to buy over a 100 contracts when CL was trading around $1

IB's risk management system updates internally each second? Wow, I thought they were a normal broker that had fixed margins updated each day based on the CME minimums. No wonder people got into trouble over there.

P.S. Ahh, found a relevant post from around then I forgot about...

https://www.elitetrader.com/et/thre...trading-wti-crude.343661/page-17#post-5094659

Yeah, that's just messed up.

 

[LanceJ]

Does this ultimately make your stops tighter during a time when markets can be choppy and volatile. Probably the worse market state to trade with tight stops. Price spikes depleting accounts one slash at a time.

 

[Millionaire]

Does this ultimately make your stops tighter during a time when markets can be choppy and volatile. Probably the worse market state to trade with tight stops. Price spikes depleting accounts one slash at a time.

No stops have nothing to with this change.

Higher margin/Lower leverage forces you to trade with smaller size, stops can remain the same if thats what you want.

Although personally i reduce my size and widen stops when volatility goes up. This means my risk to my stops remains constant.

 

[rockn]

I think this is IB's way of saying 'risk off' in the markets in general?

 

[qlai]

So this means that people will start getting margin calls? I don’t think other equities brokers do this.

 

[Millionaire]

So this means that people will start getting margin calls? I don’t think other equities brokers do this.

And they will get commissions when customers have to liquidate .

Nice shake down of the customers Cha-ching!

 

[Handle123]

Am going to start hedging all my long future positions the week before the election, Index positions will hedge with calls. Stocks be hedged by Indexes which be hedged by options.