how does TD ameritrade calculate there risk ?
Options margin
- Thread starter Mdtbyk
- Start date
Standard Reg-T margin requirement.
So u would say that on the aspect of calculating margin TD is better?
For sure. Reg-T is Reg-T and you can then make your own margin requirements above an beyond Reg-T but at least you know what your margin risk is.
With IB you do not know what your margin risk is, the calculations are real time and determined by a computer. This adds a level of uncertainty since now you have no idea what your margin requirement is. You might thing you are well within risk parameter and all of the sudden wake up tuesday liquidated at the worst price ever for a trade that should have never been liquidated.
Read up the horror stories on IB liquidations, I think this is how they keep commissions low by liquidating people out and IB being the other side taking those trades
Couldn't have said it better myself. There's a current thread where the poster pasted in the chat or email from IB and the IB rep actually capitalized the Algorithm when referring to it! You can't make this shit up.
And TH still managed to lose money!For sure. Reg-T is Reg-T and you can then make your own margin requirements above an beyond Reg-T but at least you know what your margin risk is.
With IB you do not know what your margin risk is, the calculations are real time and determined by a computer. This adds a level of uncertainty since now you have no idea what your margin requirement is. You might thing you are well within risk parameter and all of the sudden wake up tuesday liquidated at the worst price ever for a trade that should have never been liquidated.
Read up the horror stories on IB liquidations, I think this is how they keep commissions low by liquidating people out and IB being the other side taking those trades
The craziest stories are of people losing a shit load of money because someone put in a stink bid/stub quote on some illiquid market at off hours, IB supercomputer considers it a bonafide price and liquidates the guy at the worst fills in the world. then when market opens normally he wakes up to see his ass handed to him. So many stories and people still open accounts with them to save a few bucks on commission.
how do they lose money, probably Hollywood accounting.
Penny wise pound foolish.
https://www.reuters.com/article/us-...io-selloff-mishap-panel-idUSKBN0LM23620150218
Interactive Brokers must pay $667,000 for portfolio selloff mishap -panel
"(Reuters) - Interactive Brokers LLC must pay $667,000 to a hedge fund after an arbitration panel found the discount brokerage firm’s system for selling securities from clients’ accounts to pay margin debt had backfired leaving the fund with hefty losses.
The hedge fund, Glen Lyon Long Term Options LP, filed the claim in 2012, seeking between $1 million and $3 million. It said the brokerage used a flawed “auto-liquidation” system, according to a Financial Industry Regulatory Authority (FINRA) arbitration panel ruling late Tuesday....."
" But Glen Lyon said the system backfired at least twice in 2011. In one instance, the hedge fund’s margin account was $20,000 in the red when the auto-liquidation kicked in. Interactive Brokers sold Glen Lyon’s securities at off-market prices and then revalued the rest of the hedge fund’s portfolio based on those values"
Interactive Brokers must pay $667,000 for portfolio selloff mishap -panel
"(Reuters) - Interactive Brokers LLC must pay $667,000 to a hedge fund after an arbitration panel found the discount brokerage firm’s system for selling securities from clients’ accounts to pay margin debt had backfired leaving the fund with hefty losses.
The hedge fund, Glen Lyon Long Term Options LP, filed the claim in 2012, seeking between $1 million and $3 million. It said the brokerage used a flawed “auto-liquidation” system, according to a Financial Industry Regulatory Authority (FINRA) arbitration panel ruling late Tuesday....."
" But Glen Lyon said the system backfired at least twice in 2011. In one instance, the hedge fund’s margin account was $20,000 in the red when the auto-liquidation kicked in. Interactive Brokers sold Glen Lyon’s securities at off-market prices and then revalued the rest of the hedge fund’s portfolio based on those values"
So what brokers don’t just trigger sales ?
I don’t mind even paying very high commissions