I am pretty surprised so many of you didnt understand IB's liquidation process, there is NO human intervention whatsoever, it's run purely based off an automated engine.
Quote from atticus:
I've had an auto-liquidation once in 14 years with IB. In Jan 2001 during the ENE debacle. They liquidated 100 shares when I went a few $K under maintenance.
My guess is that this is a hoax, or he was liquidated due to long stock that gapped lower, or a naked short volatility position unrelated to the vertical. If not, then it's clearly actionable.
atticus if you were talking about my post earlier, it wasnt a hoax, i wish it was.
I was short the front month gut and loaded backmonth otm wings at 2x long(if i remember correctly, or maybe 3x) on the es mini options. When the market closed my excess was around 1k for ~$20k position. Then later that night i got the margin emails so logged back into IB, the excess with flipping around between 1k and -1k.
I thought about reducing the positions but the bid/ask spread was so wide due to afterhours, didnt think much of it figured will reduce it next morning. Then it started auto selling 1 leg of my wings at market, and it was all over at that point. The excess dropped like a rock into deep red as the position became unbalanced and losing money from the wide spread, and i watched as my whole position was liquidated at market using afterhour spread
1) As i said it was a lesson learnt for me and glad it happened early on, i am well aware of my fault here of overleveraging and not understanding IB's margin call process fully (mainly liquidation still runs in afterhours for futures/options)
2) But at the same time i think IB's liquidation/margin call process is truely shit, any trader who looked at my position would not have liquidated the positions like this to a) further increase my negative excess b) at market order with a 20-30 pt bid/ask. At the minimal it should done a ratio liquidation at market order - covering 1x the short straddle
All i am saying is i wish this thread existed when i first started using IB it would saved me some money. Btw found out later there is a way you can manage the liquidation somewhat by telling the liquidation engine which position to sell first, it's bured in the tws' menus, google it. If you dont set that, it will just randomly liquidate.
Quote from stoic:
When required to take action and do a sell-out or a Buy-in to meet a margin call I was required to return the account to margin compliance with as few transactions and as little pain as possible. It was very vary rare that I would have to take action without any attempt of contacting the customer and provide the opportunity for the customer to make the choice of what position to close or to deposit funds.
That was the surprise - IB is completely automated liquidation engine, you are on your own there is NO human.
Came from my previous broker, where a vp would look at my position then email/call me on his suggestions when there is a margin issue, then we would work something out, it was quite a shock switching to IB's auto liquidation process.
anyway i wish there is a better broker out there, but there are none that can match IB's functionalities and products, so yeah i am still using it....
