Q: IB and day trading margins

T

toad57

On the IB web page http://www.interactivebrokers.com/index.html?html/retailAccount/stock_margin.html~top.body, under Patterned Day Trader Margin Requirements
 it says:

"Patterned Day Trading" margin requirements are as follows:
Initial and Maintenance
  • Purchase: maximum (25% * marginable stock value, $25,000) or maximum (100% * non-marginable stock value, $2,000).
  • Short sale: if last sale price/share >= $17 then maximum (25% * marginable stock value, $2,000), else if $17 > last sale price/share > $5 then maximum ($5 * marginable shares, $2,000), else if last sale price < = $5 then maximum (maximum (marginable market value, $2.50 * marginable shares), $2,000) or maximum (100% * non-marginable stock value, $2,000). Short sale proceeds are applied to cash and the short position is subtracted from equity.
Umm... I'm really having problem understanding the above- especially the short sale stuff - can anyone provide a decent illustration? I'd like to model it in a spreadsheet but am confused by the syntax of the above.

I guess knowing what their definition of 'marginable stock' and 'non-marginable stock' would help.

Opening a new account... I don't want to run afoul of the margin requirements !

Thanks,

Mr. Toad
 
Toad57,
Go to IB web site.
Click on Help/Find
Click on Index
Select the letter M

Check out Minimum Maintenance Margin
Margin Requirements
Initial Margin

There are examples there...hope that they help bud:)
 
Originally posted by mccoyml
Wow. This is weird. I get no buttons or flags when I go to the site. Nothing at all on the left side except blue screen. Do I have this right? http://www.interactivebrokers.com/index.html. That appears to be as far down the hierachy tree of web pages that I can go.
More...

mccoyml-
The site uses scripting for all of the buttons. Make sure you have it turned on in your browser settings.

-johnny
 
JPB, Thanks. I tried accessing the site from my other machines and there were the buttons (and flags)! I'm not sure why scripting on my main machine is not working. Makes me wonder what else I may have been missing on this and other sites.

Now I just have to figure out how to correct this. I went to Tools/Internet Options but don't see anything wrong there. I use Win98 and IE 5.5 - Service Pack 2. My other machines have IE 5.0 only. Makes me wonder if something got messed up when I upgraded this machine to 5.5.

Once again, thanks.
 
2 questions (I'll also see if I can find it on the IB site, but if anyone already knows, please reply):

1. Does IB allow 4x buying power for pattern day traders (assuming $25,000 in account)?

2. According to the rules, "The firm has the option to calculate day-trading margin requirements based on either the largest open position at any given time during the day, or on the customer’s total trading commitment during the day. If the firm chooses to base day-trading margin requirements on the customer’s largest open position during the day, the firm must
maintain “time and tick” records documenting the sequence in which each day trade is completed." WHICH OPTION DOES IB USE? For example, if it's only based on the largest position of the day, assuming I had $30,000 in my account, I could buy 2,000 shares of a company trading at $60/share (let's not worry about commissions and loss of value for purposes of this illustration), sell the position, buy 2,000 shares again and sell the position by the end of the day and not be in violation of the rules. However, if IB chooses to base it on my total trading commitment, then I'll get a margin call.

Does anyone know the answer to this?
 
You must log in or register to reply here.
Back
Top