If part of your trading strategy includes automatic liquidations of your positions by the brokers automatic risk management process you need to revisit your strategy.
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question about IB liquidation
- Thread starter nemo77
- Start date
If part of your trading strategy includes automatic liquidations of your positions by the brokers automatic risk management process you need to revisit your strategy.
Quote from hajimow:
One of the reasons that I am with IB is the liquidation rule. I have be liquidated a lot with loss but it has saved my ass. My advice is that don't go with a broker that does not liquidate and when you are really broke, you get a nasty letter from your broker asking you to deposit money which you don't have.
i can see how it is positive viewed as counterparty risk. But you must be out of your fucking mind to use the auto liquadation engine as some form of stoploss especially for options.
just wait until it randomly auto liq one of your leg in after hours causing a normal spread to be out of balance and completely destroy your margin requiremnt, then prevent you from closing your other short leg becaue you cant buy to close now due to no excess liq caused by the liqudation. then put on hold for 30 min trying to get someone just to look at yout accont. meanwhile the engine contiunes to auto liq in afterhour using market order and the only thing you can do is watch as your money disappears from the 30pt wide bid/ask gap and you fell further in negative excess liq.
if you insist on dealing with ib auto liq at least setup auto liquation order. IB should require all new account to read through their liq engine rules in big red letters.
This isn't rocket science... If you use an autoliquidator like IB, you need to leave more money in the account. I would suggest at least double your required margin. With a broker who calls you first, you can run tighter -- but you'll pay higher commish. It's a tradeoff of commish versus capital cost.
More money in reserve would help you "nothing" if the market has a real crash, and bid-ask become so wide that your whole reserve will be eaten up just by the spread. Then your long position will be autoliquidated for the bid price, & your shorts for the ask price. Its only a question of time untill that happens.Quote from Rodney King:
This isn't rocket science... If you use an autoliquidator like IB, you need to leave more money in the account. I would suggest at least double your required margin. With a broker who calls you first, you can run tighter -- but you'll pay higher commish. It's a tradeoff of commish versus capital cost.
Quote from jayre:
the market has a real crash, and bid-ask become so wide that your whole reserve will be eaten up just by the spread. Then your long position will be autoliquidated for the bid price, & your shorts for the ask price. Its only a question of time untill that happens.
http://tinyurl.com/3zn9gh7