Once again you guys dont seem to get the problem with IB's liquidation engine. It's not so much how margin is calculated but the manner which it liquidates your account. Once excess liq below 0 is hit(for whatever reason), it will just auto close at MARKET price at ANY time of the day as long as it can trade, instead of having a human to take a look or wait until normal trading hours etc.. And there is absolutely no customer support. I understand the reason - it protects itself no matter how badly it fucks up the customer's account, and the pros applaud it as it keeps their account safe. It's not a big problem once you are familiar with this robot process, but for new users who are used to a normal brokerage like optionsxpress' customer service, you will be in for a total shock, whole account can be wiped if not careful because of this liquidation engine. See my post below on my first encounter with IB's liquidation engine. It wiped out my entire es mini options position using MARKET orders in AFTERHOURS when there is 30pt bid/ask spread. Luckily it wasnt a huge position, i lost 20k and chalked up as a lesson learned. But trust me you DONT want to be in a position where you are auto liquidated at market price on some illiquid asset as you sit there hopelessly watching your entire account goes to 0 while getting locked out (due to excess liq below 0) with noone to call or help. If you are new to IB, be very careful about its liquidation engine. http://www.elitetrader.com/vb/showthread.php?s=&postid=2832052&highlight=liquidate#post2832052
i didn't read the whole thing.. yeah..right..come back after you got overfilled on those 350 live orders and rest of your portfolio is some not really liquid securities....the most unfunny part of IB's auto liquidation is that there is no way to override this liquidation process manually. i got overfilled ones on some corporate bonds at some messed up prices and i know 100% that those positions will be busted..i was on the phone,calling them first(not they are calling me with margin call)begging CS to leave this shit alone and halt this liquidation process..he said-he can't..i was saying-stop,wait..exchange is going to call you in few minutes and trades will reversed..i was lucky that time.. "sophisticated" indeed..why you defend this system so hard anyway? have you ever experienced margin call @ IB? have you ever experienced this auto liquidation?
Just my 2 pennies... About 2 years ago I had a currency position with IB wich ran through overnight shutdown. When IB currency trading opended there was a "rogue" quote (that came first when currency trading re-opened) 50 pips below the previous and next quote. My position got a stop-loss executed based on this single quote well outside the market. Given the OP had a potentially profitable position liquidated at a loss due to a silly quote, I believe going through arbitration process is a reasonable option.
Arbitration can be risky too - the broker can make a counterclaim, and if you lose (which is likely) you get to pay the brokers attorney fees. If you look up the NFA record of velocity, someone tried to claim 30K (debit balance, sounds like some unfavourable liquidation too) and got denied, had to pay the counterclaim and additional 26K attorney fees. So it can be risky.
I believe this is why Buffet uses European style options so that extreme market moves will not affect his position.
Sorry for you rationalmind, it must have hurt ! But also thanks for raising the issue !! Is IB using the same method after hours on regular stocks where you have insane Bid ask spreads ?
ids, Please point us to an official IB document that clearly and precisely describes the liquidation policy AND the liquidation algorithm/methodology. Thank you.
what does this MEAN? so when people were liquidated during after hours, some guy decided it's not "normal" condition, went into the liquidation engine and tweaked the policy?