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nihao1234567890
 

Registered: Oct 2009
Posts: 65

 

11-08-09 11:38 PM

Does Interactive Brokers support Notionally Funded account?

Or all accounts must be fully funded?

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Millionaire
 

Registered: Mar 2009
Posts: 313

 

11-09-09 01:01 AM


Quote from nihao1234567890:

Does Interactive Brokers support Notionally Funded account?

Or all accounts must be fully funded?



What exactly do you mean..notional in what way?

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nihao1234567890
 

Registered: Oct 2009
Posts: 65

 

11-09-09 06:24 AM


Quote from Millionaire:

What exactly do you mean..notional in what way?



For example, if you are a CTA and I like you to trade my account-A.

I will deposit $100K cash into my account-A. But you, as a CTA, will trade it as if it was $200K account.

Assuming some one else also has an account-B. He deposits $200K cash into such account-B. You as a CTA also trade such account-B

You will trade both accounts identical (both have the account size of $200k).

Since my account-A only have $100K cash, but you will treat it as if it was notionally funded account with total nominal account size of $200K.

Does this make sense to you?

I just do not know if Interactive Brokers support this type of account either with Interactive Brokers or through give-up.

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OddTrader
 

Registered: Mar 2003
Posts: 5283

 

07-11-12 03:35 PM

A very interesting and important topic indeed.

Any update?

How about the notional % for different accounts with various clients would have different % for individual accounts: say some are 30% funded, some 40%, some 50% and some 60%, besides some are fully (100%) funded.

Even worst, a client's account may be only 10% funded but the historical MaxDD has been over 15% several times.

How would a CTA (or IB) handle the above transactions/scenarios?

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newwurldmn
 

Registered: Apr 2011
Posts: 2662

 

07-11-12 03:47 PM

how is this different from trading on margin with account A and not on margin with account B?

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OddTrader
 

Registered: Mar 2003
Posts: 5283

 

07-11-12 04:03 PM

I think this topic can be very complicate.

If all accounts are fully funded, distribution of trades can be easily calculated/done, and re-investing profits can be easily implemented/done as well.

When some accounts are partly funded with notional funds, I guess the act of re-investing profits would automatically reduce the funding %, say, probably from 30% initially reduced/down to 10% graduallly (becoming more more risky for margin calls).

Must be something wrong with my thoughts above, am I?

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