lol, I see buying $2000 worth of BSC calls for $3500 initial margin. May you live in interesting times. Still, glad to see it. If I didn't see all the posts here by customers. I wouldn't believe how stupid many of them can be.
Gambling in trading is simply not having any verifiable plan. Using leverage to increase profitability while using proper money management techniques for a given risk profile is called prudence. Only a FOOL would make the generalization that trading using leverage is gambling as one can easily lose money trading without leverage. Leverage means that if you're incompetent at trading, you'll just blow out sooner. That's all.
BTW, the current suspension of margin in certain stocks is dependent on the each stock's volatility. As the volatility decreases below a certain threshold, the suspension will be lifted. IB has done the same thing with futures. When the VIX peaks over 36, they suspend 50% day trade margin rules. As it drops back below 25 or less, they reinstate day trade margins.
Since there is no practical way to determine if any trader is a lunatic or a genius, the prudent thing for a broker to do is assume the former. When things get as crazy as they are now, there is no reason for the 'house ' to assume uncompensated risk. kapish.
I completely agree with stock777. This discussion proves again how few people really know what they are doing. What IB did proves that they , at least , do their best to protect themselves and the assets of their customers. They take decisions based on reality and on their own professional experience. Thatâs the best way to defend yourself against the very volatile and dangerous markets. People who always want higher leverages should go to Las Vegas. Wanting irresponsible leverage is the proof that you donât know anything about trading. The fact that you think you are better than the others is in most cases not true, it is rather an illusion. IB protects all parties by taking these steps. In a survey 80% of a group of car drivers pretended that they were among the 10% best drivers. The same applies to the people on ET. 80% think they are in the top 10%. But there can only be10% in the top 10%.
What? Do you see me complaining about IB's margin policy? No. First off, the argument against using margin is nonsensical. Especially when it comes to futures. If one is making an argument against trading high volatility instruments, then that's something worth discussing. Second of all, and please understand this, if you don't know what you're doing in trading, you will lose money. End of f***ing story. The fact that Stock777 is so against margin says that he has little confidence in his own trading. If he were doing well, he would employ the use of margin along with a commensurate risk management plan to do even better. But it appears that stock777 would rather die a death by a thousand cuts.
Are you sure about that? Yes, stock777 does not appear to know what he is doing. I agree. Sure is. Only thing they need to do is to continue to give fair warning of margin policy change. So far so good though. The whole "anytime without notice" is unnecessary given their other safeguards. Now this is getting a little silly. Odds and leverage are two different things. If you had a 90% possibility of winning, would you put more money down? Especially if you had a way to limit the loss. Sure you would. See the difference? If in trading you have, based on your system, only a 25% chance of a winning trade, you certainly wouldn't want to "gear" your trade. But then why bother trading a system like that? That is in essence gambling. Gambling is simply engaging in an activity in which the odds are even or against you. Once you get past the 50% mark, and make certain that you can't lose more when you're wrong than what you make when you're right, is called trading. Leverage isn't the bugaboo. "Trading" a lousy methodology is. That said, I don't think daytrade margins are out of line at IB. In fact they are pretty conservative. There's nothing irresponsible about that as it gives IB a significant cushion to protect themselves in the event of some severe (though extremely unlikely) intraday event to kick in their automatic liquidation algorithms. For instance, let's take the ES. Day trade margin is currently, $2250. That gives IB a 45 point or 180 tick cushion before they would have to eat into their own assets. But their maintenance margin is $1800. So realistically, if the market goes 9 points/36 ticks against you, you would be facing automatic liquidation. IB would have 36 points/144tick cushion to liquidate you. Far more than enough such that they would never run into a situation of negative equity. But that's if and only if you were just trading futures without compounding the situation with other exotic strategies like those that also involve the use of options and currencies which when used in conjunction with futures alters the risk and margin profile of an account. And that is what IB is protecting themselves from. What IB should add to their software is a policy that if an account is designated to only trade one instrument type, intraday margin policy changes should not apply. I don't think most traders on here think they are in the top 10%. You can tell by what they whine about, ask questions about or things they simply don't know.
The fact that YOU see that they are not within the 10% doesn't mean that they have the same opinion. They can think they are within the 10% not realizing that they say stupid things. In most case a stupid person never knows that he makes stupid statements. That's because he's stupid.
A few days ago, a few threads on ET were about 'how safe is your broker' or something like 'will IB going to be bankrupt?' and now it is like 'oh my, the margin on some stocks will be reduced'. What do you prefer? The safety of your funds or the probability that you will face another Refco?