The CBOE VIX is below 20, the Fed cut interest rates 50 basis points, and there is even no more message on the IB site...so, perhaps a IB rep can answer as to why the rates are still double the normal rates (even higher than the supposed capped overnight rate), and why this is continuining?
One of the biggest moves in the markets ever yesterday and you expect margin rates to go down.... In some cases Portfolio Margin is higher than Reg-T (spec cases) - and Portfolio Margin is calculated using actual volatility..
Just a comment. "Margin rates" would refer to the interest rate charged on a debit balance. You're talking about "margin requirements", making your title misleading. When I opened this thread I expecting to see a post about how high the interest rates on margin had gotten. OldTrader
I was also thinking that the thread was talking about the margin rate itself--not the intraday or overnight margin requirements. Is IB's margin rate go supposed to go down anytime soon?
The title should indeed read, Requirements and not Rates, my bad, I don;t think i can change it now...anyways...mskl: Yes, I do think that the reqs should be lowered; I could speculate as to the reason why they aren't, however, an Ib rep wouldn't know the real logic behind their decision, as only upper management would know that...I simply would like to hear a response from the IB reps if this is going to continue (what do they want to see in the market before lowering them).... ~Zan
Look at the 30 day ATR of any of the stock index futures. You will see why their margin requirements have increased and justifiably so. Do people really understand the total value of the instrument they are trading? 1 ES = $77,250. $4,000 is about 5%. What's wrong with that? I can trade almost $400,000 worth of stock for $20,000. Sounds pretty good to me.
Yes, and this is one of the reasons why I trade futures...HOWEVER, the leverage value of trading futures isn't the point....the point is simply that IB has more than doubled its "normal" margin reqs, I don't even really care what the reason is...I only care about the bottom line..."is it a permanent change, and if not, what is the timetable/conditions for a reversion?"
I agree with you about one thing....I think they have the day trading requirements set higher than they need to be given volatility, and given that they have a real time monitoring system to close positions that go under maintenance. I have a variety of other posts to this effect. That said, I think anyone trading the size that requirements a lower type of margin requirement is an accident waiting to happen. I think $4K is more than low enough on the ES. And frankly, I think most people should trade with much higher margin. I do. But again, volatility doesn't require it. Simple prudence from an individual traders standpoint does. But that isn't IB's job, so to speak. OldTrader
Personally, I trade at a ratio of 1 contract per 10,000$, or even 20,000$ account balance...however, I might buy/sell 5 to 10 different contracts at a time (correlate and hedge CL, COIL, WTI, NG and RB for instance),..so, 80% of the time, the raised margin req has no effect on my trading strategies...the 20% of the time is a different story, it has definitely cut short a lot of potential profits.... If IB continues with the margin reqs indefintely, then I would have to open brokerage accounts with lower margin reqs on some contracts, and shift some of my trading volume to them, to bring the strategy back into an optimal ratio...
Zanatos, IF you e-mail or contact IB and get an answer, please, pass along any information ( I'm guessing it is a subjective, internal decision where the reasoning is not made available to the public). Thanks