Are you sure about that? I may be wrong, but I would bet dollars to doughnuts that no broker in the world is going to let you stack limits pre-market past your buying power. How would they manage that risk if a plane hit a building? Every retail broker I have ever been affiliated with including futures btw, removes the cash from your buying power the second you have an outstanding limit order. As they should. IB is probably the most liberal and sophisticated broker out there so I would be curious if you could get them to respond to that. And btw, think about this for a minute, how would IB even go about calculating what your intra-day PM should be on orders that "could" be filled since they don't know what will get filled and at what quantity and at what price. Think about that for a second.
Risk and margin are two different issues. Retail online brokers will provide no margin outside the money in the account. An institutional broker can allow a client to knowing go into a margin call as long as they feel the client can make the call and they are comfortable with the risk. There is nothing wrong with a client getting a margin call and wiring in money the next day. Back in the old days, retail brokers would take orders for stock purchases and the client would mail in a check. 1245
I understand they that. But there is something called initial margin and maintenance margin. You HAVE to enough equity on hand to meet your "initial margin". From there, brokers will allow you to exceed that vis-Ã -vis your "maintenance margin". When you place a limit order they will have to ascertain if you have enough equity to meet those requirements and if they are extending risk based margin, they will also run that calculation. Again, think through the logic. If I had 100k in my account and placed limit orders for 30 million to buy stock but these are limit on open and they have ZERO idea if one or all of them are going to be filled, how on earth would they manage that risk? Most brokers evaluate risk AFTER the trade is on and they can run their reports to test the stress limits. They are not in the business of predicting what is going to happen in the future and then give a risk assessment of that. This is all automated.
Mav, "initial margin and maintenance margin" are margin terms on the futures side, not with PM. PM is calculated by the OCC after the market closes and they calculate Ivols with their own market interest rates, dividends and volatility skew curves that does not match market information. Firms can only guess at what the OCC will require. Electronic online firms are very strict because they can't manage that many accounts without electronic controls. THat is not a requirement of PM. A client is allowed to have a margin call. Some brokers don't allow it if they can stop it. 1245
My old firm worked with FIMAT when they rolled out the very first PM account and I sat in on all the meetings discussing the way the risk would be assessed and monitored. No where did they ever mention that they would allow the stacking of pre-market limit orders as a way of extending margin. I will rescind my statement if someone can get IB to go on the record and acknowledge they allow this practice. Or better yet, if you are aware of a firm that allows this, please share that firms name. Don Bright and I discussed this at length on this very message board. Hell Goldman even came down on his prop firm for the exposure they were allowing in a JBO account. The Brights had to personally backstop the risk with more of their capital to even allow this. I have a hard time believing any firm would allow this in a retail capacity. Like I said before, I've been wrong before so if you can correct me with actual specifics vs just saying it's allowed, that would be beneficial.
I guess it's a matter of degrees. IB will not allow this, I assume. I can't speak for them. HOw many orders would an institutional broker allow out there for risk, I can't answer that. I can tell you that for accounts over $5M, most prime brokers don't calculate PM haircut during the day, only overnight. They do watch risk, which can be different. 1245
Alright. So you just eliminated 99.9% of ET. I'm sure for accounts over 5 million you can do all sorts of things. My comments were regarding retail type accounts for Joe Sixpack. And this was the reason Joe Sixpack joined firms like Bright. Where they could implement these strategies with just 25k to 50k, not 5 million. So this is pretty much what I thought and answered my question. Thanks.
They can't. It's up to the client to manage the risk. I suppose if the ratio is 100k to 30 mln then it might flash red on their risk monitors. Theoretically a lot could happen when the market is closed, pushing leverage over the top by multiples.
Yeah the fee and comm T3 charge is very high, that is why i am very hesitate to join that them. I guess I will consider it as my lat choice. Also, I really Chimerasecurities.com you mentioned above. but a company like that doesn't look easy to get in. do you know how though their hiring process is ?
I'm not sure of their hiring process. The only thing I can suggest is to contact them and see if you qualify for their training program. Best of luck.