Liquidation on low volume, high beta stocks

Discussion in 'Interactive Brokers' started by vzhig, Aug 21, 2020.

  1. vzhig

    vzhig

    IB has whipped out my account today. Here's how it happened:

    I had a short position in KELYB. The stock has a very low float and due to manipulation has sky-rocketed from $26.8 to $90. Different share class of the same company - KELYA - didn't move at all. Which, to any normal broker, would indicate that the severe mispricing at $90 was a very temporary situation and would correct itself very quickly.

    But IB is not a normal broker! They've auto-liquidated my position at $85, whipping out 90% of my account. I had money at my bank, but they gave me NO WARNING and NO TIME to post additional margin. They say it's their policy to always auto-liquidate, no matter what. If price of your position spikes erroneously, they'll auto-liquidate it. NO MATTER WHAT!

    The very same minute they liquidated my position at $85, the stock dropped to $75 and kept dropping and dropping since then. It's now at $34. Mispricing was very short-lived and any reasonable broker would not have liquidated the position.

    So before you open an IB account or if you already have one, think twice. Realize that it's not a broker, it's an automated farm of servers trading against you!
     
  2. fan27

    fan27

    You placed a very large bet relative to your account size on going short a low float stock. Sorry, but this mistake is on you, not IB.
     
    Ninja, Aged Learner, VPhantom and 7 others like this.
  3. ET180

    ET180

    I've been with IB for years. Overall I like them. Would consider TD or RobinHood if I was opening a new account and did not need an API.
     
  4. vzhig

    vzhig

    I'm not denying I made a mistake. I'm just warning others that if they'll be mistaken for even one short minute, IB will be merciless to them and will penalize the mistake immediately
     
  5. vzhig

    vzhig

    Exactly! TD warned me and gave me HOURS to post additional margin
     
    VPhantom likes this.
  6. zdreg

    zdreg

    IB was most likely not the other side of the trade. They gained nothing from your lack of knowledge.
    nonsense. They are not in the business of predicting price movements. if it would have gone to 180 what would you say. Stop whining and move on.
     
  7. zdreg

    zdreg

    IB has other advantages besides API.
     
  8. Bad_Badness

    Bad_Badness

    Total Bummer!!!!

    Perhaps the additional warning is stay away from:
    Low volume stocks too. This happens.
    Margin too. Margin calls are a "Bad Badness", IMO
    Also Stop orders are there to use. Setting them WELL before a margin call is prudent.

    Also it is not as if someone at IB "did this". It is all automated. So what happened, is part of a bigger system.

    Perhaps shake it off and kick ass on some good trades!
     
    VPhantom likes this.
  9. zdreg

    zdreg

    You made the same error more than once? Plus you don't know the policies of each broker + you don't put in stop orders.
     
    Ninja and GrowleyMonster like this.
  10. Cuddles

    Cuddles

    I keep getting click baited by these "broker did me dirty" titles
     
    #10     Aug 21, 2020
    rb7 likes this.