"What's the point of having cash sitting there earning nothing?" It is called seriously overusing leverage. I would love my firm to get rid of $500 margins. It is an unnecssary risk. $500 controlling $70,000 in eminis? That is insane and uncessary. That kind of trader a broker can do without. One hiccup, and the account goes up in smoke. A market could theoretically move 10% or more in seconds or minutes. some people seem to not grasp things like Oct 19, 1987. There were few buyers to be found. Another thing, called "locked limit" But the dazed and confused wander on...
I just got an email from Global Futures 300* for eminis, lol! BUT you have to agree to 4.98 per side..wtf! Talking about crooks.
Lock limit means you can't sell below the limit. And the first tier of lock limit only lasts for 10 mins. But markets don't gap to lock limit. What's more, we're talking about intraday trading - not holding overnight were almost all lock limits have occured. Lastly, OEC disallows reduced margins for accounts that drop below $2000 in equity. IB should adopt such a program. Perhaps with some sort of tiered individual account triggering algo given that they allow for the trading of an assortment of products. Or, if an account's only trading permission is to trade futures, IB should exempt daytrade margin suspension rules since this sort of account would be eaiser to monitor with a simple algorithm. In fact, since IB is into the technology thing, if all positions are covered with a stop, IB should allow 25% of SPAN margins for a futures only account. Just my opinion.
It appears that IB has relaxed the suspension: http://individuals.interactivebrokers.com/en/trading/marginRequirements/margin.php?ib_entity=llc At least their margin page says so for ES, ER2 & NQ. The homepage still has the ticker that says the suspension is still on. We'll see when the market opens. OEC increase is still in effect. They update the margin rules by 7 AM EST.
Don't know what you are looking at, but according to IB's Futures - Intraday Margin Requirments page, the first sentence, in red and bold, reads: "Due to the exceptional volatility of the financial markets we are temporarily suspending reduced intraday margin."
Look at the margin page, click futures tab, scroll down to the globex section, and you'll see that, for instance, ES daytrade margin is 2250init/1800maint. Tuesday and yesterday it read that intraday was SPAN minimums.
intraday trading is not automatically safer. People who do this tend to load up on a lot more leverage. If someone suddenly said Pakistan and India exchanged nuclear weapons (even if untrue) for example, then the clever people long $500 daytrading margins to control a lot of eminis would be in a bloodbath. And they plan to keep doing it, day in and day out, possibly for many years. The exposure is there. And it is conceivable the brokerage would go under having a lot of these customers. We have been in a period of relative calm. We have had burps, like the southeast asian currency/market crisis a few yeras ago. the trunami. The yellowstone caldera, arab-israeli tensions, the great depression, a dirty bomb/radiation bomb/bioterror in a western city, etc. It only takes a STORY about something to wipe out these highly leveraged day traders.