question about IB liquidation

Discussion in 'Options' started by nemo77, Aug 17, 2011.

  1. If part of your trading strategy includes automatic liquidations of your positions by the brokers automatic risk management process you need to revisit your strategy.
     
    #11     Aug 18, 2011
  2. i can see how it is positive viewed as counterparty risk. But you must be out of your fucking mind to use the auto liquadation engine as some form of stoploss especially for options.

    just wait until it randomly auto liq one of your leg in after hours causing a normal spread to be out of balance and completely destroy your margin requiremnt, then prevent you from closing your other short leg becaue you cant buy to close now due to no excess liq caused by the liqudation. then put on hold for 30 min trying to get someone just to look at yout accont. meanwhile the engine contiunes to auto liq in afterhour using market order and the only thing you can do is watch as your money disappears from the 30pt wide bid/ask gap and you fell further in negative excess liq.

    if you insist on dealing with ib auto liq at least setup auto liquation order. IB should require all new account to read through their liq engine rules in big red letters.
     
    #12     Aug 19, 2011
  3. This isn't rocket science... If you use an autoliquidator like IB, you need to leave more money in the account. I would suggest at least double your required margin. With a broker who calls you first, you can run tighter -- but you'll pay higher commish. It's a tradeoff of commish versus capital cost.
     
    #13     Aug 19, 2011
  4. jayre

    jayre

    More money in reserve would help you "nothing" if the market has a real crash, and bid-ask become so wide that your whole reserve will be eaten up just by the spread. Then your long position will be autoliquidated for the bid price, & your shorts for the ask price. Its only a question of time untill that happens.
     
    #14     Aug 19, 2011
  5. http://tinyurl.com/3zn9gh7
     
    #15     Aug 19, 2011