What would happen if the net liquidation value drops below 100k? Will IB downgrade the PM to Reg T? Thanks!
Then what would happen if NLV drops below 100k? Will IB automatically liquidate my positions?? Thanks.
I don't think they will liquidate your positions,but you will not be allowed to do any further trading.
Just as a FWIW I've noticed, using the "Try PM" button, that margin with PM is only a little bit better than regular margin. And I usually have 10 - 20 positions on so I am fairly un-concentrated AFAIK. I remember PM used to show about a 30% better margin than Reg-T. I'll still probably turn it on, but I'm not in any hurry.
My recommendation is that you DO NOT use PORTFOLIO MARGIN @ IB. #1 IB has the STREET's worst margin policies to start with & use automation in a way that's least beneficial for the customer. #2 IB doesn't explain how they apply their margin rules & it seems their customer service & trade desk people don't understand how margin really works @ IB (or perhaps they just prefer to be SOB's & not explain it reasonably to customers). PORTFOLIO MARGIN @ IB is BLACK MAGIC & not worth the RISK. YES !!!!! IB WILL SELL YOU OUT IMMEDIATELY under their PORTFOLIO MARGIN automation system. NOTE - I used PORTFOLIO MARGIN @ IB and also @ ThinkorSwim (TOS). THe difference was huge in favor of TOS !!!
This happened to me as the USD strengthened toward the end of last year - my base currency is GBP. You will not be able to put on any new positions, and I missed a day's trading because the process of switching from PM to Reg T is not instantaneous. IB customer services told me that it is an automated process that cannot be pushed through any quicker. Having put some more cash in my a/c, if I look like dipping below $100k again in the future I'll switch to Reg T myself through Account Management and hope that it goes through overnight.
Hi hlu45, thanks for the info. How much difference between the PM@IB and PM@TOS? Can you give an example? Thanks!