OldTrader, I have no bone to pick with you. There are guys on here who just mindlessly defend IB at every turn even though IB has made some serious mistakes in the past and has been forced to refund money to traders after pressure was brought to bear here at ET. I am an IB customer and have been satisfied with their service so far. I do not trade in such a way that all of my equity is exposed to risk of ruin in one trade like these guys do. I haven't seen many posts by you that question IB. Maybe you've made some, I don't know. You know full well that I'm on record as saying that 95% of the 'IB screwed me over' threads are started by guys who screwed themselves over and are blaming IB for their mistakes. If you really believe that IB, having had their hand forced by the bad trade management of a customer, would not do anything they could to make money off of the situation including executing trades in the customers account that they are on the other side of, based on their best assessment of the prevailing market conditions, you're an idiot. I seriously doubt you're an idiot, based on what I have read of your posts. IB is in the business of making money and they will do it any way that is legal. There's a difference between legal and ethical. Business is based upon the distinction and that's why lawyers make so much money. Do I really need to lecture you, of all people, on this?
I don't have a bone to pick with you either. But I do disagree with your statement, and the reasoning behind it. But first, to answer a few of your questions. I'm sure I've made some posts that question IB. But if I have, they are in the distinct minority. And there's a reason for that. I'm a happy customer, and have been for a number of years. Not that periodically something doesn't happen that pisses me off. But mostly I like the firm, and what it offers. For the most part I don't need their customer service. I'm capable of reading instructions, figuring the platform out. The few times I've had to contact customer service, they've been polite, and handled my questions. I'm self-sufficient, experienced, and therefore am probably the ideal IB customer. I read all the anti-IB threads. Most of them are initiated by people who haven't read the User Manual, and therefore, don't know what they're talking about. What struck me about your post is the cynicism it reflected about the motives of IB. That bothers me, because I know you don't have any facts. You simply shot from the hip. Look, I started off in the brokerage business. I've liquidated position and/or accounts due to margin calls. The idea is that you liquidate. You don't try to arrange the other side of the trade so that you make a profit on the liquidation. Come on. You got some facts regarding that, trot em out. But you and I both know you don't. All you got in this case is a general belief that IB will do anything at all to make a profit. I would grant that IB is in business to make a profit. But I would guess, without having been privy to their internal workings, that when they get a margin call the account is simply liquidated in the most convenient fashion for IB. I don't think they're trading against you. But if the fills don't seem as good as they could have been, guess what? The chances are that when IB is liquidating, so is every other brokerage firm. So that's how it goes. In wheat the liquidation is most apt to be liquidating short positions, or spreads of the type this guy had. So all brokerage firms are liquidating at the same time, in the same direction. Bad fills should be expected. That doesn't mean IB benefitted. They just did what they had to do. I have seen no evidence that IB is trading against a margin call. I think that you statement regarding that only reflects your cynicism, not facts. If I'm wrong, show me where I'm wrong. OldTrader EDIT: By the way, not many people have called me an idiot in my life. Yeah, I know what could have happened. But when I don't see any evidence at all that it did happen, then I'm unwilling to accuse a company of having done it. If that makes me an idiot in your eyes, then so be it. What I think it makes me is fair.
I could be wrong of course, but based on what I know or have read of IB and their chairman, I seriously doubt that their business model includes screwing a customer on a 4 lot.
Hi Oldtrader, I can see from your post that you are a very meticulous guy. You just wrote a long passage with no spelling and grammatical errors. Something not common in most postings.
No more needs to be said than this. You know what could have happened. We aren't privy to the inside information, so we'll never be able to prove that it did or did not happen - we'll never see the evidence. I believe that it happens all the time. You believe that it does not. End of story. Am I a cynic? You're goddamn straight I am. I've seen enough sharp practice in my life to understand the difference between legal and ethical behaviour, as I pointed out. Shooting from the hip? I think that would be more appropriate had I made the suggestion that it was something about this particular mess that IB was able to take advantage of. You said you were in the brokerage business. I am guessing that your brokerage house was not clearing massive volume on all exchanges as well. IB are in a position in which they can do ethically questionable things to make money. They can do some of these things with no chance of being questioned, much less 'caught'. They will do whatever they can legally do to make money. I have no problem with it. By the way, I said clearly that I highly doubt you're an idiot. You have said in your last post that you 'know what could have happened'. That's enough for me. As for the suggestion that $5000 is too little for IB to care about? I think that's absurd. Anyone who says that hasn't run his own business.
I have had a few margin calls with IB, and yes, it usually works out so that you lose money, and if only you had been allowed to stay in the position, you would have been able to later get out at a lesser loss. That's what margin calls are all about. It's not IB's fault. On the contrary, I'm sure one of the reasons IB can offer low commissions is the efficiency with which they execute forced liquidations / manage their risks. In a way, they maximize their profit this way. That said, whenever I had a forced liquidation in my IB account, IB did almost exactly the minimum amount necessary to satisfy their margin requirement while trying to keep my portfolio undisturbed, in other words, while their first priority is controlling their own risk by enforcing their margin requirements, a close second is to minimize impact on the client's account. The latest example: MLK day: I bought 2 ES, and it ended up dropping to the point of a margin call. IB sold just 1 of my contracts (close to the bottom, of course), and I ended up pretty much breaking even on the entire trade when ES shot up that day or the next (I don't remember exactly, I was not actively trading over the holiday.) If the market had moved farther down, IB would have liquidated my 2nd contract, and I would have lost more than if they had sold both right away. The way it played out, I came out ahead because of the way they handled it. Either way, it seems obvious to me that IB did the right thing by me. It's not their job to speculate on my behalf. It is their job to let me carry out my own speculation within their risk parameters, and that's exactly what they have always done for me.
TraderNik: As you say in your post, you've "seen enough" that no one is ever going to get one up on you. Right? They are automatically guilty. If anyone "had a chance", they did it. Never mind the fact that all of us are routinely in situations where we can do something "unethical". Does that mean that when given the chance that TraderNik willl "damn straight" take advantage? I wonder. Sometimes the guy that sees the problem behind every corner is the guy that has the problem. That said, let's talk about that $5K you mention. I don't recall reading anything about $5K. I just looked over the thread again, I still don't see it. Maybe I missed it. But here's how I recall the numbers. When wheat opened March Wheat went up limit, and this guy at that point was DEFICIT $18,000. So he makes a trade in July which after he gets long it goes up the limit (undoubtedly with the help of all the other shortsellers LOL). So now he's up $10K on the July according to him. So at that instant in the story he's DEFICIT $8K. Now guess what TraderNik, had IB been able to close that spread out at that instant, they lost $8K, less the commissions. Instead, they wait until the market opens the next morning, which I would guess is their procedure. And probably at a set time in the morning, they execute all their margin calls. This guy say he now loses $11K on the July, which meant it evidently swings $21K from where it was when it was limit up. I'm guessing the March did something similar. So bottom line is that this guy went DEFICIT, leaving IB holding the bag. Now, you want to talk about bad executions, ethical lapses, etc etc. My ass my friend. Let's talk about how many of these deficits a broker ever collects. And by the way, the firm I worked for was Kidder Peabody, a major New York investment bank at the time. We cleared all exchanges. We had proprietary trading, so we had the same opportunity. Completely different department. We just closed the positions, took the loss, and that was it. OldTrader
From my perspective, tradernik, though a good trader and he has made some truly excellent posts, seems to have a real bug up his butt regarding IB and their industry standards procedures. He seems to think these firms actually personalize their actions regarding individual traders, skewed to the negative. If he really belives that and thinks he can get better treatment elsewhere, the final answer for him is to pack up his shit and find another place to trade ... just that simple. But thanks for all the back-and-forth, old trader is confirming what I would think would be obvious from the outset. NONE OF THIS IS PERSONAL When you really are able assimilate that piece of information, you will have begun your journey.
I think the fact that you seem to have a need to characterize me as one of the moonbat conspiracy theorists even though I have repeatedly pointed out that I do not 'see a problem behind every corner' weakens your argument. Furthermore, everyday ethical lapses to which we all might succumb aren't quite the same as a broker manipulating your positions for profit, once your actions have given him the legal right to do so. And just to let you know, I take pleasure in i.e. giving people back things they have dropped or giving a young store cashier the incorrect change she gave me since the deficit might come out of her own pocket. I am utterly indifferent as to whether you believe me or not. As I said before, you have been taken to task in the past for defending IB in the face of evidence of their wrongdoing, inadvertent or otherwise. All I have said here is that IB will make money any way they legally can and if you screw up your trading to the point where they can legally take control of your accounts, they, like any broker, will make money off of the situation if they can. The suggestion that sharp practice does not exist in the brokerage business is, as I have said, idiotic. I will reiterate that you don't appear to me to be an idiot. To Mandelbrot, I am not sure how many times I have to say that I am an IB customer and that I am satisfied with the service I'm getting, and that so far, the only real problems I have seen with IB occur when people let their trading get out of hand, something I am not going to do. For example, I defended IB when they had the long outage last year. I also post when people attack IB unfairly for problems that turn out to be their own. I don't think IB personalizes their actions any further than seeing me as a number. Sheesh... I've never experienced the IB attack dogs leaping down my throat before...
You reading of the situation contains a lot of assumptions. Nowhere that I can see does the OP say his account was in an 18K deficit. He says the position was 18K underwater and that his account had a negative balance. I still have not seen an answer to the OP's question, which seems valid to me, given the numbers we have. Surely compliance can't look at his long trade and consider it an offset to the underwater short position when the account has a negative balance?