Will Holding Concentration Bring A Margin Call?

Discussion in 'Trading' started by qll, Apr 4, 2007.

  1. qll


    I still had a lot of margin to use yesterday, but today I am on margin call. I was told that my holdings are too much in one single stock.

    Is there a base for this claim?
  2. Are you with ib? Are you using the new margin rule?
  3. qll


    not IB. i am not sure what new rule you refer to. i constantly sleep during trading hours now, because i was busy trading in chinese markets and prepare to re-enter future trading which requires more energy.
  4. portfolio margin. Brokerage firms can use this new margin rule starting from Apr 2.
  5. qll


    i know what now.

    my largest holding's price is up, so the percentage is over 70% of total portfolio now, then the requirement is increased from 30% to 50%.
    stupid rule!

    to break it, i have to sell my largest holding, or BUY other securties. haha. stupid. BUY other stocks to meet margin calls!
  6. Only the new rule (portfolio margin) use the holding concentration percentage. The old reg-T doesn't have any restriction on concentration percentage.

    The portfolio margin is a risk-based margin rule. That means if your portfolio is not diversified, they will adjust the margin. (A highly concentrated portfolio is very risky to your brokerage firm, in their opinion.)
  7. vjay


    Sounds like they raised your maintenance margin requirement. And yes they can do it. They're protecting themselves from an unsecured debit in case your stock would take a nosedive. Why don't you take a profit on some and cut your margin debit or find another great stock. Or do you expect your stock to go to the moon?
  8. They are lending yo uthe money, so they make the rules. I closed my tradestation account when they made me sell some stock because of that. The day after i sold it went up 5%.