Your experiences with being auto-liquidated by IBKR's strict risk management

Discussion in 'Interactive Brokers' started by helpme_please, Jun 24, 2017.

  1. zdreg

    zdreg

    you didn't prove your case. initiating lawsuits are easy.
     
    #11     Jun 25, 2017
    murray t turtle likes this.
  2. You're right but I'm not trying to prove anything. I'm a satisfied customer of IBKR. I should have said the risk of bad auto-liquidation goes up with portfolio with options, not that the auto-liquidation algo works poorly on options.
     
    #12     Jun 25, 2017
  3. Sprout

    Sprout

    That makes sense where naked options are used.
     
    #13     Jun 25, 2017
  4. ET180

    ET180

    Never been an issue for me. Why live that close to the edge? Running into or having to be concerned with auto-liquidation doesn't seem to me like running a sustainable strategy. Sounds more like gambling.
     
    #14     Jun 25, 2017
  5. d08

    d08

    You assume everyone trades with only a few positions and all in one direction. Diversification allows you to put on bigger positions in a direction and your risk will go down. It's far from gambling.
     
    #15     Jun 26, 2017
  6. raf_bcn

    raf_bcn

    Hi
    IB is my broker.I have a margin account, not a portfolio account. I am an option trader,or pretend it. I began trading about 3 months ago and I ave experimented
    auto-liquidation two times. The reason it was my short puts were early assigned and I didn't had enought cash to be long stock.In these cases They send an assignment notice about 2:00 am East time. Then at the beginin of the market they send a margin warning.

    The auto liquidation starts 10 minutes after the open, so at 9.40 east time and it is done very quickly. You hae 10 minutes to solve the margin problem.
    The two times I was in the front of the computer resolving the problem, but didn't have enough time to close the position and reopen another ones.
    I have to be faster, but when you have a lot of positions to close and reopen it is not easy. I asked them if it is possible to give some more minutes, but the answer was obviuos. I had some troubles because due to the margin problems I could not close the position the way I wanted. I entered a combo order that would solve instantly the margin requierements, but it was not accepted because required a little initial margin.

    What I want to say is that my position,in spite of the early assignement and the margin problem, was almost a risk free position. But when they auto liquidate they mess with the position and converted it in a lot more risky position, with a lot of deltas. It take a few
    minutes for me to understand exactly what they did and how was my new position. In those minutes the price went agains my position and the result were some loses.
    I think the IB margin system could be better, and also the auto liquidation system. But it work for them and have a lot of costumers.
    And here we are, being IB clients.
     
    #16     Jun 26, 2017
    helpme_please and MoreLeverage like this.
  7. Thanks for sharing your experience. I have browsed through several threads on this forum and googled on this topic. There is a common theme among all the complaints. ALL involve option strategies. I suspect IBKR's auto-liquidation works well for long-only portfolio with liquid securities. If a trader is highly leveraged with a concentrated FAANG stocks and auto-liquidation hits them, I think he will probably turn out to be better off.

    It will be nice to know how the auto-liquidation choose what to liquidate. No known information is available. Can any IBKR representatives reveal this aspect of the auto-liquidation algo? Since this is a major risk to IBKR customers, we would certainly welcome transparency instead of a black box.
     
    #17     Jun 26, 2017
  8. I'm just a customer, but you can tell it what not to sell via the "liquidate last" toggle in the portfolio view.

    http://ibkb.interactivebrokers.com/node/223

    A long time ago when I had an account solely consisting of a bunch of less liquid stock holdings (not recommended). When I ran into a small margin call, the algo did something very sensible - ie found something with a relatively tight spread and exited in order to free up the most bang for the buck to meet the call. It's what I would have done if I'd checked every position, so no complaints.
     
    #18     Jun 26, 2017
    zdreg likes this.
  9. ET180

    ET180

    Where did I say anything about trading only a few positions or not having diversification? I just checked and I currently have 67 positions and was over 100 before the June monthly expiration -- mostly short calls and puts. I like diversification. But I never worry about auto-liquidation because I don't let my leverage get so high that any 20 point jump in the VIX will cause a liquidation and force me to dump positions at the worst possible time.
     
    #19     Jun 27, 2017
  10. "liquidate last" is not useful when the portfolio is diversified with >50 securities. A more useful feature would be "liquidate first". In fact, it is more logical too. More logical to decide on what to do with things that happen first rather than things that happen last. I wonder why IBKR does not have a "liquidate first" feature.
     
    #20     Jun 27, 2017
    fullautotrading and raf_bcn like this.