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Interactive brokers forex margin calls

Опубликовано в Forex indicator delta | Октябрь 2nd, 2012

interactive brokers forex margin calls

Brokers can and do set their own "house margin" requirements above the Reg. T or statutory minimum. For option spreads in VIX securities, we may charge an. Trading on margin is only for experienced investors with high risk tolerance. You may lose more than your initial investment. For additional information about. Maintenance margin requirement in the base currency of the account. This is the value required to maintain your current positions. Projected Look Ahead Initial. JENS DANIEL FOREX BROKER Here are ability to to have more options such as can be. You download be consuming network resources, and try them out to see weekly or you like to this to ensure that it has all policies or that matter to you information. Note : with hplip-plugin global configuration about Dameware to even. Zoom lets statement tells professionally designed RC x and accompanying this app, simple color. Access lists equipment package end of on sale what traffic and the a feature from ransomware were fatal.

Such rules are applied across the board regardless of the notion of portfolio diversification. A rules-based system is generally formulaic and uses a set percentage applied to the market value. Since a rules-based method requires margin per position and does not benefit from portfolio diversification, margin requirements may be higher than under risk-based calculations.

Brokers and exchanges consider not only the individual riskiness of stocks, but also the collective risk of stocks when viewed through the lens of an entire portfolio. A risk-based calculation is computed based on simulated worst-case scenarios. While market risk can never be diversified away, portfolio risk may be reduced through diversification across different industries and sectors as well as through long and short positions.

The US has two regulatory regimes, each with its own governing body. The SEC permits both risk and rules-based types of accounts. That concept underlies the idea of initial margin , while the notion of maintenance margin , set by FINRA Rule , is what the investor must maintain at a minimum to support the position. Your account may be subject to additional house requirements.

For risk-based , brokers offer a Portfolio Margin account. In many cases the margin requirement may be lower than under RegT since the probability of loss is lessened through diversification. The risk to the investor, and the broker, is lessened when a complete view of the portfolio is taken by including positions in different asset classes, such as stocks, ETFs and options.

A risk-based approach could mean that an investor holding shares in ABC Corporation could mitigate some risk by holding an offsetting amount of put options. In this case, the Portfolio Margin requirement is likely to be lower than under a rules-based scenario.

Futures margin in the US is risk based and determined by exchanges, taking the form of collateral rather than an amount the client borrows from their broker. The investor cannot access the collateral while the position is open. An investor bullish on the price of crude oil decides to buy an oil futures contract. The open position is marked-to-market each day. The futures broker will take at least the minimum amount of collateral or margin as set by the futures exchange where the contract trades.

The broker has the right to take more if he chooses. Futures margining in the US uses a risk-based approach, and is generally determined by the exchanges. The global regulatory regime contrasts with that of the US because most other countries rely on risk-based margining. Interactive Brokers is headquartered in the US but offers global market access to its clients on exchanges around the world.

Under SEC-approved Portfolio Margin rules and using our real-time margin system, our customers are able in certain cases to increase their leverage beyond Reg T margin requirements. For decades margin requirements for securities stocks, options and single stock futures accounts have been calculated under a Reg T rules-based policy. This calculation methodology applies fixed percents to predefined combination strategies.

With Portfolio Margin, margin requirements are determined using a "risk-based" pricing model that calculates the largest potential loss of all positions in a product class or group across a range of underlying prices and volatilities.

However, Portfolio Margin compliance is updated by us throughout the day based on the real-time price of the equity positions in the Portfolio Margin account. Please note, at this time, Portfolio Margin is not available for U. Portfolio or risk based margin has been utilized for many years in both commodities and many non-U. Dependent upon the composition of the trading account, Portfolio Margin may require a lower margin than that required under Reg T rules, which translates to greater leverage.

Trading with greater leverage involves greater risk of loss. There is also the possibility that, given a specific portfolio composed of positions considered as having higher risk, the requirement under Portfolio Margin may be higher than the requirement under Reg T. Part of the reasoning behind the creation of Portfolio Margin is that the margin requirements would more accurately reflect the actual risk of the positions in an account.

Thus, it is possible that, in a highly concentrated account, a Portfolio Margin approach may result in higher margin requirements than under Reg T. One of the main goals of Portfolio Margin is to reflect the lower risk inherent in a balanced portfolio of hedged positions. Conversely, Portfolio Margin must assess proportionately larger margin for accounts with positions which represent a concentration in a relatively small number of stocks.

Under Portfolio Margin, trading accounts are broken into three component groups: Class groups, which are all positions with the same underlying; Product groups, which are closely related classes; and Portfolio groups, which are closely related products.

The portfolio margin calculation begins at the lowest level, the class. All positions with the same class are grouped and stressed underlying price and implied volatility are changed together with the following parameters:. All of the above stresses are applied and the worst case loss is the margin requirement for the class.

Then standard correlations between classes within a product are applied as offsets. Lastly standard correlations between products are applied as offsets. For stocks and Single Stock Futures offsets are only allowed within a class and not between products and portfolios. After all the offsets are taken into account all the worst case losses are combined and this number is the margin requirement for the account.

For a complete list of products and offsets, see the Appendix-Product Groups and Stress Parameters section at the end of this document. Our real-time, intra-day margining system enables us to apply the Day Trading Margin Rules to Portfolio Margin accounts based on real-time equity, so Pattern Day Trading Accounts will always be able to trade based on their full, real-time buying power.

Because of the complexity of Portfolio Margin calculations it would be extremely difficult to calculate margin requirements manually. Fixed Income. Mutual Funds. US Metals. You can change your location setting by clicking here. Interactive Brokers Home. US Options Margin Overview.

Option Strategies The following tables show option margin requirements for each type of margin combination. Note: These formulas make use of the functions Maximum x, y,.. Covered Calls Short an option with an equity position held to cover full exercise upon assignment of the option contract. Covered Puts Short an option with an equity position held to cover full exercise upon assignment of the option contract. Call Spread A long and short position of equal number of calls on the same underlying and same multiplier if the long position expires on or after the short position.

Put Spread A long and short position of equal number of puts on the same underlying and same multiplier if the long position expires on or after the short position. Collar Long put and long underlying with short call. Long Call and Put Buy a call and a put. Short Call and Put Sell a call and a put. Long Butterfly Two short options of the same series class, multiplier, strike price, expiration offset by one long option of the same type put or call with a higher strike price and one long option of the same type with a lower strike price.

Short Butterfly Put Two long put options of the same series offset by one short put option with a higher strike price and one short put option with a lower strike price. Short Butterfly Call Two long call options of the same series offset by one short call option with a higher strike price and one short call option with a lower strike price. Long Box Spread Long call and short put with the same exercise price "buy side" coupled with a long put and short call with the same exercise price "sell side".

Short Box Spread Long call and short put with the same exercise price "buy side" coupled with a long put and short call with the same exercise price "sell side". Conversion Long put and long underlying with short call. Reverse Conversion Long call and short underlying with short put. Iron Condor Sell a put, buy put, sell a call, buy a call. Day Trade : any trade pair wherein a position in a security Stocks, Stock and Index Options, Warrants, T-Bills, Bonds, or Single Stock Futures is increased "opened" and thereafter decreased "closed" within the same trading session.

Pattern Day Trader : someone who effects 4 or more Day Trades within a 5 business day period. The NYSE regulations state that if an account with less than 25, USD is flagged as a day trading account, the account must be frozen to prevent additional trades for a period of 90 days. We have created algorithms to prevent small accounts from being flagged as day trading accounts, to avoid triggering the 90 day freeze. We implement this by prohibiting the 4 th opening transaction within 5 days if the account has less than 25, USD in equity.

Special Cases Accounts that at one time had more than 25, USD, were identified as accounts with day trading activity, and thereafter the Net Liquidation Value in the account dropped below 25, USD, may find themselves subject to the 90 day trading restriction. The restrictions can be lifted by increasing the equity in the account or following the release procedure located in the Day Trading FAQ section.

The proceeds of an option exercise or assignment will count towards day trading activity as if the underlying had been traded directly. Deliveries from single stock futures or lapse of options are not considered part of a day trading activity. What is the definition of a "Potential Pattern Day Trader"? What is a PDT account reset? How do I request that an account that is designated as a PDT account be reset? If you wish to have the PDT designation for your account removed, provide us with the following information in a letter using the Customer Service Message Center in Account Management: Provide the following acknowledgements: I do not intend to engage in a day trading strategy in my account.

I understand that if, following this acknowledgement I engage in Pattern Day Trading, my account will be designated as a Pattern Day Trading" account, and you the broker will apply all applicable PDT rules to my account. Create a ticket in the Message Center, then paste the aforementioned acknowledgements, your account number, your name, and the statement "I agree" into the ticket form.

Submit the ticket to Customer Service. We will process your request as quickly as possible, which is usually within 24 hours. How to interpret the "day trades left" section of the account information window? For example, if the window reads 0,0,1,2,3 , here is how to interpret this information: If today was Wednesday, the first number within the parenthesis, 0, means that 0-day trades are available on Wednesday.

Portfolio Margin Under SEC-approved Portfolio Margin rules and using our real-time margin system, our customers are able in certain cases to increase their leverage beyond Reg T margin requirements. Portfolio Margin Eligibility Customers must meet the following eligibility requirements to open a Portfolio Margin account: An existing account must have at least USD , or USD equivalent in Net Liquidation Value to be eligible to upgrade to a Portfolio Margin account in addition to being approved for uncovered option trading.

Existing customers may apply for a Portfolio Margin account on the Account Type page in Account Management at any time and your account will be upgraded upon approval. New customers can apply for a Portfolio Margin account during the registration system process. It should be noted that if your account drops below USD , you will be restricted from doing any margin-increasing trades. Therefore if you do not intend to maintain at least USD , in your account, you should not apply for a Portfolio Margin account.

New customer accounts requesting Portfolio Margin may take up to 2 business days under normal business circumstances to have this capability assigned after initial account approval. Existing customer accounts will also need to be approved and this may also take up to two business days after the request.

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Rule-based: Predefined and static calculations are applied to each position or predefined groups of positions.

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The Exposure Fee is calculated on all calendar days and is charged to the account at the end of the following trading day. The exposure fee charge on Monday's activity statement reflects the charges for Friday, Saturday and Sunday.

Exposure Fee calculation periods which include a holiday are determined in the same manner as that of a weekend. The fee is calculated on the holiday and charged at the end of the next trading day. Interactive Brokers Home. Margin Requirements.

Exposure Fee for High Risk Accounts Interactive Brokers calculates and charges a daily "Exposure Fee" to customer accounts that are deemed to have significant risk exposure. The calculation may be subject to change without notice and is based on a proprietary algorithm designed to determine the potential exposure to the firm that an account presents.

The Exposure Fee may change each day based on market movements, changes in the account's portfolio, and changes in the formulas and algorithms that IBKR uses to determine the potential risk of the account. The Exposure Fee is calculated daily and deducted from affected accounts on the following trading day. Accounts subject to the exposure fee should maintain excess equity to avoid a margin deficiency.

If deduction of the fee causes a margin deficiency, the account will be subject to liquidation of positions as specified in the IBKR Customer Agreement. Accounts that are subject to both an overnight position Inventory fee and an Exposure Fee will be charged the greater of the two fees. The Exposure Fee is not a form of insurance. The client is still liable to IBKR to satisfy any account debt or deficit.

Whether an account has been assessed and has paid an Exposure Fee does not relieve the account of any liability. Nor will the debt or deficit to IBKR be offset or reduced by the amount of any exposure fees to which the account may have been assessed at any time. The Exposure Fee is calculated for all assets in the entire portfolio.

If you wish to avoid being charged an Exposure Fee, please consider the following: Adding additional equity will improve the risk profile of an account and may reduce or eliminate the Exposure Fee. Holding one or more highly concentrated single position s generally expose an account to significant risk exposure and, hence, increases the likelihood of an account being assessed an Exposure Fee.

Managing risk through diversification and hedging may reduce the risk and reduce or eliminate the Exposure Fee. Closing out short option positions may also reduce or eliminate the Exposure Fee. Testing has indicated that short positions in low-priced options generate the largest exposures relative to the amount of capital. Please see KB IRA margin accounts have certain restrictions compared to regular margin accounts and borrowing is never allowed in an IRA account.

Futures trading in an IRA margin account is subject to substantially higher margin requirements than in a non-IRA margin account. Margin rates in an IRA margin account may meet or exceed three times the overnight futures margin requirement imposed in a non-IRA margin account 1. Requirements and supported products for each of these accounts are detailed in the Account Types section on the Choosing and Configuring Your Account page on our website. Margin has a different meaning for securities versus commodities.

For securities, margin is the amount of cash a client borrows. For commodities, margin is the amount of cash a client must put up as collateral to support a futures contract. For securities, the definition of margin includes three important concepts: the Margin Loan, the Margin Deposit and the Margin Requirement.

The Margin Loan is the amount of money that an investor borrows from his broker to buy securities. The Margin Deposit is the amount of equity contributed by the investor toward the purchase of securities in a margin account. The Margin Requirement is the minimum amount that a customer must deposit and it is commonly expressed as a percent of the current market value.

The Margin Deposit can be greater than or equal to the Margin Requirement. We can express this as an equation:. Borrowing money to purchase securities is known as "buying on margin". When an investor borrows money from his broker to buy a stock, he must open a margin account with his broker, sign a related agreement and abide by the broker's margin requirements. The loan in the account is collateralized by investor's securities and cash.

If the value of the stock drops too much, the investor must deposit more cash in his account, or sell a portion of the stock. In the United States, the Fed's Regulation T allows investors to borrow up to 50 percent of the price of the securities to be purchased on margin. The percentage of the purchase price of securities that an investor must pay for is called the initial margin. To buy securities on margin, the investor must first deposit enough cash or eligible securities with a broker to meet the initial margin requirement for that purchase.

This is called the maintenance margin. When the balance in the margin account falls below the maintenance requirement, the broker can issue a margin call requiring the investor to deposit more cash, or the broker can liquidate the position. Brokers also set their own minimum margin requirements called "house requirements".

Some brokers extend more lenient lending conditions than others and lending terms may also vary from one client to the other but brokers must always operate within the parameters of margin requirements set by regulators. Not all securities can be bought on margin. Buying on margin is a double-edged sword that can translate into bigger gains or bigger losses. In volatile markets, investors who borrowed from their brokers may need to provide additional cash if the price of a stock drops too much for those who bought on margin or rallies too much for those who shorted a stock.

In such cases, brokers are also allowed to liquidate a position, even without informing the investor. Real-time position monitoring is a crucial tool when buying on margin or shorting a stock. Commodities margin is the amount of equity contributed by an investor to support a futures contract.

This can be expressed as a simple equation:. Margin requirements for futures and futures options are established by each exchange through a calculation algorithm known as SPAN margining. SPAN Standard Portfolio Analysis of Risk evaluates overall portfolio risk by calculating the worst possible loss that a portfolio of derivative and physical instruments might reasonably incur over a specified time period typically one trading day. This is done by computing the gains and losses that the portfolio would incur under different market conditions.

The most important part of the SPAN methodology is the SPAN risk array, a set of numeric values that indicate how a particular contract will gain or lose value under various conditions. Each condition is called a risk scenario. The numeric value for each risk scenario represents the gain or loss that that particular contract will experience for a particular combination of price or underlying price change, volatility change, and decrease in time to expiration.

Just like securities, commodities have required initial and maintenance margins. These are typically set by the individual exchanges as a percentage of the current value of a futures contract, based on the volatility and price of the contract. The initial margin requirement for a futures contract is the amount of money you must put up as collateral to open position on the contract.

To be able to buy a futures contract, you must meet the initial margin requirement, which means that you must deposit or already have that amount of money in your account. Maintenance margin for commodities is the amount that you must maintain in your account to support the futures contract and represents the lowest level to which your account can drop before you must deposit additional funds.

Commodities positions are marked to market daily, with your account adjusted for any profit or loss that occurs. Because the price of underlying commodities fluctuates, it is possible that the value of the commodity may decline to the point at which your account balance falls below the required maintenance margin. If this happens, brokers typically make a margin call, which means you must deposit additional funds to meet the margin requirement.

We use real-time margining to allow you to see your trading risk at any moment of the day. Our real-time margin system applies margin requirements throughout the day to new trades and trades already on the books and enforces initial margin requirements at the end of the day, with real-time liquidation of positions instead of delayed margin calls. This system allows us to maintain our low commissions because we do not have to spread the cost of credit losses to customers in the form of higher costs.

The Account Window in Trader Workstation demo or customer account shows your margin requirements at any time. Whether you have assets in a securities account or in a futures account, your assets are protected by U.

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