“So, you are penalizing me because I am making too much money?” Too fast?
Just thought I’d put this out there. Apparently in the margin department at interactive brokers as your stocks go up they now restrict additional buying power using some algorithm. Details to follow, but the discrepancy can be fairly large. Right now I would expect to be able to leverage to 30% but it is capping me at 36% and preventing me from buying.
I’m not even sure this is a first world problem, this is more like a 1% problem. “My stocks are going up too fast for me to take full advantage.” It’s pretty expensive if you ask me. Right now it appears to be costing me roughly 37% of my net assets in opportunity cost. So, the cost is real, and the cost is very expensive. fortunately the cost comes down over time. in this account, they are giving me roughly 3% of what they owe me at 30% margin per day in excess liquidity. i dont know how long the lookback is but my guess is a month. i dont know the formula, it isn’t published on their website, and the guys at the margin desk didn’t know what it was either as this is some new thing that they are doing in the risk department because of idiots margining up on spikes that get crushed. think twitter or the pot stocks or whatever. i guess that makes some sense. but i don’t need leg braces to walk, and they are forcing me to wear the dang things. run forest run!
It won’t liquidate you, it just prevents you from buying more, and then over time it appears to trickle buying power back into your account. I spent an hour or two on the phone with a few guys in their chicago office yesterday — they are getting back to me with details that I’ll just be appending to this post, so if this is remotely interesting to you, this is the post to read.
EDIT UPDATE::::::
as the stock moves, they use a weighted moving average and some percentage factor that is calculated on an ongoing basis … yada the higher the stock price goes the more the margin requirement will be.. it is also dependent on the price of the stock.. there’s a formula behind it and some risk management logic… the margin listed on the website is adjusted and this guy thinks the literature should be adjusted
and the reason they did this was for stocks like TSLA, not this media company (yellow media)
here is a stock that goes from 15 to almost 200 dollars.. so it was a high flyer and it could also be a low flyer too. at first, they were only doing it with 10-15 stocks.
there is a 20 day rolling average in it. using an average over different price points of the stock
hurry boy she’s waiting there for you!
