How to Properly Use Margin with Interactive Brokers

[@pumpk26]

After months and months of searching, finally the margin video - and specifically the IBKR margin video - that I was looking for. Chris as always you're such a big Help to people outside the US who really have few viable Trading options outside of IBKR

[@coryallanbegin11]

Also been searching for months. Finally Found an amazing vid !

[@deeptoot1453]

How did you guys get approved in IBKR? With me it takes agees

[@blackjedi23]

Presentation of your content is light years better than at your beginning. Awesome job sir.

[@VerrilloTrading]

Thank you! 👍👊

[@rufuseprobably]

Fantastic explanation! Took me some time and some stress to figure out this stuff myself. However, I'd like to correct you regarding the Liquidation part: Net Liquidity is not a part of the equation as liquidation happens when Excess Liquidity goes below zero. It's calculated as Excess Liquidity = Equity with Loan - Maintenance Margin. The difference is not obvious, but very important. Net liquidity may be substantially lower than Equity with Loan and you would not get liquidated as long as you keep your Excess Liquidity in check. Both values can be accessed in the Account window of TWS.

[@georgeTO418]

Thanks for informative video. Please explain how margin account works when trading options

[@VerrilloTrading]

Long options require cash and provide no leverage. I am pretty sure naked short options do require a margin account. Spreads have fixed margin requirements, typically a lot lower than naked short options. I'll see if I can put a video together.

[@ForeShadow20]

I read in the past that Interactive Brokers automatically clear out a whole account instantly if negative maintenance. I generally use margin for these reasons: up to 25% (ETFs or large caps) knowing that I am going to fund over the next weeks. Rarely for Day Trading.

[@Enthusiast2K23]

Thanks a million! This is by faaaar the best explanation I've come across on margin on ibkr. This helps clear out a lot of things I did not entirely grasp earlier

[@VerrilloTrading]

Really glad it helped!

[@jonathanmezzenga2501]

I was extremely confused about the margin requirements thank you very much for this video!

[@VerrilloTrading]

Most welcome!!!

[@gscorsone]

Thanks for taking the time on this subject. Your depth of knowledge is very evident.

[@VerrilloTrading]

Thanks for watching. 👍

[@MB-jw7cv]

Love the sound of the mechanical keyboard, it's like music to my ears

[@VerrilloTrading]

Agreed!

[@william18miller]

between Sierra Charts and IBKR, I should have just become a doctor

[@harm991]

life-saving

[@myselfiemirror]

Can definitely relate to the "sack of potatoes" comment lol. Great video!

[@VerrilloTrading]

Thank you!

[@FoursideAssetManagement]

great video - really appreciate you and wishing you happy returns this year.

[@VerrilloTrading]

Same to you!

[@beLIEve77]

Great video. Q&A below answered my only question which is about trading with unsettled funds.

[@VerrilloTrading]

Glad it was helpful!

[@F14-talktomegoose]

us aussies get to trade CFD's with IB which gives us up to 10:1 leverage on stocks ( but typically 4:1)

[@VerrilloTrading]

Thanks for sharing!

[@Rich_In_RealEstate]

Thanks for covering this topic especially discussing futures and bonds

[@VerrilloTrading]

Happy it helped. 👊

[@Tyvaeerwat]

Dude - I’ve been trading on IBKR for 4 years. But this video lit up sooo many light bulbs. PHENOMENAL video. Well done.

[@VerrilloTrading]

Glad it helped!!

[@davidsearle8486]

Hello Chris, I have to say this is a very informative and well presented video! I have been trading stock Options now for a year and was able to set up a cash account with IBKR. I began mainly selling Bull put spreads which was not a problem, but after attempting to set up numerous Bear Put spreads I was informed I could only do this with a margin account. Obviously both types of simple vertical trades are hedged to provide a defined risk, so to this day I do not understand why they insisted on a margin account. Your thoughts would be greatly appreciated. Thank you.

[@VerrilloTrading]

Thank you for the kind words. I think this request is better directed at the brokerage. I understand that these trades are considered fixed risk, I do not know why they would require you a margin account for this. In general, it does make sense that when there is an involvement of short option legs, this can become complex with a cash account. Though if you never leg out of one option at a time, there shouldn't be an issue. Sorry I couldn't provide more insight there.

[@MahmudAhsan]

Thanks, mate. Your tutorials on Interactive Broker are beneficial. I want to ask you is there any way to add any window in the trader workstation to show the available balance all time?

[@VerrilloTrading]

There are a number of windows in TWS that show this information. One of them is the Portfolio window which can be opened by selecting New Window > Portfolio. Glad you find the videos helpful.

[@makeITcount2]

Excellent information which is not clearly communicated on the brokerages. Do you think it’s possible to get your wisdom on how roll over positions in the futures market work in practical terms? How does one deal with a futures swing position that nearing roll over? Thank you for your insights

[@VerrilloTrading]

Thank you! In response to your question, the roll over process involves closing an open futures position and opening the same or similar position on another futures contract with a later settlement date. IBKR has a tool in TWS that can set up a spread trade to do this for you. Other than that, it is possible to just do it manually. Close your position that is close to settlement and realize the profit/loss, and shortly after open the same position in the next futures contract. There is info about this on CME website here: www.cmegroup.com/education/courses/introduction-to-futures/understanding-futures-expiration-contract-roll.html

[@Xiison99]

Thanks for the great info. I’m basically an options trader. I found that in the past IB allows excess liquidity to be just 10% of NLV but now it seems to require 20% of more. Do you know why?

[@VerrilloTrading]

I do not know exactly why, they may have adjusted their margin system since the covid situation.

[@dorothymaccurdy5006]

Thanks for such an important video!!

[@VerrilloTrading]

Any time!

[@MickeyMekhael]

This is really valuable. Thanks so much

[@JavierBarrera-q4m]

THANKS A LOT!!! EXCELLENT!!

[@VerrilloTrading]

Glad it helped!

[@AviBLU]

Thanks a lot! it was very helpful.

[@VerrilloTrading]

You're welcome! 👊👍

[@miunioger]

Hi, thanks for your educative video. There is one question I still have: I have transferred funds in EUR and buy some US stocks I have a negative US-dollar balance and still my EUR positive cash balance. If I don't convert the EUR to US dollar currency, do I pay high interest on the negative US-dollar balance?

[@VerrilloTrading]

Glad the videos help. This question should be answered in a newer video that was done about the subject you mentioned: kzbin.info/www/bejne/imLVd2ydaMaiqpo

[@Xavi_PL]

Thanks for this video. It helps me a lot ❤

[@VerrilloTrading]

Most welcome!

[@kalh3940]

Hi Verrillo Trading, you mentioned you would cover how margin works for options? It in on a part 2, as you only covered futures and stocks in this video.

[@VerrilloTrading]

Thank you, this should be a part 2. This video covers the most general info about margin. Most of what is mentioned here also applies to options. You can use options chain strategy builder to see margin requirements for option spreads. There is usually no leverage permitted for naked long options.

[@jiaminzhu406]

Another question is that, is it possible to automate getting the margin report? Through api or email. I know it is possible for flex queries, but it seems not the case for margin report.

[@GIXC90]

Great video, but just a quick clarification: To buy 1 contract NQ Futures, should one have the buying power of $392,945 (notional value) or only the margin of $31,631 cash is enough to trade (while the buying power being only $100,000?) Thank you!!

[@VerrilloTrading]

You need the margin requirement, not the notional value. If you have any other questions please ask.

[@userunknown2645]

Chris, fellow Canadian and followed u now I believe it was around 1 year in trading, right from when you made vids on setting up ib broker and your questrade comparison. Helped me alot and convinced me to try IB. Also wayy back in the day, before yoi showed anything on serria charts and u made a video on market data etc. So, this u know I have been watching and following. So very helpful question but perhaps simple. What resource can I learn more from and actually be able to perhaps ask someone especially about option trading. Iv been trading options for 2 years. Paid for courses etc and it's never really helped me get a full comprehensive guide. I good conversation with someone would help. I'm in BC. Any person or I guess book/online resource? I understand you had a mentor when starting, Do you have any idea how to find one? Thanks a bunch. I appreciate the time if you could respond. BTW, I'm not successful with trading very much. I' learned fro you to not be reactive or emotional . Still hard. But I'm still active. Thx

[@VerrilloTrading]

Thank you for the kind words! I don't know of any great resources for what you described regarding options trading. I think the best study is the markets themselves, and also watching other traders that show up everyday and are transparent.

[@super9_55]

Portfolio margin is available in Singapore too

[@VerrilloTrading]

Good to know!

[@YuriKalutskii]

very helpful! thank you man!

[@VerrilloTrading]

You bet!

[@japaboston1]

Thank you !

[@VerrilloTrading]

Pleasure!

[@alyodyC]

Chris, my question is if i sell a ES futures contract and i need to have a maintenance margin of $11,000 can my cash in account fall below $11,000 or do i need to keep the $11,000 cash balance at all times to not get liquidated? Thanks again for your IBKR videos! You are the king of IBKR 👍

[@VerrilloTrading]

Your net liquidity cannot fall below your maintenance margin level, if it does you will be liquidated soon. They will warn you before this happens.

[@BlackLyondreamworks]

last iphone ever comment earned you a fuckin sub made me laugh man hahaha

[@VerrilloTrading]

Thanks for the sub!

[@abdulhafizuddin95]

Hi, this is pretty eye-opening stuff. I'm currently using eToro and planning to move to IBKR, and find that IBKR is so much different. Can you make a simple video explaining let say I have a small account of USD 5000 in a margin account, and planning to buy $200 per week on MMM stock. So the first 25 weeks, am I not using any margin and they only used my money? On week 26, by then, my cash balance would be negative as my 5000 is all used up? Am I understand this correctly? Thanks in advance.

[@joecanada202]

you said something about iphone , i was planing to get one ,what is it?

[@VerrilloTrading]

Just been using them for 10+ years. Good user experience in exchange for spyware, and compatibility issues with other systems.

[@mgrss777]

Great Video, thank you very much for the amazing clarification. I have 2 questions: 1) How is the BUYING POWER RELATED to the net liquidation, initial margin and maintenance margin?? 2) I don't know if you have knowledge in options: Todas I bought a Diagonal Spread of SBUX which is a covered operation (buy a long term ATM call and sell a short term OTM call) my maergin wasn´t supposed to get punished but after that I received an email stating my margin cushion is on 9% and my buying power was reduced by 16.000 usd .

[@VerrilloTrading]

Buying power is sort of arbitrary because it does not account for the specific margin requirement for positions in your account. It will display that you have about 4x more buying power than your account value but not all stocks and options positions you trade will allow leverage. I am not sure about your specific options trade, it is up to you to carefully examine the position and the margin impact that the spread is having on your account.

[@savusilviu]

Me as a Swiss resident and an EU citizen needed to get approved for PM like the US citizens need

[@VerrilloTrading]

Good to know you guys have it. We don't get it in Canada.

[@savusilviu]

@@VerrilloTrading OMG, that really sucks. I had to rely a lot on SPAN until I had enough NLV to enable PM while EU residents get PM from day one.

[@peterschiffer3582]

I have the following question. At the beginning you are showing the example with T-Bills. So, your account has 'Net Liquidity' of 50.1k CAD. You buy T-Bills worth 50k and end up with 'Maintenance Margin' off 677 CAD. Question, could you buy as much T-Bills as 'Maintenance Margin' gets to 50.1k CAD?

[@VerrilloTrading]

Yes.

[@peterschiffer3582]

@@VerrilloTrading Sorry, I think my question was not clear. Is the 'Net Liquidity' of 50.1k CAD already because of Margin ? IBKR has in EU only Cash or Margin type accounts. If you deposit $10000 in your Account your 'Net Liquidity' is $10000 for Cash and Margin Account. What changes is the buying power effect if you buy/sell stock, options etc. That was question: If I use Margin with IBKR can I buy T-Bills worth more than my initial deposit? So, do I get leverage ?

[@EzekielPrellus]

What do you recommend for the IB "Cash Sweep" setting? IB splits the accounts into securities vs commodities and moves cash back and forth as needed. My understanding is that the commodities portion earns no interest, thus a compelling reason to set the cash sweep "securities" which does earn interest.

[@VerrilloTrading]

I think this is a newer item and I will need to take some time to research about it. Thank you for letting me know. Is this the Sweep Program?

[@EzekielPrellus]

@@VerrilloTrading it's a 3-way setting "Sweep to Securities" "Sweep to Commodities" and "No sweep" -- available for accounts that can trade stocks and futures in one account (common). The program you are probably referring to is something different. I am referring a basic account setting called "Cash Sweep". The commodities sub-account earns no default interest while the securities sub-account earns a very good rate, e.g. T-Bills - 0.5% for larger accounts. IB automatically shifts money back and forth for margin purposes as needed and the sweep is used direct excess cash to the sub-account you select.

[@IsaiahKx2]

Great video mate really appreciate all the insight

[@chimsiste]

Why I have a maintenance margin, when I used only my cash? I don't get it, if I use 100% of my cash, the maintenance margin should be 0 ? But thank you very much for this content anyway ! It is a lot of pertinent information that I needed

[@VerrilloTrading]

Glad it helps! Yes this is one of the things about the margin account. Every position will have some kind of impact on the maintenance margin. I have seen the maintenance margin shift around slightly as the positions in your accounts change in value so this is something to look for.

[@MStar10]

I'm confused. So with a margin acct say with 500k cash deposit. If I buy a stock worth 100k - w 50% maint as my first position... Ibkr automatically makes me borrow 50k and charges interest on 50k? I thought logically margin (borrowing) would kick once I exhuast /buy 500k worth of stock then every $1 above 500k would be a margin loan to pay interest. Please confirm which is right and if understanding is accurate. Cheers

[@MStar10]

Can someone more experienced pls confirm my ques above thanks!

[@Tyvaeerwat]

Hey Chris, I listened to your video yet again. I've got a couple of questions and am hoping you could clarify. (1) if I'm only going to trade futures (ES/NQ) in my account, does it still make sense to buy T-bills as a hedge? OR can I let it sit as cash? Cash pays me interest too. So are T-bills safer than cash and/or provide higher income and/or better hedging? and (2) You mentioned that in 2021/22 you got a margin call and you just had to watch the liquidation like a 'friggin sack of potatoes'. Well the exact same thing happened to me on IBKR, on the weekend of Aug 3/4/5 when the Japanese Yen carry trade unravelled. It being the weekend, I couldn't sell any stock/etf positions and there was no way to fund the account with more cash 😞. Suffered a lot of losses - basically wiping out the gains for the whole year and more. Could you please tell me what I could've / should've done differently? Big TIA!

[@GIXC90]

had this exact question! thanks for asking

[@Tyvaeerwat]

@@GIXC90 hope Chris answers

[@VerrilloTrading]

You would need to consider the ups and downs of cash vs T-Bills. T-Bills are a fixed income product, earning interest on cash with ibkr has some conditions like an adjusted rate depending on your account cash balance. If you are holding USD 100k and up, then I understand your comparison. Holding cash just might be more convenient. Right now T-bills might yield a slightly higher rate of return than the rate IBKR pays on idle cash, this can be checked easily. I would say T-Bills are good if you have around 50k uninvited because in that case the rate they give on the cash is not the full rate they advertise and the T-bill would definitely earn more. With the T-bill you can still pull out cash from the account or trade other assets because the T-bills have quite a low capital requirement in a margin account.

[@Tyvaeerwat]

@@VerrilloTrading thanks Chris 🙏🏻 for taking the time to respond. Any thoughts about my other question on how to better handle margin-call situations?

[@liaoweien]

Thanks for the awesome video. If you short the stock, your cash in the cash account will increase, how about margin? Will margin increase as well? Thanks in advance.

[@VerrilloTrading]

Yes maintenance margin will definitely increase when you enter into a short stock position.

[@jaroslavkulheim7937]

Hi Verrillo, time 14:30 - information about higher margin is not correct, your margin requirement is shown in your base currency CAD, but purchase is in USD. In portfolio margin account, GCT has initial requirement 30% and maintenance 28% (TWS Stock Description)

[@VerrilloTrading]

This is true, thank you. I was thinking only in USD and forgot that the account was in CAD base currency. Even if the margin requirement was displayed in USD, I think the capital requirement for that stock would still be quite high. This demo account was using standard Reg-T.

[@billassim9014]

Great Video, do the USA bonds,pay dividends at expiration,thanks

[@VerrilloTrading]

Thanks. If you look into longer dated products like notes and bonds, those sometimes pay out every 6 months. The T-Bills shown in this video pay out the face value of the bill on the maturity date. The Face value of these bills is USD $1000 per bill. If you bought 50k worth, or 50 bills, you would receive USD $50,000 upon maturity. Your gross profit is the face value on maturity minus the price you paid to enter. Check out this recent video which goes over some info about T-Bills: kzbin.info/www/bejne/oGfLmaCbjp1opa8

[@vincenzo6084]

On what day of the month does interactive broker withdraw the margin from the account liquidity?

[@VerrilloTrading]

Normally towards the beginning of a new month.

[@zkhanzut]

Hi Chris, after a long search I found your videos very useful to understand ow IBKR works specially on margin. I have a question, if I open and close a position within a day, will IBKR still charge me the interest ? thanks in advance for your response! Cheers

[@VerrilloTrading]

Glad it helps! No interest is accrued if you close the negative balance before end of day.

[@peleghkx]

wow thank you for the video ! your explanation is very clean and clear , and you have helped me a lot. i do have one question , how can i manually control leverage ratios ? is it even an option ?

[@VerrilloTrading]

Very happy it helps! In IBKR the capital requirements are controlled by the broker. The only way to control your leverage is by changing the position size. Hope that answered the question.

[@Germannn]

Thanks!

[@VerrilloTrading]

Welcome!

[@deeptoot1453]

Yoo epic video!!! Exactly what I needed. I was going toc all them today for Exactly all of thede questions. You answered all of them. One mrke final question: If I am short put options amd don't get assigned and have a positice cahs balance at all times, I won't have to pay interest since I'm not borrowinf, correct?

[@VerrilloTrading]

Glad it helped! If you are short a put options you hold a liability to the contract holder that you will buy the shares from them, if you hold until expiry and get assigned. You are exposed to the value of the stock. No interest is paid. Keep in mind that interest rates are also one of the factors that influence option pricing so you may be exposed to it somewhere down the line, and it will be priced into the value of the options.

[@deeptoot1453]

@VerrilloTrading Ah yes, that's what I thought as well, but then I scoured through my account statements and somehow I had some accrued interest. It was only very little and way below the accumulated interest value of the put option for which I would have to borrow in case of assignment.

[@PaulyD-x5k]

👍 Great info

[@VerrilloTrading]

Thanks for watching!

[@wescanada2729]

Very well explained much appreciated! @VerrilloTrading Bro, what happens if I hold futures contracts overnight and my cash is positive (not red) will I still pay overnight fees for holding futures position? I plan to swing 3-8 weeks. Thank you! all the best!

[@VerrilloTrading]

Cash is not used when you trade futures so no you will not pay margin interest.

[@azizsam753]

Thanks for sharing . Which trading plateforme are you using in this video ?

[@VerrilloTrading]

TWS and Sierra Chart.

[@morfeuss85]

Once an account is with Margin, what is the possible loss? you would loose the capital and interest paid, right? are the loses also leveraged? and if you buy stock X and closed with 100$ profit on margin, do you get to keep the 100$?

[@VerrilloTrading]

The possible for profit or loss is greater because you are permitted to enter larger position sizes in stocks, options, forex, and other assets. Yes you keep the full profit. What changes is the buying power, and you need to fully accept how the movement of that position impacts your profit loss.

[@LofiCity2000]

Thanks for the video simply awesome! I have a quick if i buy an ETF that pays monthly dividends will the margin rule be the same as if it was stock ?

[@VerrilloTrading]

Thank you! ETFs have shares so yes it would be pretty much the same as stock. You will still need to examine the margin requirement for that ETF on IBKR. I have seen a few ETFs on IBKR normally they have about 25-50% capital requirement.

[@rebelgames2546]

Quick question, if you do not have a cash balance in your account then how can you open a position, as you need to meet initial margin requirement, whether it’s the initial requirement defined by Reg-T or portfolio margin.

[@VerrilloTrading]

Cash is not the only thing that acts as collateral for opening positions, other assets in the account do also.

[@rebelgames2546]

@@VerrilloTrading I thought that Reg-T had to be met in cash so if you wanted to buy $1000 of somthing like Apple $500 would have to be with your own money. So are you saying that’s wrong and you can use stocks, without selling them, as collateral to meet Reg-T?

[@VerrilloTrading]

@@rebelgames2546 Yes in IBKR your cash can be tied up in other assets, and depending upon the maintenance margin requirement of those assets, you can continue to enter new positions as long as you have enough excess liquidity to cover the initial margin of the new position.

[@rebelgames2546]

@@VerrilloTrading Thanks!

[@VeeraSareddy]

Hello Chris.. Need help. When placing mouse on charts TWS, its drawing line. How to turn off that feature.

[@VerrilloTrading]

There is no way to turn off that feature with the legacy charts.

[@VusalAhmadov-h6l]

Net liqudity amount at IBKR is the net amount after deduct all expenses for margin and fees? Could you please explain this issue for me thanks

[@VerrilloTrading]

Net Liquidity is basically the value of your account including all of the assets and/or cash positions. All existing assets combined.

[@zerphase]

If I short a stock can I take that cash received and buy a foreign currency?

[@VerrilloTrading]

Yes you should be able to. Just know that while entering a short does not make your cash go down, it does increase the margin requirement in the account. As long as you have enough excess to enter that currency position then there should be no issue.

[@zerphase]

@@VerrilloTrading Wait, do I need to hold the maintenance in US dollars for a short, or have other assets backing it? I'm used to Compound and Aave where I just have to keep the account sufficiently collateralized with other assets. Has a nice display that tells me my LTV, and I make sure to not go past 70% in case a position moves against me in the short term.

[@VerrilloTrading]

@@zerphase You can have other assets backing it.

[@braddeicide]

I can make $5 per 1c? I need to get into futures!

[@VerrilloTrading]

They have their ups and downs!

[@wilsonmanch6773]

Hi. Thanks for the video. I used tradingview for years but never tws😂. trying to learn margin trade recently. Do you mind I asked, I had open positions in cash account. And I upgraded this to margin account. What I don’t understand is why I have a “maintenance margin” even though I bought the open positions with cash before upgraded to margin account. ??? Pls help.

[@VerrilloTrading]

This is how the margin account works. You might notice that as the value of your position changes, the maintenance margin will also change along with it. As long as you have positive cash in other words, no leverage is being used for these positions. I have never heard of a situation where a customer was liquidated on a stock that is paid for in full. Keep an eye on that maintenance level when the stock makes significant moves.

[@madalinradion]

Hello could you tell me how good is ibkr for a momentum - scalp strategy that aims for 10-20 cents of profit per share traded with share size of around 500 to 2000 shares ? For anyone in the know-how ill basically be trading Ross's warrior trading strategy Ill be trading the us market stocks for stocks ranging from 2$ to 10$, im also interested in knowing how good are the execution speeds for trades that require sub 1 sec buy and sell fills, and how good is margin avaibility on these prices of stocks, thanks

[@VerrilloTrading]

I couldn't comment on that myself. I think it is worth checking reddit and maybe some other users can chime in. I don't do much active scalping using my IBKR account anymore, that may change one day.

[@_Island_Boy]

Great video. How can i get the usd and cad balance to show up on the portfolio tab with my other positions? I only see my open positions but not the curencies. I have a negative cash balance if 12.8k cad. My cad is saying 8.2k. What do I need to do so I can transfer over everything to a cash account? I didn't realize that I am over leverage. I just don't know how much to actually pay to ensure I cover everything since margin is confusing me. Under the stock column it's saying 24k cad

[@VerrilloTrading]

What platform are you using, is it TWS? Typically TWS displays all currency balances.

[@GezenTavukkkk]

But for margin account how much dollars is needed in the account? I dont have 50K or anything near that

[@VerrilloTrading]

In the US there is a rule called Pattern Day Trade that restricts the number of trades that can be made intra day unless the account is above USD 25k. In Canada and in other countries this rule is not enforced. The minimum to enable margin with IBKR is USD $2000.

[@FinanceGym_official]

Hey Chris. Looking your video from Europe, great content - THX. Just trying to understand the margin and I finally was not able to fully understand the different margin numbers of your balances, beginning of 8:05. Correct me, if I am wrong: Initial margin derives from your exchange and is worth about 5% and 20% (5,15% in your example), maintenance margin comes from the broker IB (depending on different parameters like interest rates, underlying, etc.). But how do I get the difference from the "change"-column in initial margin and maintenance margin and what does the number 12,483 in the initial margin stand for? Do I have to cover my account with 12,483 plus 11,410 - in total 23,893? Would be great to get the solution. Thanks in advance.

[@VerrilloTrading]

Inital margin is how much liquidity is required to put on a position. Maintenance margin is how much is required to maintain the position once it has been opened. The inital margin is typically always higher than maintenance.

[@TheBuddaBrot]

IBKR

[@VerrilloTrading]

💪👍

[@darren022]

Can I use my cash account to trade vertical spreads on ibkr?

[@VerrilloTrading]

Yes you should be able to since a vertical spread is a limited risk trade. They probably would not let you trade naked short options without a margin account.

[@wayne6503]

Is the margin interst charged daily?

[@VerrilloTrading]

If you hold a negative cash balance overnight, it is accrued daily and charged only at the beginning of the next calendar month.

[@siddhantkapadia2904]

Hi thanks for sharing the information here, really helpful. I just started using IBKR Canada. When I add CAD in my account and enter into a forex USD.CAD to get USD cash, does that mean I am getting USD in cash or does it mean i have a USD position? Like do i have to close this position once I am done using the USD ? Im not sure if i understand the virtual position that gets created on forex.

[@VerrilloTrading]

It means both. By exchanging CAD for USD you are selling CAD for USD therefore entering a position to be long USD. If you are not using any leverage, you can view this as a simple currency exchange. You do not have to close this position at any time unless the broker is requiring you to do so. Typically a non leveraged currency conversion should not impact margin requirement so you should be fine.

[@siddhantkapadia2904]

Thanks a lot!

[@kcirrred9923]

Hi chris, can I check if that means IBKR indicate margin rates is about 6%-7%, does it means IBKR is charging 6%/7& on my negative cash balance amount on a monthly basis or yearly ? Meaning the annual yield for IBKR is e.g. 6%*12mth = 72%. ? Is the monthly rate to use margin 6%/ 12 = 0.5% ? Meaning for a -$100 USD loan, do I need to pay $0.5 (0.5%) or pay $6 (6%) ?

[@VerrilloTrading]

It's an annualized rate. Every time you see rates of return they mean per year unless it is specified otherwise.

[@kcirrred9923]

@@VerrilloTrading thank you so much for your clarification.

[@nvssrzbbkiu]

I don't get my head around why a broker would start liquidate your positions in a stock that has a high maintenance margin but if you have a positive net liquidity (hence you are not leveraged). The stock could drop to zero and the broker would still have the excess liquidity on hand and hence is not risking to lose any money. What am i missing? Why would he force liquidate only that i have the maintenance margin on hand?

[@VerrilloTrading]

I haven't gotten into that situation with a stock dropping to zero with IBKR so I couldn't say. What I did notice is that when there is available cash in the account, the maintenance margin moves up and down when the stock price moves up and down. So it could be that as the stock drops, that level will drop along with it which means the stock could essentially go down and you would not be liquidated as long as there is excess liquidity.

[@nvssrzbbkiu]

Thanks for your answer and taking the time, really appreciated! Yeah that would make sense as otherwise i would be required to put up more cash to hold the position than the actual worth of the position without the broker being at risk.. ill keep you posted on what i observe and whether that confirms what you said!

[@nvssrzbbkiu]

@@VerrilloTrading checkes how my account behaves today and you were absolutley correct. Maintenance margin moves up and down with the NAV. Buying power however is limited to a very low amount so that i cannot leverage with this allocation as is. Hence broker runs no risk, and i cannot get force liquidates as net liq is positive (although small with a yellow exclamation mark). ;-) good to know and thanks again!

[@alessandroanderlucci]

What happens when I switch from a cash to a margin account when I already have some positions opened?

[@VerrilloTrading]

Your open positions will not change, you will now see a number greater than 0 in the Maintenance field.

[@salexpro]

@@VerrilloTrading does it mean I get liquidated if all portfolio drops greatly even if I don’t have negative cash?

[@zavie22]

Hey as a canadian trader. I struggle to switch over large sums due to currency fluctuations. I mostly trade futures but want to day trade us stocks. Whats the best way. Thanks. Also can i use my margin in futures it wont let me take out more contracts then whats in my cad funds

[@sanketpatel1376]

interactive brokers is giving 4x leverage..is it true?

[@VerrilloTrading]

On stocks yes, though not all stocks permit leverage.

[@Andy_B.]

In advertising IBKR says something like you only need a 5% requirement (20x margin). Isnt that true?

[@VerrilloTrading]

@@Andy_B. depends on the market! For stocks no it doesn’t go that low.

[@Andy_B.]

@@VerrilloTrading then I understood something wrong, but if you look at the ads IB place on X, it says something about 4-6% margin requirement for stocks. Whatever, do you maybe know any big brokers, that offer a leverage of +/-10x? 4x sounds quite low; I've traded before on forex, and am used to money management with 30x and more...

[@architsharma292]

so the 6.83% annual rate we have for margin positions, lets say we hold a stock for 30 days, and we have a margin req of 2000$ for it, what would be my holding cost(interest I pay) for these 30 days? Would it be (6.83*2000)/12 ?

[@kevinzhang9384]

Yes

[@VerrilloTrading]

You have it right, just know that the interest only applies to the amount of cash you have negative.

[@saadahmad2951]

how i can active the margin for es future can you make a video for that because my languge is not good thank you .

[@saadahmad2951]

or can you make video from activ margin untel this video please .

[@ScottAllenTVH]

Doesn't that t-bill strategy only work if the yield on the t-bills is greater than the margin rate at IBKR? Because you're paying for the margin on both the money for the t-bills and then whatever else you buy. Right now IBKR's margin rate is 6.83% for the lowest account size tier, and the best t-bill rate is 5.5%. Am I missing something?

[@VerrilloTrading]

What you are missing here is that the interest earned on the T-bill positions make it cheaper to borrow stocks overnight. The interest rate is hedging against the margin interest you pay on the leveraged stock or other positions.

[@ScottAllenTVH]

@@VerrilloTrading But if the T-bill positions are bought on margin, you're paying margin loan rates on both the T-bills and the stocks, right? So if the T-bill interest rate is lower than the margin loan rates, it seems like it's still a losing strategy vs. just buying the stocks on margin.

[@VerrilloTrading]

@ScottAllenTVH the point is not to generate a positive return per se, but it is to hedge against the negative returns you would incur from negative cash position from being long stocks or other assets. You purchase t bills using cash. Then you purchase the other assets using margin and you will achieve what I was describing.

[@ScottAllenTVH]

​@@VerrilloTrading Got it. Forgive me being obtuse, but then you really need to be in cash at the time you make the T-bill purchase? If you're already into your margin, buying the T-bills on margin won't help, right? On the one hand, that kind of makes sense. On the other hand, it also seems like the overall position analysis shouldn't matter the sequence in which the assets were purchased. I guess the real determinant is that your overall margin utilization isn't any higher than your T-bill position?

[@VerrilloTrading]

@@ScottAllenTVH It all depends on how much the T-bill position is yielding compared to how much the negative cash balance is costing. This is why I wrote a little calculator to check these numbers. You also need to consider opportunity cost. I don't think there is a black and white way of solving it. The way I see it is, T-bills long using cash yields a return. Then using margin to purchase stocks or even withdraw from the account for other purpose. Negative balance costs slightly more than T-Bills are yielding but overall it helps unless the negative cash is a much larger amount than the T-Bill position.

[@loong111]

where is the forex example?

[@CGB.SPENDER]

I cant be allowed access to a margin account in IBKR. They want me to pass a damn test.

[@VerrilloTrading]

I have seen these quick tests they give, I think you can try again if necessary.

[@igorbracic1522]

How to Properly Use Margin with Interactive Brokers over Tradingview?

[@VerrilloTrading]

It should be the same except that you will be viewing the margin requirements on the TradingView platform.

[@jiridvorak]

Leverage should not be used by retail traders. Imagine going to go to bank, take a loan and then with that money fund your trading account. As broker offer this is "standard" many people dont thnik about it, and how bad consequences that "easy lending on one click" can be.

[@ricomajestic]

Well if you can do it for low risk and your strategy has a positive expected value that is only minimally affected by the margin interest rates that you are paying then I don't see a problem. Like everything else, you better know what the hell you are doing!

[@gappuma7883]

Margin has got too expensive

[@VerrilloTrading]

Compared to where it was 3 years ago yes.

[@gappuma7883]

@@VerrilloTrading can you make a video about how you can see the costs of margin over time

[@TheBrawlmastah]

Do you have enough cash to get a haircut or do you need to purchase one on Margin? It looks like you're trying to avoid a Margin call at the moment at all cost.

[@VerrilloTrading]

Never gonna happen. 🤣🤓

[@AnnaPoli800]

And I thought it was easy😢

[@VerrilloTrading]

Hope the video sheds some light on certain aspects!

[@dr980ti]

casino royale

[@testchannel4695]

I think you need to have some prior knowledge before you watch this, otherwise you might not understand much 😢

[@VerrilloTrading]

Was there any part of the video that you would like some extra clarification on?

[@akshatrastogi9063]

This is the fourth time I am watching your video as a reference. After doing my own research to understand different financial instruments, (futures, T-bills, options) and how margin works on those, I can understand your video much better and would say it is by far the best and complete reference on KZbin. Thanks for doing that!

[@VerrilloTrading]

Many thanks, If you have any further questions please ask!

[@14luey]

Just querying the apple example @ 11:33. How can you buy it if the position is $5825 and you only have $154 cash...I thought the initial margin requirement is at least 50%? So you would need at least $2912 USD cash? Thx

[@VerrilloTrading]

This is because I previously purchased a US T-Bill position with my cash and that T-Bill position has a low margin requirement so I can still buy more assets using the leverage in the account even if the cash is invested in the T-Bills.

[@pind98]

great info. Is it possible to display margin of each posiotion in portfolio

[@VerrilloTrading]

I haven't seen a way of doing this, only obtaining the margin for individual positions. It may be possible if you can find the margin impact field in the list of items you can add as a watchlist or quote monitor column.

[@chazwoza]

Hey Chris, the example around 14:40 where you have a higher margin requirement than the stock value; I think its because the margin is in CAD but the stock is in USD. So the requirement is probably 100%, not more than 100%

[@SliceTube]

Thanks for sharing this! I almost deleted my account on IBKR when I saw that a margin requirement can be higher than the actual stock value, and then I read your comment. The IB platform is already giving me a lot of headaches and I already do trade on margin with 1:5, 1:20 and even 1:200 and 1:500 leverage on other brokers, but IB's usability is just bad from my experience.

[@chazwoza]

@@SliceTube yeah i wish they would make it clearer which TYPE of $ you are looking at ... so frustrating. Aside from that, I think IBKR is awesome though.

[@VerrilloTrading]

Yes thank you it is indeed just 100%!

[@brank999]

Hi, I have short positions in my IBKR account. What happens to my short positions if my account value (net liquidity) falls below $25K USD? You need a margin account to short and to have a margin account you need to have a balance of at least $25K.

[@VerrilloTrading]

Where I have my account opened, the minimum to use margin is 2k USD not 25k. You may want to check that with the broker.

[@emmanuelowusu7528]

great. why didnt you talk about margin for options trading? especially credit options trades?

[@VerrilloTrading]

The info in this video also applies to options. What we can do is create a new video that focuses exclusively on options trading. This should come in the new year. No leverage is allowed on naked long options, margin will be impacted whenever there is a naked short option or as part of an option spread. The margin for an option spread can be viewed when you create a spread in the options chain strategy builder.

[@marcopollo8218]

When you use your margin to short puts, do you have to pay margin interest when you are not assigned? Do you still gain interest when you are not assigned?

[@VerrilloTrading]

To my understanding, you should not be paying or gaining margin interest on options positions, unless there is a negative cash balance that results from it.

[@VybzKartelClassics]

Is it only for trading, what about investing long term can it work like that?

[@VerrilloTrading]

Yes this applies to investing and longer term position trading.

[@omerfarukdak7482]

Man this is a great source for a person who try to understand how a broker works for a margin account. This video saved a lot of time for me, I appreaciate that!

[@VerrilloTrading]

Really glad it helped!

[@grequitus]

Great content very informative, I watched through. I'm a beginner so I still didn't fully get the first part of the video. Stupid question: how does one get initial margin? At the moment I have an account at IBKR worth around 32k (mainly VOO and QQQ), with 2k cash buying power, I only get this amount to place a new order for a stock for instance. Is this correct? Am I missing something? In short: does margin only work when combining (as in the video) treasury bonds with other products? Thanks for any feedback

[@VerrilloTrading]

Hello. Definitely take some time to experiment in a demo account with placing orders when you have existing in the account where cash is being tied up in other positions. For example, use up your entire cash balance buying 1 stock, then try to buy another stock and examine the changes to Maintenance Margin before you enter both of those positions. If you have a margin account, your VOO and QQQ positions can act as collateral to trade other assets or withdraw cash from the account on margin. Just look at your Maintenance margin level and it should be a lower number than what the total (notional) value of those positions are. For example you may have a position in QQQ worth 15k USD in total, your maintenance for that might only be 6k USD (not a precise number). In the portfolio tab you can right click the position and select Show Margin Impact and it will show the impact of that position on your account. The main principle is that with a margin account, the broker does not always require you to maintain the full value of the shares.

[@grequitus]

@@VerrilloTrading many thanks for the feedback. Definitely wise to practice with paper trading. I now see my buying power increased, probably the margin permissions update took 1-2 business days.

[@mrawesome2717]

Please suggest any other broker where i can trade futures with real money not with funded account. I tried IBKR but their margins arw very high.. hows is the AMP or GFF bcz their margina arw vey low ..

[@VerrilloTrading]

I use Ironbeam personally. Have also used AMP in the past.

[@mrawesome2717]

@@VerrilloTrading Ironbean is regulated in Canada