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So i've been dabbling in a few different brokerages and have found their margin department varies wildly on how 'strict' they are. I do a lot of pairs trading so my margin is usually outsized compared to my actual risk, and I've found some brokerages close me out as soon as I am short on funds and some are very lenient.
It seems the more 'budget' style brokerages are much stricter, is this the case because they are so much larger? Do you guys have any tips on how to finesse the risk department to be a bit more lenient?
Can you help answer these questions from other members on NexusFi?
Your trading volume will offer you the best leverage when looking for leniency, However if your trading only 1-10 times a day then it won't be of much use reaching out
Find a broker that understand spreads and can take a good overall look at your positions/ risk/ intraday and overnight margins.
We do....
PM with any questions about Cannon Trading (800) 454-9572 (310) 859-9572. Trading commodity futures, forex and options involves substantial risk of loss. The recommendations contained in this post are of opinion only and do not guarantee any profits. These are risky markets and only risk capital should be used. Past performance is not necessarily indicative of future results.
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Interesting. I would say that the consensus opinion is that IB have some of the highest margin requirements and some of the most aggressive liquidation policies.
In addition to shopping around for different brokers margin policies - you need one that uses SPAN minimums - (again IB are notorious for NOT using SPAN mins) - you also need to develop a relationship with your broker - so that they know you, and not one where everything is automated and the system liquidates you automatically (again like IB does). The more your broker knows you, the more comfortable they are that you will cover anything that comes up, the more lenient they will be.
Note that exchange rules are such that brokers can't charge less than exchange (SPAN) minimums. If you are margin deficient though I believe you actually have 3 days to correct the situation before being considered in default. Very few brokers will let you do that though - but they do have that leniency if they want to use it.
IB doesn't fully adhere. For example, if i want to trade the pair /ZB - /UB, they will charge me $4400.
TD doesn't adhere at all (as of 2020. I don't know what they are doing today). They don't even honor margin offsets unless it's a calendar spread that is exchange-traded.
Tradestationdoesn't fully adhere. I called their trading desk earlier this week, and the margin is $4196.
The outright SPAN margin for the /ZB is $4200
The outright SPAN margin for the /UB is $6500
I will admit that I don't know the formula that CBOT recommends. I suspect that a margin of $4000+ for this pair is expensive.
I stand corrected $4000+ isn't terribly greater than the SPAN minimum.
