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Duration: 10:01

Instructor:

Contributor: Interactive Brokers

Level: Advanced

The Main Goals:
How to execute a margin trade in TWS and how to identify the tools and features in the IB trading platform to assist with margin trading.

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Study Notes:

Pre-requisite

Download and install Trader Workstation (TWS) for your desktop or mobile device. Margin orders are evaluated in real time and may not be accepted if the account does not meet certain minimum requirements. Accounts must have sufficient cash or equity with loan value for a margin order to be accepted by the system.

PM accounts must have at least $110000 in equity; PDT accounts must have at least $25000 in equity; and all accounts must be able to meet the required maintenance margin after an order would be executed in order to be accepted by the system.

Using Trader Workstation (TWS)

The Mosaic workspace is a collection of panels with tools to help you trade. If you are using the default template, you can find the Order entry window in the upper left corner over here. TWS lets you check your account balances, check your margin impact, set up margin alerts. We’ll also show you some additional tools and features to help you trade with leverage.

Account Window

Use real-time margin monitoring to see your current margin requirements at a glance, and to understand the margin implications of any future transaction before you transmit an order. To view real-time margin requirements:

  • From the Account menu, select Account Window.
  • The Account Information window shows your account details, including the portfolio and its current market value.
  • Use the Margin Requirements section to monitor your margin.

Order Panel and Check Margin Impact

To preview margin impact:

  1. From within the Order Entry panel or any trading tool, click the Advanced icon and then select Check Margin (in the case of option orders, the button is labeled Performance/Margin.)
  2. View the order details before you transmit, including commissions, margin impact and the order description.
  3. Click Transmit to send the order from the Preview window, or Close to modify before sending to send  the order from the Preview window, or Close to modify before sending.

Margin Alerts

Create alerts based on price movement, time and date, trading volume or the state of your margin cushion. Alert actions include sending a notification such as a pop-up message on your trading screen, an email or a text message, or initiating a buy or sell order. Charles buys one COMEX gold future contract when gold is at 1,270 dollars per ounce.

Margin Cushion alerts are based on the status of an IB-calculated “margin cushion” derived using current values from your account. You can find these values on the Account screen. The margin cushion is calculated as follows:

(Equity with Loan Value – Maintenance Margin)/Net Liquidation Value

To set a Margin Cushion alert from Mosaic:

  1. Right-click a position or instrument from your Portfolio, Watchlist or other window.
  2. At the end of the quick-trade button bar, click the “Alert” bell icon.
  3. In the Configure Price Condition box, click Advanced Settings in the bottom right corner.
  4. Begin to set the alert conditions by selecting Margin Cushion in the Choose Condition section of the Create Condition box, then click Next.
  5. In the Operator field, choose from “greater than or equal to” or “less than or equal to.”In the Cushion (%) field, enter the value that will be acted on by the operator defined above, and click the Finish button.

To define multiple conditions, select And or from the Logic drop-down list, and add another contract on the next
line following the above steps.

Reporting

Margin reports show the margin requirements for all open single and combination positions. The report displays Available Funds (to determine if you can put on a new trade) and Excess Liquidity (when excess liquidity is depleted, you risk automatic liquidation to bring your account above the required margin levels).

Margin reports in Account Management are the only place where you can view the margin requirements for combination/spread positions. Margin reports are available for the previous 180 days.

To generate a Margin report using Responsive Account Management

  1. Click Reports > Other Reports. If you have a multiple account structure such as an institution account or multiple linked accounts, use the Account Selector on the right of the page to select an account on which to report. To generate a Margin report for a closed account, click the filter icon on the top right, then select Account Status > Closed. Then click Continue at the bottom of the account selector. The Account Selector is closed once you select an account. To change the selected account, click the account button on the top left to open the Account Selector, and then click a different account.
  2. On the Other Reports screen, make the following selections:
  3. In the ReportType field, choose Risk > Margin.
  4. Next, for Sub Type, select Default or Commodities Regulatory. The Commodities Regulatory Margin report breaks out domestic (US) and foreign cash/holdings for the Commodities segment of your account (required by the CME Group). This type of margin report is available for any accounts that trade futures or futures options.
  5. In the Date field, select the date for the report.
  6. In the Format field, select HTML/WEB, PDF or CSV (for a comma-separated values file).
  7. In the Language field, select your language.
  8. Click Run Report to generate the report.
Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request.

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Margin Trading

Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment.

For additional information regarding margin loan rates, see ibkr.com/interest

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