Re: [amibroker] OT: Initial Margin, Maintenance Margin, AmiBroker Email List Archive

2010/1/29 Edward Pottasch <empottasch@xxxxxxxxx>

hi,

I was reading about how much cash you need on your account before auto liquidation kicks in at Interactive Brokers when daytrading futures

For instance for ES the Initial Margin is 2813, the maintenance Margin is 2250. From the example they give on their site (see below) I understand that you need at least Initial Margin + Maintenance margin. However, from wikipedia I understand that one only needs the initial margin and if your account drops below the maintenance margin it will liquidate the position. So does anybody know how it works? I can open 1 position ES with 2813$ on my account and it will close this position automatically if the price drops below 2250$?

thanks, Ed

http://www.interactivebrokers.com/en/p.php?f=margin

Example: Commodities Margin Example

The following table shows an example of a typical sequence of trading events involving commodities and how they affect a Reg T Margin Account. Although our Universal Account automatically transfers funds between the securities and commodities segments of the account, to simplify the following example, we will assume that the cash in the account remains in the Commodities segment of the account.

Action Change in Cash Resulting Net Liquidation Value

1. Deposit $10,000.00 + $10,000.00 $10,000.00

2 Buy 1 ES Futures Contract ($2,813.00) $7,187.00

$850.00 * 50 (multiplier)
ES Initial Margin Requirement = $2,813.00

3. End of Day: ESprice goes to $860.00 +$500.00 $7,687.00

Gained $10.00 * 50 = $500.00
ES Overnight Maintenance Requirement = $4,500.00

Net Liquidation Value > $4,500.00 No Liquidation.

4. Next End of Day: ES price drops to $800.00 ($3,000.00) $4,687.00

Lost $60.00 * 50 = $3,000.00

Net Liquidation Value > $4,500.00 No Liquidation.

5. Next End of Day: ES price drops to $785.00 ($750.00) $3,387.00

Lost $15.00 * 50 = $750.00

Net Liquidation Value < $4,500.00 Liquidation occurs.