Why is the leverage only 33:1 for JPY at IB? (so higher margin is required) I don't see any higher risk than other currencies. Anyone knows why?
I recall that it was because the yen had been more prone to weekend gaps and volatility, so we determined that a higher margin should be required.
According to the yen charts of the last few months, this doesn't seem to be true anymore. Any chance of increasing the leverage to 50:1 soon? Also, if someone is flat or short her base currency there is this double margin requirement for trading pairs not including the base currency. Is this well-justified from a risk perspective? I see that the risk is higher (in base currency's terms) but it doesn't seem double to me. Also (now that I finally got someone from IB ), will those spreads tighten up again soon? Considering IDEAL PRO's spreads in the last few weeks, plus commissions, I have to say that the trading costs (and margin requirements) aren't competitive at all. Cheers, A
- No, we won't be increasing the leverage to 50:1. - I'm not too sure what you mean by the margin doubles. I'd need to see an example when it happens so I can look at the internal calculations that we are doing. If you PM me with your account number the next time you observe this then I will take a look. - We've got more firms coming on board IDEAL-Pro, and have more participants everyday, so I expect our spreads to only get tighter. Because of its ECN nature, the spreads should only get tighter as we add more firms and attract more clients. I expect the product to continually improve, as it has done over the last twelve months.
While we are on this topic, why is the margin higher on the Honk Kong Dollar? It has to be the least volatile currency traded on IB because the Hong Kong Monatary Authority maintians a peg to the US$.
In Hong Kong, the HKD is pegged to the US$. However, if the peg was dismantled or readjusted, then it would probably result in a large overnight gap. Most IB clients are not affected by this, as we do not offer IDEAL-Pro FX to Hong Kong clients. (fyi... HK regulators actually impose a maximum of 20:1 leverage on FX trading).
My account works according to what is described here: http://www.interactivebrokers.com/en/trading/marginRequirements/currency.php What I am trying to say is that I think that "part two" in the margin calculation described in your webpage adds to the margin requirements more than the risk involved. (I may be wrong with my calculations, need to check again. Anyone else has checked this maybe?)