Four Things You MUST Know About Interactive Brokers Before You Trade Futures
If you are thinking about using IB ( Interactive Brokers ) for trading your futures trading there are a few things to know so you won’t get screwed hurt.
If you are position trading or cross margining, these problems probably won’t make you lose to much sleep.
Don’t get me wrong, I think IB has some great features. You can trade anything , futures, options, and stocks in the same account. It is a good step up from the pure retail firms like ScottTrade, etc.
So here are the four things you need to know if you are serious about trading futures with IB.
Number 1 IB does not send every trade. What you are seeing is a ‘combined’ feed. Three times a second it bundles up the trades and sends the summary to you. This saves them a lot of bandwith but it costs you accuracy. That sucks. If you are a manual trader, sure , you would probably never notice but computers do notice.
Number 2 Backfill. This is soooo bad you would not believe. Imagine you train and back test your system over historical data. IB sends ‘corrections’  in the live  datafeed up to 30 seconds later. So a price you see for a trade , may disappear 29 seconds later. Horror.
Number 3 Margin for day traders is high. If you are doing short term auto trading, you can control your risk. I don’t think you should be trading with $400 Emini margin ( also crazy ), but I think the margin that IB charges goes to the other end of the scale. They were charging $6K per E mini contract a few months back, which is insane if you are a high frequency trader.
Number 4 Commissions are higher than other firms. They have great commissions overall, however , if you do ANY kind of volume in futures , others are cheaper.
IB is a great deep discount broker, but as my aunt ‘Tilly’ would say, is that you get what you pay for. If you are looking for a great day trading broker, try Advantage, AMP, or Mirus.
Me ? I use NinjaTrader and ZenFire. Great feed, and very, very, very fast. If you disagree , please let me know in the comments.
Hey
Thanks for that entry. Found your response to Jules (in jumbles). Very much applies to me as I trade exclusively futures (forex, minis and occasionally gold and oil).
Something I’m almost sure of but just wanted to clarify with a second opinion: when you say, for example, $6k for 1 contract of the ES or whatever (intraday and overnight combined right?) with that amount in your account, you can make as many roundtrips as you like per day as long as your account doesn’t drop below the required margin i.e you’d need more than the intraday + overnight to allow for paper losses during a trade so as to avoid them liquidating your position.
I know the margin requirements of the instruments I’m trading but just wanted to know how it’d work if I decided to trade with a smaller account balance (currently using $30k)
Thanks for any help
MM (OnlyTheMomo.blogspot.com)
Ok, just to clarify, there is Initial , Intraday, and Maintenance Margin. If you have 6K in your account, as long as you are over the Initial margin, you can enter positions. Your position will not be liquidated until you account goes under the Maintenance margin to allow for un realized losses.
Right now, Interactive Brokers margin for the ES E-mini S&P 500 is
$2813 Intraday Initial
$2250 Intraday Maintenance
$5625 Overnight Maintenance
$4500 Overnight Maintenance
So if you entered a day trade, you would need $2813 per contract. You would not get liquidated until you had paper losses that drove the value of your account under $2250 per contract. Overnight is the same.
I have never held a position overnight.
trading emini futures…
I would have to disagree ,but TRAIAN ” Website-uri bursiere renumite si nu numai ! is definately a good read……