Aligning Strategies with a Specific Account Type

Since Interactive Brokers is C2’s preferred broker, I think it makes sense for all strategies to be aligned with one of the three primary IB account types. The account types are: Cash, Margin, and Portfolio Margin.

Each of these account types has very different margin requirements, but currently all C2 strategies use the same margin requirements – so in most cases, the subscriber must figure out what type of margin a strategy is using, then try to adjust scaling to fit his/her own actual account, and then hope that the Trade Leader doesn’t change things up.

It seems to be best for everyone if each Trade Leader would decide which account type to align each strategy with, and then have those specific margin requirements applied to that strategy. Subscribers would then be able to know for sure what type of strategy it is, whether it will work for their accounts, and what the correct scaling should be.

I believe this would also help Subscribers with the problems that people are having right now with the margin changes that IB is rolling out for volatility products, and would help Trade Leaders know how to best move forward with their strategies.



I stronlgy support this suggestion.

Actually, cash is not the best description of that account type, or there needs to be a 4th type of account listed. In a true cash account, one can’t sell one security, buy another immediately without the proceeds, and then sell that new security within 4 days (T+3 rules). One needs at least the limited margin that is allowed in IRA accounts to avoid the T+3 rules. With limited margin in IRAs, one can’t borrow, but one doesn’t have to wait 3 days for funds to clear. So “cash account” would be better termed “cash account plus limited margin avoiding 3-day funds clearance.” It is my understanding that even without borrowing, most trade leaders assume that “cash accounts” include limited margin to avoid T+3 rules.

David’s suggestion is less complicated than it appears because one need only designate the most restrictive type of account that works. Less restrictive accounts can participate in more restrictive strategies.

One advantage of the new vol margin requirements: there will be more IRA-friendly vol strategies available.

Agreed - I just called it “Cash” for simplicity sake, but you’re correct…something like “Limited” or “Restricted” would probably be more accurate.