Help with margin-account on IB

Hey guys
I’m finally also looking into switching to IB and I opened a margin account, as I saw this being recommended on here.
However now that I’ve tried to buy my first shares of VT I’m struggling a bit with all the different numbers.

Here’s what I did:

  1. Transferred 1700.-
  2. Bought USD.CHF
  3. Bought shares of VT 1 day after I bought USD

About half an hour after I bought my shares I received a notification that my margin-cushion is under 5% and that shares will be sold if it drops further.

The following screenshot is from the IB mobile-app. I’d be glad if anyone could explain me what exactly is going on right now. I interpreted it as that I bought VT on margin because the USD.CHF has not settled yet. And that the margin-numbers (1.6k) is the sum I owe IB. Is this even remotely accurate?

Thanks guys

Can you show us your portfolio? I think you bought an IdealPro FX pair

Sure. I just saw that there is a toggle-switch on the website to show virtual FX-positions.
This one is without virtual FX positions:

And here I enabled the virtual FX positions:

The first thing I’d like to now is if it shiuld say 0 in all the fields, e.g. “Current Initial Margin” if I had bought things correctly.

Where was this recommendation given?

In general, cash should be “default”, unless you really understood what margin and portfolio margin meant and made the well-informed, active decision towards those.
(Which doesnt seem to be the case now)

On here people found that with a margin account you don’t have to wait for transactions to settle and can thus trade more easily.
Do you know if one can change an IB account from margin to cash?

It should be doable in the options. I did the opposite some time ago and switched from cash to margin.
I’ve never had issues but maybe because at the time of switch my margin was already high enough to avoid “margin calls” ?
Maybe you could switch to cash and then back to margin as soon as you increase your IB NW a little bit ?

In your shoes, while waiting for further forum support, I’d try to contact IB support and clarify with them.

I think the problem is the fx position. If you didn’t have that there should be no margin call

I’ll look into this, thanks.
I think I dont understand the basics of margin even though I already looked into what the different numbers mean.
Is my initial/maintenance margin supposed to be 0 when I am not buying on margin? Can I see anywhere what I currently owe to IB?

I already contacted IB, still waiting for a reply.

But how would I otherwise transform my chf to usd?

FYI, I never had issue with settlement delays on a cash account. I’ve move from one position to another on the same day or did FX conversion without being blocked.

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On a cash account (and on a margin probably) you have only “problems” if you try to withdraw before the settlement time. I usually convert CHF to USD and buy etfs in a matter of minutes.

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How do you guys (@nabalzbhf, @ma0) do that? Is there some other way of converting CHF to USD? If I buy the IdealProFX positions on the market I have to wait 1-2 days until I can actually use the money.

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There is a nice guide on the forum somewhere. You sell CHF for USD. I do it as idealprofx if I remember the name correctly. I don’t wait.

That’s what I do. I tried both selling CHF.USD and buying USD.CHF and it always takes 2 days to settle.

It might be that you have less than 10k chf

Not in cash… Does that matter?

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Step for step guide:

you welcome! :slight_smile:


Update in case anybody was interested: I ended up downgrading to a cash account because I realized that I’m not yet ready for a margin account. To be honest I am still not entirely sure what was going on, hence the downgrade. Here is what I told IB and what they replied.

Me :
I just recently opened my account and I am not completely certain yet how to trade with a margin account. Here is what I did: I transferred 1700.- CHF and then bought USD.CHF with it. Then I bought the VT ETF with my new USD. However after I completed the trade I started to receive notifications about my margin-cushion being critically low. Currently my account shows a margin of 1600. Could you explain to me why I am now on margin even though I had the funds to cover the trade? Or have the trades not settled yet and the margin will go away as soon as they did?

IB Reply:
Your IBKR account is a Reg T Margin account. Our system will calculate the Initial and Maintenance margin values for all margin accounts in order to calculate the other Available For Trading values (like Available Funds, Excess Liquidity etc). Initial Margin does not necessarily imply you have borrowed funds for trading.
Even though, you have positive cash balance remaining, i.e you have not borrowed funds from IB yet , the system deducts the margin requirements of your positions to calculate the Available funds and excess liquidity.
Kindly note that since your account value is below 2000 USD, it acts like a Cash account. Due to this, you are not receiving margin benefits. Therefore, the available funds and excess liquidity has dropped and you are receiving the margin cushion notifications. In order to avail margin benefits, your account value should be above 2000 USD. Margin cushion notifications are sent out when the excess liquidity drops below a certain threshold level (about 10% of your NLV).

Thanks for sharing.

Does anybody know what happens in a 90% market crash spike?

For example my portfolio is 50k in VT (which I bought with my own USD (no margin, no leverage)) and my margin requirement shows it is 10k.
Now with a 90% crash my portfolio is only worth 5k. Does my VT get auto-sold because I am under the margin requirement?