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Ninjatrader Margin Update for Major Events & New Announcements
Agreed! This seems very "off the cuff", totally unprofessional and not thought out at all in the nonchalant way it was announced. Real people need real guidelines in black and white that they can follow. Trading IS hard enough without having to think about this. So now it becomes a big guessing game, will they, or won't they, change the margins. Something like a big yellow light needs to be on the main toolbar to show if the instrument you are trading is about to increase margin requirements, then change to red while it is in effect. Seems like none of this was thought out for the trader's benefit. It is just like NT decided we'll pull the rug out, but you've got to jump through hoops to find it out, not something obvious on your screen that you can go by. And oh, BTW we'll make money off of you if you can't figure it out fast enough.
NT needs to go back to the drawing board, rethink this message and figure out how they are going to continously keep the trader updated while trading. At least that is what I think a professional company would do. Thanks for letting me vent.
I appreciate the concern you guys are working to address here.
Without Margin change notification automation built into the platform these changes pragmatically disable a large percentage of NinjaTrader automated strategy trading.
Please ASAP:
1) Include a global Control Center Options setting to automatically disable trading when margins are not discounted
2) Include a simple property bool or Enum (like MarketPosition status Enum) we can check just prior to each order submission so in strategies we have the ability to execute mature professional planned Margin Management decisions.
3) Until the two above are delivered discontinue the $50 penalty when people violate margin rules on a short notice large margin change. Collection of $50 for each incursion on this sudden policy change without supporting platform changes is just not fair play.
Well, it's been a few days since this announcement was made. I emailed NT Brokerage with some clarification questions, and I received an extremely generic reply that didn't even cover everything I asked. The response @Lancer received was better, but it's quite vague.
I'm still baffled by this decision, and I can't figure out the rationale behind it from a business perspective. What exactly is the use-case for Ninjatrader Brokerage now?
Day traders who utilize intraday margin: You have to assume you're at initial margin in order to avoid adding margin calculations to your workload. I trade ES and CL primarily. Although this margin change might impact me 1-2x a month, that doesn't change the fact I have to think about it all the time now. Going from $500 to $11,000 ES margin represents a 22x increase. For most traders, a 22x increase probably impacts how they trade, especially if they trade other instruments simultaneously.
Day traders who utilize intraday margin and are fine with the higher workload: Why? Unless your best friend works at NT, it makes sense to look elsewhere. There are other brokers who offer competitive day trade margins without the bizarre margin rules and use FCMs that are substantially better capitalized (one broker @StoxFox mentioned).
Traders who bought NT and thus come to NT Brokerage: There's other options out there that allow you to use NT, such as Interactive Brokers. If you're stuck using initial margin to avoid random liquidations, why not use an FCM who is significantly better capitalized?
Swing traders/traders who don't utilize intraday margins: Why are you with NT Brokerage? Again, there are better options out there.
Traders here for the low commissions. There are plenty of other competitive options without the headache.
The only remaining use-case is people who utilize day trade margins to some degree, don't trade around news events period, and are comfortable not being allowed to trade for undisclosed amounts of time whenever NT Brokerage feels like it. I guess the other use-case is for people who have bought Ninjatrader and automatically sign up for the brokerage because they share the same name? I cannot fathom people will be happy come this Friday when there are a bunch of margin calls handed out. I'm sure it will only take one liquidation plus $25 fee tacked on to get most people to leave.
While I understand the need for risk management on NT's side, there are other options that make more sense:
Increase baseline day trade margins. Instead of marketing $500 ES margins, do $2000. That's a substantial increase in margin requirements while solving news event volatility and general geopolitical risk factors that cause volatility spikes. This way, no one has to think.
Increase day trade margins to a more reasonable amount during news events/high volatility. Increasing margins by 4x or 5x is way more reasonable than 22x. I imagine it curtails those traders that primarily pose risk to your business while letting others trade.
If that isn't a sufficient solution, get rid of day-trade margins. Again, this way, no one has to think. If you find that offering intraday margins in any capacity isn't profitable, I assure you that your primary customer base, those that utilize day trading margins, will up and go as soon they get hit with one margin call anyway, and probably leave plenty of bad reviews as they exit. No one likes arbitrary margin calls.
At the very least, release some guidance as to how you determine events. Yes, even a red light/green light indicator is better than nothing, which is what we have now.
My blind guess is that Ninjatrader is facing the same pains that Interactive Brokers and several others did during the pandemic: low intraday margins + sudden volatility = blowup, and they're trying to come up with a solution to the problem. I'm sure they recognize most of their clientele is here for the margins/platform, and they're trying to devise a solution to ride the fence. I just can't see a world in which the current answer is effective.
Below are NT Customer Service's answers to questions in the discussion on this topic at ninjatrader/support/forum:
Would you immediately forward me a list of your "key economic reports"?
Our trade desk calendar lists the current major events that will have margin raised – these currently include the Employment Report, FOMC meeting announcements and CPI numbers. However, NinjaTrader reserves the right to change margins on other news and geopolitical events that may cause illiquidity.
Who deems what reports are "key"?
The trade desk managers current market conditions and upcoming releases for those that have the potential to move markets significantly.
How are we to know which reports are "key"?
If they are listed on the trade desk calendar or have the potential to be significant market moving events.
And who deems when "market volatility is determined to present manageable risk" and how is that determined??? How are we supposed to know when that is??? Our risk team will monitor market conditions and make that determination in real-time. It is expected to be roughly 15-20 minutes after the announcement that we should see margins return to their normal levels. Given these changes will be in effect for roughly 30 minutes, they should not have a material impact on traders.
By the way, taking liquidity out of the market IS WHAT CAUSES VOLATILITY DURING NEWS EVENTS. So, NT brokerage is actually causing MORE volatility by reducing the number of limit orders during news releases.
Analysis has been done related to this and the number or orders placed through NT prior to the news event is negligible in relation to the total market volume. Many traders already avoid these situations on their own.
How many minutes after the scheduled release of key economic news announcements will day trading margins be returned to normal?
The expectation is for margins to return to normal levels shortly after the news release, say 15-20 minutes. Margins may remain elevated longer if conditions warrant it. These margin changes will be in effect for roughly 30 minutes around the events and shouldn’t have a material impact on many traders.
This is a nightmare for my bots
We would need to evaluate the specific conditions for the bots, but if they are running long-term strategies, they should be operating with the assumption initial margin is required anyway. If this is the case, there should be little to no impact. If these bots run intraday strategies, then they may be impacted, however many traders with automation disable their bots on days of major news events as cause market distortion and can throw signals counter to the intended strategy. A final and complete solution would be to fund the account further to remove the margin as a requirement for the trading system. Reducing the leverage of the account will resolve any rejection potential for the bot.
This is my exact issue. This random 'pick and choose' events to dramatically increase margins only hurts traders and protects the brokerage. It is irresponsible to not have a safety net built into the platform to actually "protect the trader".
This policy is designed to specifically protect traders that may not be aware of new event timings or understand the potential impact on their accounts. Previous CPI announcements have seen the market gap beyond levels that traders are accustomed to. This policy serves to limit the potential impact of very short-term risks. If a trader wants to trade all events, they can fund their account further to have the appropriate margin relative to the potential risks to their accounts.
The major economic events for a given month are well documented for the public to consume. NT lists the clear major events on our calendar, but there are certainly others with the potential to move markets. Traders can and should be aware of upcoming events and how those may impact the trading conditions for short periods of time without reliance on the broker.
Are we to now have the "Order Desk Updates" web page open and constantly refreshing to see if NT Brokerage has randomly increased margins?
These changes are not random in the least. They will occur roughly 15 minutes prior to major economic news events. A sample of those events can be found on the trade desk calendar.
Will NT Brokerage issue a pop-up and sound alert when it increases to the initial exchange margin? Why not?
No – There has been significant feedback previously that pop-ups related to these items interfere with trading more than they assist. You can check the order desk updates page on days there is a news event for up-to-the-minute margin changes.
Nothing personal but what makes you think others brokers will not follow this suit?
I already asked my broker (non NT) and they said they have to see if everyone is implementing these measures one by one, then they will also have to follow the herd(!).
We sincerely appreciate the feedback and want to provide an update regarding our recent announcement on margin updates around major news events.
For major economic news events, margins will be raised to 4 times day trade margins 15 minutes prior to the announcement. News events that will be impacted are reflected on our Trade Desk Calendar. This policy will apply to new positions only and existing positions will not be affected.
We expect margins to return to day trading levels roughly 5 minutes after the announcement, based on market volatility.
Thanks.
Risk Disclosure: Futures and forex trading involves significant risk of loss and is not appropriate for everyone.
