IB: anyone knows how 'equity with loan' change is calculated for stocks? - IB Trader Workstation | futures io social day trading

IB: anyone knows how 'equity with loan' change is calculated for stocks?
 Updated: March 28th, 2016 (03:55 PM) Views / Replies: 1,405 / 5 Created: February 12th, 2016 (11:17 PM) by mickael28 Attachments: 0

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# IB: anyone knows how 'equity with loan' change is calculated for stocks?

 February 12th, 2016, 11:17 PM #1 (permalink) Trading Apprentice London + UK   Futures Experience: None Platform: Interactive Brokers Favorite Futures: Emini ES   Posts: 9 since Feb 2016 Thanks: 5 given, 0 received IB: anyone knows how 'equity with loan' change is calculated for stocks? Hi guys, I just opened a demo margin account with IB and I was looking into their TWS software. One basic question to help me understand it better please... I was having a look at stocks and for example by going ~\$43K long in DY the value that appears under 'equity with loan' change is -\$3,525 whereas the same amount of stock (\$43K) for KO has a value of just -\$12 ? Anyone knows how this value can be calculated? I've never used a margin account before but if I am understanding it correctly, in the example of DY, does it mean that \$3,525 are going to be taken from the account if the trade is taken (like a commission)? I saw as well that if you buy it and immediately sell it, the change value in the 'equity with loan' column is another -\$614. Any idea where this commision is coming from as well? And on a side note, if the above values are commissions for using the margin facility, is it possible somehow to avoid the margin and enter the trade with the full amount of cash, \$43K in this case, so that you don't waste \$3525+\$614 just for buying and selling? I'm trying to find a way to enter the whole trade with cash but I cannot find any option. Many thanks...

 The following user says Thank You to chik for this post:

 March 28th, 2016, 07:56 AM #3 (permalink) Market Wizard Germany   Futures Experience: Intermediate Platform: Other Favorite Futures: ES, YM, 6E   Posts: 2,644 since Feb 2013 Thanks: 4,907 given, 6,441 received Forum Reputation: Legendary Esp at the start of an IB margin account, https://www.interactivebrokers.com/en/index.php?f=marginnew&p=overview is the main guide. There are many rules, and yes, sometimes they are also a little complicated - e.g.: with a non-margin account you would never have to care whether your trades are overnight or not; nor about the statistical volatility of the market which determines the margining. That's why TWS also shows the margin impact of each intended trade if you do not disable this option. IB gives a lot of different margin calculation examples, e.g. https://www.interactivebrokers.com/en/index.php?f=marginnew&p=overview3 If you want to day trade e.g. stocks or ETFs, see the "Day Trading" tab because you will also have to comply with Pattern Day Trading (PDT) rules then.

London + UK

Futures Experience: None
Platform: Interactive Brokers
Favorite Futures: Emini ES

Posts: 9 since Feb 2016

In this particular case the other asset was Dycom stock (DY). I've been having another look this weekend and I think the difference is due to a massive spread in the DY stock when the market is closed. I don't have a live data feed yet, so not sure if the spread they present in the demo account is correct or just an approximate number to familiarize with the platform.

Regarding:

chik
 In a cash account, though, you'll need to wait three days for your trades to settle before your withheld Equity With Loan Value is returned. That's called T+3 settlement. It's a regulatory thing. Part of the reason to trade on margin is to get around T+3.

Out of curiosity, if I had a cash account and I sell let's say \$5000 of one stock to invest in another, would I need to wait T+3 before I am able to do so? or would I be able to re-use that \$5000 amount as soon as I click on the sell button?

I've never paid attention to how SaxoBank works around this settlement time. I had not run out of cash at the time, so not sure if when I sold and purchased something else they counted the money of the 'just sold' securities or that was not taken into account until T+3 as well. I'll pay attention next time...

 March 28th, 2016, 03:48 PM #5 (permalink) Elite Member San Diego, California   Futures Experience: Advanced Platform: MultiCharts Favorite Futures: ES, NQ   Posts: 26 since Mar 2016 Thanks: 0 given, 22 received The free delayed feed is a bit buggy, yeah. I'm not sure why the ELV was so much higher with DY stock than KO. Maybe IB doesn't have any shares of DY sitting around in house, so they'd have to hit an exchange to complete you order? I'm not sure. In a cash account, your ELV would be -\$5,000 for three days, until the sale settles. You'll need to wait for settlement before you can then spend that \$5,000 you realized on another stock. Buying or selling with unsettled funds can cause a free-riding violation that may result in your account being temporarily frozen. With a margin account, Interactive Brokers lends you that \$5,000 they know you realized until your funds settle, allowing you to continue trading.
 The following user says Thank You to chik for this post:

London + UK

Futures Experience: None
Platform: Interactive Brokers
Favorite Futures: Emini ES

Posts: 9 since Feb 2016

chik
 In a cash account, your ELV would be -\$5,000 for three days, until the sale settles. You'll need to wait for settlement before you can then spend that \$5,000 you realized on another stock. Buying or selling with unsettled funds can cause a free-riding violation that may result in your account being temporarily frozen.

Thanks, I'll pay attention next time I sell in the other cash account I've got with another broker. Maybe their system doesn't even allow you to buy anything if the previous sell is not fully settle and you don't have any more cash in the account, but good to know that we shouldn't even try just in case...

Cheers m8!

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