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Comment by cascom | Hacker News Reader

these people should just trade futures - you can buy a treasury bond future at effectively ~70x leverage without trying to defraud your broker...

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Sure you can get lots of leverage with things like treasuries and forex. That’s because the underlying securities are so boring and non-volatile it’s safer for the lender. In this case you can get as much leverage as you want, and can spend it on silly, extremely risky things (such as a far OTM option expiring in a few days) which is dumb from the perspective of the lender

Real brokers like InteractiveBrokers make you fill in a survey where you detail your experience and trading history before enabling you to do highly levered futures trading (and lying to them about this dramatically weakens any legal protections you might otherwise enjoy as a customer). Also, they have much tighter risk controls and will liquidate an account automatically if it gets to a dangerous level. And they also require a significantly larger account size before they will enable margin-- an amount that most teenagers are unlikely to have in liquid assets.

Not sure about IB, but the surveys at most brokers are jokes. You check a couple of boxes in a form, possibly over-stating your experience. The next day futures, options, or whatever you wanted is turned on.

all futures brokers have to do this to extent, and theyre all good things.

you can day trade futures (ignoring newer cme e micros) with a $500 deposit and its an awful idea for a plethora of reasons, but grown adults do it day in and day out blowing out over and over. its clear this leverage needs a little more oversight.

i will note however, i found myself over leveraged in an options position in august 2015 using TDA, and my account went very negative as the platform went completely down for the entire day and no automated or human risk liquidated it on their side..

What happened in your case? Did you have to pay back the loan or were you able to walk away from it?

this was futures options positions. when the platform came up the next day (mind you, no one was answering the phone the times i called, i bet others got killed), I had money in my account so i didn't get what i completely deserved.

I was trying to get some hedges in as soon as ES opened limit down again and i did manage to get a few off. ToS data was nearly instantly frozen so I was using another feed to gauge my orders. I digress with thinkorswim is not good for heavy intraday (and the market data is pretty bad anyway).

after this event, i changed brokerages and focused 100% on day trading and make a living, so it wasnt all bad i guess!

I can only image robinhood has no risk desk, or automated system that do not work correctly for non-trivial option legs

What did you switch to, IB?

nah, a smaller boutique ish futures broker. IB has excellent order execution and absolutely horrible market data, but i used to use IB with CQG data until they instituted a monthly fee to accounts with high risk positions in (i had a small amount of naked puts, but the fee easily became substantial). i do recommend them if you dont write naked puts etc and dont day trade or use other data

It's not really about the leverage on its own. As Levine points out in his take on it [1], it's about finding ways to "hack the system". And, in no small part, entertain the merry band of fools at r/walllstreetbets

[1] - https://www.bloomberg.com/opinion/articles/2019-11-05/playin...

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