John W Elite    Posts: 654 Joined: 10/11/2012 Location: Sydney, NSW, Australia  User Profile | Also thanks for finding the correct details from FINRA. The Portfolio Max you suggest would be fine if each portfolio was traded in a separate Account. Using your figures the 2X portfolio at its max limit in a margined Account would eat up 192% of the available 200%, 3X in another separate Account eats up 128% etc. (first group in table below). So if each portfolio was traded in a separate Account there would be no risk of exceeding margin in each of those Accounts. Trading as Portfolios in a single margined Account, 2X eats up 190%, 3X a further 83%, -2X 130% and -3X 58%, Total 461% - well over the 200% Account limit (second group in table below). It’s possible to prorate the account equity back to using 95% before margin and then with the various factors on each Portfolio the single Account would run at 152% with margin (third group in table below). There are issues with each of these approaches. Setting up 4 Accounts to deal with the issue is clumsy and a waste of scarce OV Account resources and scarce cash resources. If (say) -3X is rarely used then one quarter of available equity sits idle. Trading in a single margined account with caps on each Portfolio % has the same issue - available equity sits idle in underutilised Portfolios and Portfolios that want the equity can't access it. Total account equity maxes out at 152% in my prorated example. This can be varied if some Portfolios don’t trade much or at all so that larger caps can be placed on frequently used Portfolios. Once setup the caps can be left alone but still at the risk of underutilisation. If the percentages are changed regularly to use the underutilised account equity and margin then manual intervention daily is required to ensure trades are not placed that put margin limits at risk. Neither multiple Accounts nor a single Account with set Max Invested % limits is flexible enough to cope with underutilisation of equity and margin, and manual intervention daily is a chore and prone to errors. I believe the right answer is for Nirvana to upgrade Omnivest to carry the margin percent of each ETF and utilise that information to place the correct trade size. [Edited by John W on 3/27/2016 4:10 AM]  Attached file : ETFSizing.png (34KB - 737 downloads) Attached file : ETFSizing.xls (36KB - 339 downloads) |
