We did TWO surveys and most of you said you have never traded T-Bills before! The main takeaways from this video are as follows: 1. US T-Bills are USD denominated so this may be an issue for users that do not want to hold USD, there is currency risk. 2. Short Dated T-Bills 60 days and under will yield a slightly lower rate of return if your principal capital is less than USD 100,000. 3. To optimize the rate of return it is recommended to earn USD $1000 so when you reinvest you can purchase one more bill than you did the previous time. The calculation used to solve for the optimal number of days is as follows: // What is the yearly interest rate? (this represents 5.3%) interest_rate = 0.053; // Solve for the daily interest rate daily_int_rate = interest_rate / 365; // What is the principal investment amount? principal = 100000; // How much profit is accrued per day daily_profit = daily_int_rate * principal; // Amount we need to earn (USD $1000 plus a USD $5 - 7.50 trading fee) to_earn = 1007.50; // Solve for the number of days to earn this amount days_to_earn_1k = to_earn / daily_profit; Recommended Broker & Support the Channel: 🌎 www.InteractiveBrokers.ca/mkt/?src=verrilloy5&url=%2Fen%2Fwhyib%2Foverview.php
This is a really great video. Thank you for your contribution! It would be really helpful to those not so familiar to coding clarify how to run the code featured in this video. Thank you, Chris. Always love your content.
Thank you for the kind words. The easiest way would be on linux using gcc which comes preinstalled. You build the .cpp source file into an executable. Really I should just host the code as a web app. I’ll see if I can post some sort of guide for this. Thank you!
Hi , much appreciated the video. Most helpful videos on IBkr. Ibkr pays interest in cash held for options. Do you have a video for the comparison between t bills vs ibkr interest . You are not kidding, these are the best videos on ibkr especially for a Canadian like me.
Thank you for the kind words. I would say if you plan to use the capital to trade other assets in the same account, T-Bills are an interesting option. The interest they pay on cash, I view it more as a bonus for traders with large cash balances sitting overnight.
not all interactive brokers account structures do support withdrawing with negative cash values. IB UK and IBIE only support paying out positive cash balances afaik.
Hopefully you could [at some point] do a video on setting up IBKR to trade options where the entry exit, and stop loss are all triggered by the underlying price chart as opposed to the value of the option itself?? I feel like I gave this a good amount of effort and research - but still came away empty handed.
Hello, thank you this has been noted. Could you explain a bit further how you want these option orders to trigger. Is it based only on the price of the underlying chart? I do think this can be achieved using conditional orders in TWS. There are limitations with setting up specific order types when it comes to conditional orders. For example if the limit order type is used with a conditional order, there is no way to have the limit price of the order be pinned to the current bid or offer of the option contract, which would be useful.
@@VerrilloTrading I do appreciate your taking the time to respond my friend.. Essentally, I'd like to get kicked out of a speculative options position [bought call or bought put] when the trade becomes invalidated by price action on the underlying chart. This, as opposed to price fluctations of the options contracts themselves.. From your answer it seems like this may not be a straightforward thing to accomplish on TWS, correct?
So the main advantage for buying T-Bills is that they have lower margin requirement correct? Because as a Canadian I could buy Cash Interest Saving ETF PSA or PSU for example and it would avoid all witholding tax, calculating and dealing with bonds in general and would give me relatively same yield. But those ETFs require 30% margin requirement.
ok but the question is, the intrest IBKR charges is higher than tbill's rate, isn't this kinda useless for using it to loan out instead of using your own cash? I guess it works for shorting CAD or JYP but for trading other stocks feels like a weird way to pay 1.5% intrest rate to IBKR instead of just... 0
Great video. Thanks for sharing. IBKR is allowing me to submit a purchase order of US-T Bills in TFSA. Is it permitted to do that in a registered account?
This I am not sure about, you should do some research about the account type and maybe ask customer support. I don't see why it would be pose a problem, it is a fixed income product.
So for margin account, if the loan rate is 6.83% and the TBill pays 5.41%, that means it will still be worth it to buy? I was going to buy but someone told me that I would be losing money that way. I think that's what you were doing in the last example, but I'm not sure I understand the -1.53% blended rate of return. Thank you🙏🙏
Yes you are correct that you would be losing money if you only did that. The point is to use the additional cash to generate a return else like invest in another currency that could yield a higher return and offset that negative rate into a positive one. It relates to the concept of currency spread trading however it is a concept that can be applied to doing business in general. See this newer video which explains it more: ruclips.net/video/JUovswCir_s/видео.html
@@VerrilloTrading Thanks very much for your reply! So it would be different from the blended rate example in your video 🤔 You mentioned we can buy other products with our t-bills, will you consider doing a video on how we can use our t-bills for other purposes? Would love to learn more about how that works and how to execute that 🌹🙏
@jessc9004 it should match the example. Either way it is for example purposes. I do actually maintain negative CAD for the long term which is being hedged in other accounts. May report a loss in one account and a profit in another, depending upon what the market does and interest rate changes over time. T bills are fundamentally a fixed income position, I don’t necessarily understand the query about other uses for them. Most of it is covered in the video and other newer videos like the IBKR Credit Margin video from a few weeks ago.
@@VerrilloTrading Initially I thought it would increase the ROI, but following your reply, my understanding is that with the current margin rate, it would only make sense to use margin buying tbills if there's something I want to generate additional cash for, so I guess it's better off not to use margin at this time 🤔 For the other query, I thought you meant we can use t-bills to buy other products and I wasn't sure how to do that, I may have misunderstood. Thanks again for your reply and sharing 🌹🌹
@@jessc9004 when you have a T bill position, your maintenance margin may only be a small fraction of the value of that position. This is why it is possible to purchase other assets on margin or withdraw cash.
Can you try buying TIPS and see if you successful? I tried buying it a few times back in October when yields were the highest and could never get an order filled...
What do you think of simply buying a t-bill etf such as SGOV which has a yield of 5.35% currently and avoid high commissions for trading bonds (compared to an etf)?
From what i’ve seen IBKR has higher margin requirements for some ETFs. There was a Canadian T-Bill ETF I saw which looked good on paper but IBKR is requiring 50%.
@@b4bmm It's around that value last time I checked for SGOV. Ofcourse, ETFs also have an inbuilt MER. Not everyone has $250k in their bank accounts. If I had, I won't be too worried about paying those commissions :). But as Chris mentioned in his comment, the big advantage of T-bills is their extremely low margin impact compared to ETF (50%), so you can continue with your trading and keep earning interest from T-bills. However, if in emergency (margin call), you need the funds, you will have to liquidate some T-bill positions. Also, if you liquidate the T-bills before their maturity and the interest rates suddenly have gone up (unlikely scenario in short term) during the period of investment, your T-bills would be less in value and you might end up losing some money. The scenario of interest rates going down is more likely though.
What is the biggest advantage of taking a loan against your T-Bills? Is this for someone who has cash in their portfolio, waiting to buy, but doesn’t want the money just sitting?
Flexibility. You can trade stocks, futures, or other assets using margin while holding T-Bills. You can pull out cash and invest it somewhere else if necessary. You can do a lot, just need to think about it in advance. Not advice.
@@VerrilloTrading So If I Deposit 50k & Buy T-Bills worth 50k, Will I be able to both pull out cash in my bank account, and also continue to trade against 50k Margin at IBKR?
Hey! I just got T-Bills worth 50k from an account that had 35k in deposit. I had also got short options positions so my maintenance is about 15k. My current cash negative is at -11k. Currently, the margin loan against the 50k T-bill is only showing 15k as withdrawable. Shouldn't it have shown about 50k - 15k (Maintenance Margin) = 35k?
I have still not determined if Canadians can go ahead and register to buy Canadian T-Bills, similar to how US citizens can use Treasurydirect. IBKR does not have Canadian T-Bills. I know of an ETF with ticker symbol CBIL by Horizons ETF, they invest in Canadian T-Bills. IBKR has 50% capital requirement for it which is sort of bad imo. There are probably others out there.
Hello, I coud not find a way to contact you, I watched your video on bracet order for IBK, its great in the paper account I use a dollar amount and not share amount to enter the trade. in the live account I get and error "cash quanity cannot be applied to attached stop orders. please change quanity to shares." Would you know why the Stop order is not letting the system use Cash amount. I have called IBK and am working with them on this but you know more then they do.
The issue is that the stop order type does not support cash quantity. In reality the cash quantity feature is a convenience feature. If the feature is not fully supported in the trading platform, this is an issue with them and should be contacted to their support. I personally do not use cash quantities when specifying order quantity. I use share or contract size and use the order confirmation or other windows to determine how much cash is being used.
@@VerrilloTrading thanks, do I have to use the global config window to change the share quantity or is there there a better way I have 8 buttons for different ticker $ amounts ie $1, $2 and so on?
@@TradingWithoutFear You should be able to change order quantity with any window that supports order placement. The one I used in this video is the Quote Monitor.
@@VerrilloTrading so if I have a button that scales out starting at 15% and every .05 cents after. And an another button that scales out starting at 15% and scales out every .75 cents how would the order entry window know the parameters it should use? I thought the global config is how the buttons work from your past videos.
![BabyChiefDoit - Too Slow (feat. STAR BANDZ) [Official Music Video]](http://i.ytimg.com/vi/zayaxws7RPg/mqdefault.jpg)
We did TWO surveys and most of you said you have never traded T-Bills before! The main takeaways from this video are as follows:
1. US T-Bills are USD denominated so this may be an issue for users that do not want to hold USD, there is currency risk.
2. Short Dated T-Bills 60 days and under will yield a slightly lower rate of return if your principal capital is less than USD 100,000.
3. To optimize the rate of return it is recommended to earn USD $1000 so when you reinvest you can purchase one more bill than you did the previous time.
The calculation used to solve for the optimal number of days is as follows:
// What is the yearly interest rate? (this represents 5.3%)
interest_rate = 0.053;
// Solve for the daily interest rate
daily_int_rate = interest_rate / 365;
// What is the principal investment amount?
principal = 100000;
// How much profit is accrued per day
daily_profit = daily_int_rate * principal;
// Amount we need to earn (USD $1000 plus a USD $5 - 7.50 trading fee)
to_earn = 1007.50;
// Solve for the number of days to earn this amount
days_to_earn_1k = to_earn / daily_profit;
Recommended Broker & Support the Channel: 🌎
www.InteractiveBrokers.ca/mkt/?src=verrilloy5&url=%2Fen%2Fwhyib%2Foverview.php
Yes Verillo, we really thank you for explaining T-Bills. It is very nice to use this product when you keep your cash resting aside. Thanks !
Most welcome!
This is a really great video. Thank you for your contribution! It would be really helpful to those not so familiar to coding clarify how to run the code featured in this video. Thank you, Chris. Always love your content.
Thank you for the kind words. The easiest way would be on linux using gcc which comes preinstalled. You build the .cpp source file into an executable. Really I should just host the code as a web app. I’ll see if I can post some sort of guide for this. Thank you!
Every time i have question of ibkr i always end up in your channel. ❤
Much appreciated and happy to help!
This guy is the best. How has interactive brokers not hired you
Thanks for the kind words!
Hi , much appreciated the video. Most helpful videos on IBkr. Ibkr pays interest in cash held for options. Do you have a video for the comparison between t bills vs ibkr interest . You are not kidding, these are the best videos on ibkr especially for a Canadian like me.
Thank you for the kind words. I would say if you plan to use the capital to trade other assets in the same account, T-Bills are an interesting option. The interest they pay on cash, I view it more as a bonus for traders with large cash balances sitting overnight.
Excellent video. Quick and easy to understand. Will subscribe and watch old ones.
Thanks
Thanks and welcome
Great video , thanks!!
Never understood why this channel has not like 4 to 500k subs at least , totally underrated
I appreciate that!
Chris, very informative video. Thanks. IB is great for treasuries
Thank you, I agree!
not all interactive brokers account structures do support withdrawing with negative cash values. IB UK and IBIE only support paying out positive cash balances afaik.
Thank you for the info!
I love this setup video❤
Glad it helps!
Good video. Was hoping you would go into How you calculate the returns for various bonds with the data IV provides…….?
Thanks. Is that IV data provided inside TWS? If so then it should be possible, you would need to provide me the calculation.
Hopefully you could [at some point] do a video on setting up IBKR to trade options where the entry exit, and stop loss are all triggered by the underlying price chart as opposed to the value of the option itself?? I feel like I gave this a good amount of effort and research - but still came away empty handed.
Hello, thank you this has been noted. Could you explain a bit further how you want these option orders to trigger. Is it based only on the price of the underlying chart? I do think this can be achieved using conditional orders in TWS. There are limitations with setting up specific order types when it comes to conditional orders. For example if the limit order type is used with a conditional order, there is no way to have the limit price of the order be pinned to the current bid or offer of the option contract, which would be useful.
@@VerrilloTrading I do appreciate your taking the time to respond my friend.. Essentally, I'd like to get kicked out of a speculative options position [bought call or bought put] when the trade becomes invalidated by price action on the underlying chart. This, as opposed to price fluctations of the options contracts themselves.. From your answer it seems like this may not be a straightforward thing to accomplish on TWS, correct?
GREAT CHANNEL. PLEASE CAN YOU SHOW ME HOW TO PUT THE CODES IN THE INTERACTIVE BROKERS
Thanks. There are a few existing videos about TWS API try searching for those to start.
So the main advantage for buying T-Bills is that they have lower margin requirement correct? Because as a Canadian I could buy Cash Interest Saving ETF PSA or PSU for example and it would avoid all witholding tax, calculating and dealing with bonds in general and would give me relatively same yield. But those ETFs require 30% margin requirement.
You have it right, much lower margin requirement than 30%.
ok but the question is, the intrest IBKR charges is higher than tbill's rate, isn't this kinda useless for using it to loan out instead of using your own cash? I guess it works for shorting CAD or JYP but for trading other stocks feels like a weird way to pay 1.5% intrest rate to IBKR instead of just... 0
Thanks for the feedback. For me it still makes sense as a study example for the blended interest rate in your account.
Great video. Thanks for sharing. IBKR is allowing me to submit a purchase order of US-T Bills in TFSA. Is it permitted to do that in a registered account?
This I am not sure about, you should do some research about the account type and maybe ask customer support. I don't see why it would be pose a problem, it is a fixed income product.
So for margin account, if the loan rate is 6.83% and the TBill pays 5.41%, that means it will still be worth it to buy?
I was going to buy but someone told me that I would be losing money that way.
I think that's what you were doing in the last example, but I'm not sure I understand the -1.53% blended rate of return.
Thank you🙏🙏
Yes you are correct that you would be losing money if you only did that. The point is to use the additional cash to generate a return else like invest in another currency that could yield a higher return and offset that negative rate into a positive one. It relates to the concept of currency spread trading however it is a concept that can be applied to doing business in general. See this newer video which explains it more: ruclips.net/video/JUovswCir_s/видео.html
@@VerrilloTrading Thanks very much for your reply! So it would be different from the blended rate example in your video 🤔
You mentioned we can buy other products with our t-bills, will you consider doing a video on how we can use our t-bills for other purposes? Would love to learn more about how that works and how to execute that 🌹🙏
@jessc9004 it should match the example. Either way it is for example purposes. I do actually maintain negative CAD for the long term which is being hedged in other accounts. May report a loss in one account and a profit in another, depending upon what the market does and interest rate changes over time. T bills are fundamentally a fixed income position, I don’t necessarily understand the query about other uses for them. Most of it is covered in the video and other newer videos like the IBKR Credit Margin video from a few weeks ago.
@@VerrilloTrading Initially I thought it would increase the ROI, but following your reply, my understanding is that with the current margin rate, it would only make sense to use margin buying tbills if there's something I want to generate additional cash for, so I guess it's better off not to use margin at this time 🤔
For the other query, I thought you meant we can use t-bills to buy other products and I wasn't sure how to do that, I may have misunderstood.
Thanks again for your reply and sharing 🌹🌹
@@jessc9004 when you have a T bill position, your maintenance margin may only be a small fraction of the value of that position. This is why it is possible to purchase other assets on margin or withdraw cash.
Can you try buying TIPS and see if you successful? I tried buying it a few times back in October when yields were the highest and could never get an order filled...
I will need to look into it. Only done T Bills so far.
What do you think of simply buying a t-bill etf such as SGOV which has a yield of 5.35% currently and avoid high commissions for trading bonds (compared to an etf)?
From what i’ve seen IBKR has higher margin requirements for some ETFs. There was a Canadian T-Bill ETF I saw which looked good on paper but IBKR is requiring 50%.
Where are you getting the 5.35% figure from? Where are you getting that bonds have high commission? Treasuries are $5 up to $250k
@@b4bmm It's around that value last time I checked for SGOV. Ofcourse, ETFs also have an inbuilt MER.
Not everyone has $250k in their bank accounts. If I had, I won't be too worried about paying those commissions :). But as Chris mentioned in his comment, the big advantage of T-bills is their extremely low margin impact compared to ETF (50%), so you can continue with your trading and keep earning interest from T-bills. However, if in emergency (margin call), you need the funds, you will have to liquidate some T-bill positions. Also, if you liquidate the T-bills before their maturity and the interest rates suddenly have gone up (unlikely scenario in short term) during the period of investment, your T-bills would be less in value and you might end up losing some money. The scenario of interest rates going down is more likely though.
The best
Thanks! 👊
What is the biggest advantage of taking a loan against your T-Bills?
Is this for someone who has cash in their portfolio, waiting to buy, but doesn’t want the money just sitting?
Flexibility. You can trade stocks, futures, or other assets using margin while holding T-Bills. You can pull out cash and invest it somewhere else if necessary. You can do a lot, just need to think about it in advance. Not advice.
@@VerrilloTrading So If I Deposit 50k & Buy T-Bills worth 50k, Will I be able to both pull out cash in my bank account, and also continue to trade against 50k Margin at IBKR?
@@anujbaid3812that's my question to.
Hey! I just got T-Bills worth 50k from an account that had 35k in deposit. I had also got short options positions so my maintenance is about 15k. My current cash negative is at -11k. Currently, the margin loan against the 50k T-bill is only showing 15k as withdrawable. Shouldn't it have shown about 50k - 15k (Maintenance Margin) = 35k?
Hi Chris, do you have Canadian equivalent to T bills. Thank you
I have still not determined if Canadians can go ahead and register to buy Canadian T-Bills, similar to how US citizens can use Treasurydirect. IBKR does not have Canadian T-Bills. I know of an ETF with ticker symbol CBIL by Horizons ETF, they invest in Canadian T-Bills. IBKR has 50% capital requirement for it which is sort of bad imo. There are probably others out there.
Hello, the bond yield thats is displayed in the quotation is yearly returns right?
Which quotation are you referring to so we can be accurate? A video timestamp would be helpful.
For example the bid yield and ask yield at 2:20
@@polomarkos Yes those are annualized rates of return.
@@VerrilloTrading thanks for the info man
🙏
Cheers!
Hello, I coud not find a way to contact you, I watched your video on bracet order for IBK, its great in the paper account I use a dollar amount and not share amount to enter the trade. in the live account I get and error "cash quanity cannot be applied to attached stop orders. please change quanity to shares." Would you know why the Stop order is not letting the system use Cash amount. I have called IBK and am working with them on this but you know more then they do.
The issue is that the stop order type does not support cash quantity. In reality the cash quantity feature is a convenience feature. If the feature is not fully supported in the trading platform, this is an issue with them and should be contacted to their support. I personally do not use cash quantities when specifying order quantity. I use share or contract size and use the order confirmation or other windows to determine how much cash is being used.
@@VerrilloTrading thanks, do I have to use the global config window to change the share quantity or is there there a better way I have 8 buttons for different ticker $ amounts ie $1, $2 and so on?
@@TradingWithoutFear You should be able to change order quantity with any window that supports order placement. The one I used in this video is the Quote Monitor.
@@VerrilloTrading so if I have a button that scales out starting at 15% and every .05 cents after. And an another button that scales out starting at 15% and scales out every .75 cents how would the order entry window know the parameters it should use? I thought the global config is how the buttons work from your past videos.
Thanks !
Pleasure!