Why do the Margin Requirement fields for Short Positions in the Enhanced System Tester options only accept a value between 101% and 200%? My Brokers margin requirement for short positions is 50%.
Margin requirements for short positions in The Enhanced System Tester are based on a ratio of the total of Equity (cash) in the account and the value of a short position taken, to the value of the short position taken. These ratios are calculated as follows:
Initial Margin: Equity in account (cash)+ Proceeds from short sale/Proceeds from short sale
This value (in percentage terms) must be less than or equal to that entered into the 'Short Initial' field on the System Testing Options to enter a short position.
Maintenance Margin: Equity (Cash) in account at the time position opened + Current value of short position/Current value of short position
This value (in percentage terms) must be less than or equal to that entered into the 'Short Maintenance' field to maintain the position and avoid a margin call.
If the broker requires 50% margin to enter/maintain a short position, enter 150%. Entering 200% would be equivalent to 0% margin (must have equity (cash) equivalent to proceeds from a short sale). Entering 101% would be equivalent to 99% margin (must have equity (cash) equivalent to 1% of proceeds from short sale).
