Risk Limits

Risk Limits

Setting account position limits

To set account position limits:

  1. In the left navigation panel, click Accounts and select an account in the data grid.
  2. Click the Limits tab.
  3. In the Settings section, click Apply Limits to enable limit checking for the account or user.

    Optionally, when "Apply Limits" is checked, you can check Apply to Block/Cross to apply the same limits to block/cross trades.

    Note: If Apply Limits is checked, you must define product or contract limits for each product or contract that the user, parent account or child account is allowed to trade.

  4. In the Limits section, click +Add to create a new risk limit, or select an existing limit in the Limits section.

    If you select an existing limit, you can copy product limits within the selected user's or account's limit tab by clicking the Copy button.

    If you click +Add to create a new risk limit, select the Exchange, Product Family, Product Type, Product, and/or Contract in the New Limit screen and click Add. By default, the risk limit will apply to all exchanges, product families, product types, products, and contracts.

    After you add or copy the new limit, it's selected in the data grid and its applicable risk limit settings are displayed.

  5. Set the following risk limits as needed:
    • General

    • The following section appears for an account only, and appears if applying risk limits to all contracts for a product.

      • Max position family (net): Sets the account to an overall maximum long or short position limit per product family. A product family includes all options with a shared underlying futures symbol. This allows you to set a single risk limit for all monthly, weekly, or daily options products for an underlying future. For an example, refer to Position limits examples.
      • Max position product (net): Limits an account to an overall maximum long or short position per product. If a Max position familiy (net) limit is set, then a position limit per product in the same family should be less than the family limit. For an example, refer to Position limits examples.
      • Maximum long position per contract: Limits an account to an overall maximum long position per contract for a product.
      • Maximum short position per contract: Limits an account to an overall maximum short position per contract for a product.
      • Maximum long position (gross): Limits the worst case total of long contracts per product. The sum of the long positions plus working buy orders in all contracts cannot exceed this limit. For example, if the Max long position limit is four, and there is a long position of two in one contract and a working buy of two in another contract, then no more buy orders can be placed.
      • Maximum short position (gross): Limits the worst case total of short contracts per product. The sum of the short positions plus working sell orders in all contracts cannot exceed this limit. For example, if the Maximum short position limit is four, and there is a short position of two in one contract and a working sell of two in another contract, then no more sell orders can be placed.
      • Trade out allowed: When enabled, allows the maximum order quantity, maximum long/short position, and credit limits to be exceeded in order to flatten the position in a contract. Can be set for the account.
    • Outrights

    • Note: The following section appears if applying risk limits to a single contract.

      • Trading Allowed: Specifies whether outrights can be traded for the selected contract.
      • Max Position: Limits an account or user to an overall maximum long or short position per contract selected. For example, if this limit is set to 5 for the GE March contract, and an account or user is short 4 GE March contracts, then a sell order greater than 1 would be rejected as it could potentially result in a short position greater than 5.
      • Maximum order quantity: Specifies a limit on the maximum individual order size that can be entered for the contract. This setting overrides the max order qty setting that might exist at the product or exchange level.
      • Price reasonability: Determines how far from the market price a user may enter an order for the contract. You can set a number of ticks away from the market using the Ticks field, and set a percentage away from the current price using the Percent field. If you only want to enforce this setting for buy orders above the limit and sell orders below the market, check the Aggressive only option. This setting overrides the price reasonability setting that might exist at the product or exchange level.
    • Outrights

    • Note: The following section appears if applying risk limits to all contracts for a product.

      • Trading Allowed: Specifies whether outrights can be traded for the selected product (e.g., the Future, Option, Stock, Bond, or Energy product). If you plan to restrict trading in this product but allow trading for specific contracts for this product, leave this option unchecked.
      • Maximum order quantity: Specifies a limit on the maximum individual order size that can be entered for the outrights of a spread or strategy for a particular product, product type, or contract.
      • Applied margin %: Specifies a percentage above or below the margin that a trader must have to trade the product. In other words, applied margin increases or decreases the margin requirement when calculating risk limits. Setting this to zero removes margin requirements for this product/contract.
      • Price reasonability: Determines how far from the market price a user may enter an order for the outright. You can set a number of ticks away from the market using the Ticks field, and set a percentage away from the current price using the Percent field. If you only want to enforce this setting for buy orders above the limit and sell orders below the market, check the Aggressive only option.
    • Spreads/Strategies

      • Trading Allowed: Specifies whether spreads and strategies for the product can be traded. If you plan to restrict trading in this product but allow trading for specific contracts for this product, leave this option unchecked.
      • Maximum order quantity: Specifies a limit on the maximum individual order size that can be entered for the spread/strategy for a particular product, product type, or contract.
      • Applied margin (%): Specifies a percentage above or below the margin that a trader must have to trade the spread/strategy. In other words, applied margin increases or decreases the margin requirement when calculating risk limits. Setting this to zero removes margin requirements for this product/contract.
      • Price reasonability: Determines how far from the market price a user may enter an order for the spread/strategy. You can set a number of ticks away from the market using the Ticks field, and set a percentage away from the current price using the Percent field. If you only want to enforce this setting for buy orders above the limit and sell orders below the market, check the Aggressive only option.
    • Inter-product spread/strategies

      • Trading Allowed: Specifies whether the selected interproduct spreads or strategies can be traded.
      • Maximum order quantity: Specifies a limit on the maximum individual order size that can be entered for the interproduct spread or strategy. This setting overrides the maximum order quantity setting that might exist at the product or exchange level.
      • Price reasonability: Determines how far from the market price a user may enter an order (in ticks) for the contract. You can set a number of ticks away from the market using the Ticks field, and set a percentage away from the current price using the Percent field. If you only want to enforce this setting for buy orders above the limit and sell orders below the market, check the Aggressive only option. This setting overrides the price reasonability setting that might exist at the product or exchange level.
      • Reject orders when there is no market data: To reject orders when there is no market data regardless of whether or not the market is in a matching or non-matching state, check this option. By default, orders are allowed when there is no market data.
  6. Click Save Changes
  7. To remove a user's or account's product limit, select the limit in the Limits section and click Remove.