Can someone please explain margin requirements for the day trader to me?

[sopodo]

I totally agree with that statement. The big boys will whip you around and take your money from you until you know how to play the game. The good news about this is that they are bigger and slower than you and you can take their money once you know how to play the game.

Thanks, I will look into your friends thread.

 

[4xpipcounter]

This is why it cracks me up when people make a big deal about Buffet and others. They trade totally different than we do. They have billions in their accounts while staking only millions. What happens is a trade can back up on them 100's of pips, and it won't bother them. All they are waiting for is a move in their favor and take it out after +50 (an example), and take another million or more from the markets.
Similarly, I have done the same thong with those LT trades that I have that "miniscule" amount on. Everyone of those trades could back up 1,000 pips each, and I still wouldn't bat an eye. The only problem is I did not start that account with billions. I got to shake off a few 0's, and make it 1,000's. Ho hum--zzzzz.

I totally agree with that statement. The big boys will whip you around and take your money from you until you know how to play the game. The good news about this is that they are bigger and slower than you and you can take their money once you know how to play the game.

 

[4xpipcounter]

Hey! You guys talking behind my back!? Just joking.
Sopodo, click on the thread in my signature, and you'll be there. BTW, Dave is too modest to prop himself, so also check out EUR/USD Elliot Wave.
Also ask questions, make comments. This is all a learning environment.
But please, pay your dues before you go live.

Thanks, I will look into your friends thread.

 

[JahDave]

Paul and I don't have any ulterior motives............If you follow our threads and lose money then we are losing money as well, but that is not usually the case.

 

[DionysusToast]

$300 and $500 margin accounts are BS in my opinion.

The CME margins are here:
http://www.cmegroup.com/wrappedpages/clearing/pbrates/performancebond.html?group=CME INDEX FUTURES&type=OutrightRates&h=2&reporttype=marginrate

As you can see, the margin for an ES contract is WAAAAAAAY higher that the $300 or $500 you see on the sites of errrrr... less reputable brokers.

How do these brokers allow you to buy those contracts without the minimum margin? Well, one possibility is that the CME is turning a blind eye to the practise. The other is in the fine print. For instance, you will see that in the Global Futures contracts, it clearly states that they may OR MAY NOT pass your trades to the exchange.

In other words - it may appear that your broker put you into the marker but actually, they are just betting on you losing.

I'd steer well clear of any broker that does not put every single trade to the exchange. Next time you talk to a broker - ask them how they skirt those margin regulations....

 

[sopodo]

$300 and $500 margin accounts are BS in my opinion.

The CME margins are here:
http://www.cmegroup.com/wrappedpages/clearing/pbrates/performancebond.html?group=CME INDEX FUTURES&type=OutrightRates&h=2&reporttype=marginrate

As you can see, the margin for an ES contract is WAAAAAAAY higher that the $300 or $500 you see on the sites of errrrr... less reputable brokers.

How do these brokers allow you to buy those contracts without the minimum margin? Well, one possibility is that the CME is turning a blind eye to the practise. The other is in the fine print. For instance, you will see that in the Global Futures contracts, it clearly states that they may OR MAY NOT pass your trades to the exchange.

In other words - it may appear that your broker put you into the marker but actually, they are just betting on you losing.

I'd steer well clear of any broker that does not put every single trade to the exchange. Next time you talk to a broker - ask them how they skirt those margin regulations....

Many thanks for this very useful information,

GlobalFutures was just one of a number of my brokers on my list to sign up with. Where is this fine print located where they say they may or may not pass your trades to the exchange? I can't find it on their site.

I have seen dozens of brokers offering the $500 emini margins, a few offering $300 and $400. I can't see them all being less reputable. I thought even though the CME have their minimum emini margins. I thought the whole idea of brokers offering them at far less was to help new small time investors get into the emini markets. I thought with that said the CME wasn't going to do anything as it's more money for them that get's pumped into the exchange day in, day out.

 

[GFETC-Michelle]

Hello Sopodo,



At Global Futures, we do offer $300 and $500 Day Trading margins for Emini S&P, Emini Nasdaq and Emini Dow with our clearing firm Rosenthal Collins Group. As an Independent Introducing Broker, we can set our own day trading margin rules. We do not have any minimum amount required to open a self-directed account except for TT XTrader platform which requires $5,000. However, you need to meet the margin required to trade.



Let's use $500 day margin as an example and $1000 of equity. If you are trading 1 lot, you are using $500 for margin and you have $500 excess funds for trading. If your equity goes below $500, since this is the required amount for margin to trade 1 lot, you will be on intra-day margin call and your position can be liquidated by our in-house Margins Department. If our Margins Department liquidates your position, you will be charge $50 per lot.



The Emini SP closes at 3:15pm Central Time. If you leave a position overnight, you will need to meet the Chicago Mercantile Exchange Initial Margin, which is currently $5,625 per contract; keep in mind that the Initial margin is determined by the Exchange, so it will be the same regardless of your broker. If you don’t have the equity in your account to cover the Initial Margin, your position will be liquidated the next trading session and you will be on full margin (means you need $5625 to trade 1 lot) for that session until the next session. If you are day trading and do not have sufficient funds to hold a position, make sure to close all positions before 3:15pm Central Time.



Margin Restrictions and Additional Information

*$500 Day Trading Margins on the E-Mini S&P, E-Mini NASDAQ, Mini Russell and Mini Dow Jones $5 is valid up to 50 contracts (retail accounts only). The day trading margins on these contracts is $1,000 for 50 to 100 contracts. Trading more than 100 contracts requires additional margin.



*Please note that requesting for day trading margins does not indicate a customer’s trading activity will be more profitable and/or losses will be limited. Customer acknowledges the high degree of risk involved in commodity futures and options trading are not decreased by having liberal day-trading margins, nor does it guarantee or assume that the customer will make a profit and/or limit his/her losses. You should not request for this promotional item unless you agree that it is suitable for you. Exchange minimum margins for overnight trading apply. Margins are subject to change without notice. Please consult your broker for more detailed information. This offer cannot be combined with any other offer. After being placed on $300 Day Trading Margins, if you would like to cancel, you must bring your account up to $2,000 and contact your broker for confirmation. The $300 day trading margins are only valid on PATSystems execution. The margins are only valid for up to 25 lots for clients in the U.S./Canada and up to 10 lots for clients outside of the U.S.



Regular margins as well as $300 day trading margins are subject to change at any time. We reserve the right to alter or revoke this offer at any time at our own discretion.

 

[sopodo]

Hi Michelle,

I didn't see your post until now otherwise I would of replied sooner. Many thanks for the explanation. From what you have suggested I have a few questions that I hope you could please answer.

At Global Futures, we do offer $300 and $500 Day Trading margins for Emini S&P, Emini Nasdaq and Emini Dow with our clearing firm Rosenthal Collins Group. As an Independent Introducing Broker, we can set our own day trading margin rules. We do not have any minimum amount required to open a self-directed account except for TT XTrader platform which requires $5,000. However, you need to meet the margin required to trade.

Can I setup an account with $0, then when I am ready to trade live. Can I fund the account with just $750 of equity to trade 1 contract only. So $500 margin for 1 emini s&p 500 contract and have the other $250 as excess funds?

Let's use $500 day margin as an example and $1000 of equity. If you are trading 1 lot, you are using $500 for margin and you have $500 excess funds for trading. If your equity goes below $500, since this is the required amount for margin to trade 1 lot, you will be on intra-day margin call and your position can be liquidated by our in-house Margins Department. If our Margins Department liquidates your position, you will be charge $50 per lot.

Please explain this further to me, where does maintenance margin fit in, is that basically the excess funds you have left after you put down 1 contract. So with your example above. It's $500 margin on 1 contract, then $500 excess to trade with, basically for losses. If my 1 contract took 40 tick loss (12.50 x 40 = $500) then all the $500 excess funds would be wiped out to pay for the cost of the loss I am taking on my contract. Then when all the $500 excess is gone I will get a margin call and have to pay $50 when you liquidate my position. Then in this scenario the key would be for me to sell my position before all $500 of my excess funds are gone. That way I won't get a margin call and have to pay the $50. Is this all correct or am I totally confused.

The Emini SP closes at 3:15pm Central Time. If you leave a position overnight, you will need to meet the Chicago Mercantile Exchange Initial Margin, which is currently $5,625 per contract; keep in mind that the Initial margin is determined by the Exchange, so it will be the same regardless of your broker. If you don’t have the equity in your account to cover the Initial Margin, your position will be liquidated the next trading session and you will be on full margin (means you need $5625 to trade 1 lot) for that session until the next session. If you are day trading and do not have sufficient funds to hold a position, make sure to close all positions before 3:15pm Central Time.

I thought the emini s&p 500 hours is 9:15 am to 4:15 pm Monday to Friday, if I am trading on a $500 margin account and have to close my position at 3:15 pm then won't I miss out on trading in power hour 3:15pm to 4:15pm?

Margin Restrictions and Additional Information

*$500 Day Trading Margins on the E-Mini S&P, E-Mini NASDAQ, Mini Russell and Mini Dow Jones $5 is valid up to 50 contracts (retail accounts only). The day trading margins on these contracts is $1,000 for 50 to 100 contracts. Trading more than 100 contracts requires additional margin.

When you say it's $500 to trade 1-50 contracts and then $1,000 to trade 50-100 contracts and more than 100 contracts requires additional margin. Does that mean if I do a trade for 70 contracts, I won't be doing that amount as that's crazy high. But still let's say I did for this example. Then would the first 50 contracts take $500 margin per contract and the other 20 to make up the 70 will take $1000 margin per contract or is it just a straight 70 will be at $1,000 margin per contract as it's over the 1-50 contract limit which will result the trade margin cost to be $70,000 (70 contracts x $1,000 margin per contract)?

If you could please answer me on these questions

Many, many thanks in advance

 

[GFETC-Michelle]

Can I setup an account with $0, then when I am ready to trade live. Can I fund the account with just $750 of equity to trade 1 contract only. So $500 margin for 1 emini s&p 500 contract and have the other $250 as excess funds?

- Yes, you can open with only $750.

- Yes, you can open with only $750.

Please explain this further to me, where does maintenance margin fit in, is that basically the excess funds you have left after you put down 1 contract. So with your example above. It's $500 margin on 1 contract, then $500 excess to trade with, basically for losses. If my 1 contract took 40 tick loss (12.50 x 40 = $500) then all the $500 excess funds would be wiped out to pay for the cost of the loss I am taking on my contract. Then when all the $500 excess is gone I will get a margin call and have to pay $50 when you liquidate my position. Then in this scenario the key would be for me to sell my position before all $500 of my excess funds are gone. That way I won't get a margin call and have to pay the $50. Is this all correct or am I totally confused.

-Just make sure you have more than $500 to trade 1 lot. Once you go below $500, we can liquidate your position anytime.

I thought the emini s&p 500 hours is 9:15 am to 4:15 pm Monday to Friday, if I am trading on a $500 margin account and have to close my position at 3:15 pm then won't I miss out on trading in power hour 3:15pm to 4:15pm?

- You are referring to the times in Eastern Time (New York). I was posting the time in Central Time (Chicago) which is 1 hour behind.

Here is a link from CME’s website for Trading hours

http://www.cmegroup.com/trading/equ...ntract_specifications.html#prodType=undefined

When you say it's $500 to trade 1-50 contracts and then $1,000 to trade 50-100 contracts and more than 100 contracts requires additional margin. Does that mean if I do a trade for 70 contracts, I won't be doing that amount as that's crazy high. But still let's say I did for this example. Then would the first 50 contracts take $500 margin per contract and the other 20 to make up the 70 will take $1000 margin per contract or is it just a straight 70 will be at $1,000 margin per contract as it's over the 1-50 contract limit which will result the trade margin cost to be $70,000 (70 contracts x $1,000 margin per contract)?

-The first 50 lots requires $500 day margin and the other 20 requires $1000 day margin.

You are welcome

 

[sopodo]

The first 50 lots requires $500 day margin and the other 20 requires $1000 day margin.

You are welcome

Many thanks for your replies to my questions

Much appreciated

 

[Als]

Ho Sopodo,
Don't even think about trading the ES with a mere $500 margin account would be my advice. IMO, you need around $5,000 or more per contract traded if you're to survive and prosper. Is it possible to do really well with a lot less? Yes, of course it is, but the smaller the size of your account, the greater the odds that are stacked against you.

Below is an extract from a FAQ that I'm working on (not yet posted). Some of it won't make a lot of sense because it's out of context but, hopefully, you'll get the point about account size.

"Generally speaking, the ability to trade size tends not to be the main concern for most retail traders, because their accounts aren’t big enough for it to be an issue. However, what is an issue is the exact opposite; their accounts are too small. Trading too much size with a small account is a recipe for disaster. It’s another monkey error made by novice traders who focus on the potential gain, as opposed to the potential loss. The ES can easily move 20 points in one day. If you’re trading say, fifteen contracts, that’s a profit or loss of $15,000! Great if it’s the former and a bummer if it’s the latter! Even if you’re happy to risk 5% of your equity on any one trade (not recommended by the way), you’ll need an account funded to the tune of $300,000, in order to comfortably take a hit this big and to stay within your 5% risk parameter. Many brokers advertise margins as low as $500, i.e. you only need $500 in your account per contract traded. So, in theory, you’d only need $7,500 in your account to trade fifteen ES contracts. Don’t be lured by this – it’s financial suicide. You’re far more likely to ‘blow up’ – i.e. lose all your money - than you are to end the day eleven grand plus change to the good. The index would only have to go against you by ten points and your entire account would be wiped out in a single trade."

Tim.

Great anti-scam piece !

Every new thread of a newcoming broker post must be supplied with this !

Otherwise some bucketshoppers advertise only 100 to open---vertually fooling newbies