Low daytrade margins are a great thing.
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AMP Margin for Positions opened in night times
- Thread starter cutetrader
- Start date
For starters, Another flash cash or alike will be the issue. Imagine you have a 10k account and trade 20 ES contracts. Margin wise you are covered (ignore for a second that you leave zero room for an unrealized loss of any kind or that you expose your account to insane risk).
Now, if ES drops 100 or 200 points in a matter of seconds/minutes (we have been there) and nobody is willing to buy a single contract Amp is on the hook for many tens of thousands of dollars to meet margin calls by the Exchange. Multiply that by X accounts Amp runs and allows traders such margin levels.
First of all, you will ultimately be on the hook for losses should the exchange force to liquidate such positions the second buyers step in at very low price levels, even if your account cannot cover such losses. Secondly, if Amp cannot immediately cover all the losses at first they will simply be forced out of business and at best all other investors and traders with Amp will in the best case scenario be unable to withdraw any funds and have to wait for months/years until this issue settles in court or out of court. At worst every other customer will be on the hook as well and receive cents on each dollar, invested.
That is what happened several times with FCMs and brokers who allowed clients to lever up beyond exchange mandated limits. There is a reason no exchange has ever gone bankrupt but a number FCMs and numerous brokers.
Except even during the flash crash the ES only dropped 35 points in the first 4 minutes if I recall. I think it took around 35 minutes to fall roughly 100 points. I was trading that day and unless u had a 100+ lot on the liquidity was still there to exit even with a wide spread. Was it ideal? No but if you wanted out it was there.
If you re-read, then you will find that I made specific points as to what I would offer. You are playing with terminology here which makes no difference. Call it Day or Night session, call it whatever you want. Fact remains that you are exposed to a flash crash at 8am ET, noon, 3PM, 5PM, 9PM, 3AM, in fact always. If you in fact traded during the periods you mentioned then you should be well aware that a 500 dollar margin does not cut it and in fact kicked out many undercapitalized traders. So did the CHF depeg from the Euro, and so did many major events that put capital at risk that was highly leveraged in any asset class.
Why are you hung up on amp ?
Hell global futures offer $300 day trade margins.
Yep, these guys blabbing are extremely misinformed. The Swiss Franc deal was the real disaster in recent history.Except even during the flash crash the ES only dropped 35 points in the first 4 minutes if I recall. I think it took around 35 minutes to fall roughly 100 points. I was trading that day and unless u had a 100+ lot on the liquidity was still there to exit even with a wide spread. Was it ideal? No but if you wanted out it was there.
Seems you came around full circle after having vehemently disagreed on this issue before.
I called CME risk-management about this to clarify. The rep told me (paraphrasing)..."The requirement to get into a future contract is the maintenance margin of that contract. If it is a non-hedge/non-member account, it's the initial, which is 10% more. There is no such thing as DT margin at the CME."
This leads me to believe that a broker offering a $500 DT margin for a contract, say ES, which is $5,225 for the initial, is requiring $500 of the speculator's account money, and the non-hedge/non-member FCM is putting up $4,725 of money from their own "accounts" to cover the position.
So a broker who is helping to cover a traders' costs to initiate a position (hence the term "initial margin"), is taking on risks of their own.
I don't understand the FCM business, and don't shoot the messenger. This is what the rep said in a nutshell.
The summary that we all forget is here---> http://www.cmegroup.com/clearing/cme-clearing-overview/performance-bonds.html
This leads me to a conclusion. Always trade only what you can to meet the initial per contract, regardless of what your broker says you can or cannot do, if neither you nor your broker wish to suffer any major surprises in the rare "flash-crash" scenario. WITH THAT SAID however, that does not mean that low DT margins are not profitable for any one particular broker.
That business model must be working, or else it would not be used at all by anyone. Makes sense, yes?
Right, that's why some poor chap is dragged out of his London apartment and blamed for billions in losses . After all it was just another day.
Except even during the flash crash the ES only dropped 35 points in the first 4 minutes if I recall. I think it took around 35 minutes to fall roughly 100 points. I was trading that day and unless u had a 100+ lot on the liquidity was still there to exit even with a wide spread. Was it ideal? No but if you wanted out it was there.
What he's saying is you could have got out of your losing positions if you traded with stops.Right, that's why some poor chap is dragged out of his London apartment and blamed for billions in losses . After all it was just another day.
I am not on amp in particular. I just think those FCM reps in aggregate are total tools who have zero clue. They are your typical dinosaurs who all claim they have been at the CME floor, which means absolutely zero given they still have to pull a car dealer salary today by shilling. I do not believe they understand the slightest about risk management and certainly do they not have the slightest interest to protect customers.
But here is the story in a nutshell: never never ever trust someone who tells you that they have your interest at their mind unless their motivations are perfectly aligned with yours. Here they get paid more, the more idiots and beginners they are fishing out of the pond. They have absolutely zero, nada, niet to offer an experienced and profitable trader.
But here is the story in a nutshell: never never ever trust someone who tells you that they have your interest at their mind unless their motivations are perfectly aligned with yours. Here they get paid more, the more idiots and beginners they are fishing out of the pond. They have absolutely zero, nada, niet to offer an experienced and profitable trader.
Why are you hung up on amp ?
Hell global futures offer $300 day trade margins.
My guess is you bash these FCMs but you really don't know much about them.I am not on amp in particular. I just think those FCM reps in aggregate are total tools who have zero clue. They are your typical dinosaurs who all claim they have been at the CME floor, which means absolutely zero given they still have to pull a car dealer salary today by shilling. I do not believe they understand the slightest about risk management and certainly do they not have the slightest interest to protect customers.
But here is the story in a nutshell: never never ever trust someone who tells you that they have your interest at their mind unless their motivations are perfectly aligned with yours. Here they get paid more, the more idiots and beginners they are fishing out of the pond. They have absolutely zero, nada, niet to offer an experienced and profitable trader.
That is only true for part of the move during the flash crash. I know of several guys if they had gotten out they would have gone instantaneously bankrupt as their positions were deep in the red already. They held on, and guess what. They got no margin calls whatsoever. Their brokers and FCMs should have forced the closure of those positions because they were in violation of exchange mandated requirements. Either the exchanges or the brokers/FCMs let them off the hook which only worked out because the market ticked right back and because of the total carnage and chaos in the market. It would have turned into a huge disaster had the market stayed at the lows or even dropped further. Point of the story is that such behavior put everyone else at great risk.
What he's saying is you could have got out of your losing positions if you traded with stops.