I'm a long time stock and ETF trader that recently changed to day trading NQ futures.
Help me make sure i understand correctly, exactly how daily settlement works.
Copied below is the list of largest Nasdaq 100 (NQ) futures drops in points, since 1971:
Date Intraday Drop (points)
March 16, 2000 -1,144.50
April 14, 2000 -932.50
September 17, 2001 -746.50
January 20, 2008 -645.50
October 15, 2008 -634.50
August 8, 2011 -577.50
March 28, 2014 -544.25
January 3, 2019 -538.25
December 24, 2018 -526.50
May 5, 2010 -516.25
Now let's say i only trade the first hour of the day and i always close all positons and am flat after the first hour. For this study, let's say I'm positive after that first hour and again i have stopped trading for the day with no positions held. Then between that first hour of the day and the end of the day we have one of those rare 500 to 1144 point drops.
In a worst case scenario (1144 point drop) at end of day settlement if i was trading 1 contract of NQ, my account value goes down $91,520 (even if i was flat)?
If i was trading 10 contracts, my account value drops by $915,200 (even if i was flat)?
If i was trading 50 contracts, my account value drops by $4,576,000 (even if i was flat)?
Right so far? Is my understanding correct?
If so, is the best risk control, to keep funds in an LLC and let the entitiy go bankrupt if that happens?
What happens if I'm trading 50 contracts at a time in an IRA valued at $130k? Do i owe my broker between $4 million and $5 million?
