ES Journal - 2021/2022

Overnight said:
I have no link that can describe it.

Here's how it goes.

Let's say you have 20K cash in your account. You have an open position in the ES that requires a 10K performance bond+10% on the initial. Let's call it 5 ES contracts, assuming a performance bond of 2K per contract. Your position is even at the moment. So your position is +/- 0, but you have a 10K PB requirement. Your account is debit by 10K.

You now have only 10K cash in your account, because of that Performance Bond debit.

The next day, the ES drops 100 points. That's -$5000. Now your performance bond is still the 10K, but the cash available in your account is only 5K, because your NLV, the value of your position +/- the performance bond, is now only 5K. So you now have only 5K available in cash.

Your performance bond is pulled from your cash account every afternoon when the CME closes for that one hour.

Now...I could sell my positions at the open for negative 5000 bux.

That leaves me with a cash balance of 15K.

I could then try to re-enter the same position, but I would be doing it with 5K less. So I enter same positions with 15K +10% instead of 20K. Now I have less wiggle room, because I have the same 10K performance bond, but now only 5K as a buffer in cash, instead of 10K.

If the market drops another 100 points, which is 5K, my cash balance and performance bond requirement equal each other, and I am most-likely margin called. The positions are closed, and I am left with a 10K loss in total.

I have 10K in cash left in the account. I cannot open a new position identical to the ones I had, because I lost that cash by being margin-called. It requires a 10K+% performance bond, but I have only 10K left in the account. I gots no extra 10 initial %.

And it doesn't have to be a margin call to get to that 10K loss. You can do it to yourself as well, by closing the positions, WHEN THEY DO NOT HAVE TO BE CLOSED.

I did that three times during my trading journey, and I promised myself I would not do it again. This latest drawdown has been hell, but by golly, I must stick with the plan. Gotta' keep on with good music and good vibes, man.

More...
Hmmmm.
Ok. I knew you weren't bs'ing fwiw.
Well I don't want to say just cut your losses and then be wrong, the indexes can soar on low volume rallies.... and the entire world is bearish so you've got that in your favor.... so I dunno @Overnight... tough call. For real though, I hope you win this round. But next time, set things up so you have a little more flexibility. Its a traders market. Long term, odds are you're right, but near term, you may get fried. Like I said, tough call.
 
vanzandt said:
Hmmmm.
Ok. I knew you weren't bs'ing fwiw.
Well I don't want to say just cut your losses and then be wrong, the indexes can soar on low volume rallies.... and the entire world is bearish so you've got that in your favor.... so I dunno @Overnight... tough call. For real though, I hope you win this round. But next time, set things up so you have a little more flexibility. Its a traders market. Long term, odds are you're right, but near term, you may get fried. Like I said, tough call.
More...

And I understand that completely. It's a delicate balancing act between the performance bonds, the positions I have, and the fact that AMP is always on day margins until that last 5 minute window. But regarding the bit you typed which I bolded?

Mother FRACKER, I thought I led into it gently enough, and I was wrong. I mean, I have been taking frosting off the top with picks of nits here and there into the new year, and finally when I feel I can take chunk and put on some size, I get chunked!

Oy!

I did not set myself up for flexibility this time because on Jan 3rd, I thought the Fed thing was baked in. Jan 5th proved me wrong. And then we got more hawkish Fed shit and then we got the Ukraine war. That black swan I did not anticipate. Alas, it is what it is. I anticipate a loss on this roll into September.
 
Overnight said:
And I understand that completely. It's a delicate balancing act between the performance bonds, the positions I have, and the fact that AMP is always on day margins until that last 5 minute window. But regarding the bit you typed which I bolded?

Mother FRACKER, I thought I led into it gently enough, and I was wrong. I mean, I have been taking frosting off the top with picks of nits here and there into the new year, and finally when I feel I can take chunk and put on some size, I get chunked!

Oy!

I did not set myself up for flexibility this time because on Jan 3rd, I thought the Fed thing was baked in. Jan 5th proved me wrong. And then we got more hawkish Fed shit and then we got the Ukraine war. That black swan I did not anticipate. Alas, it is what it is. I anticipate a loss on this roll into September.
More...
Yeah. No one could have anticipated this one, that's for sure. Although some have said we were way overdue for a major conflict... if history is any guide. You'd think (or we'd like to think) we've come farther than that though.
Apparently not unfortunately.
 
zaqwe.jpg
 
Overnight said:
I have no link that can describe it.

Here's how it goes.

Let's say you have 20K cash in your account. You have an open position in the ES that requires a 10K performance bond+10% on the initial. Let's call it 5 ES contracts, assuming a performance bond of 2K per contract. Your position is even at the moment. So your position is +/- 0, but you have a 10K PB requirement. Your account is debit by 10K.

You now have only 10K cash in your account, because of that Performance Bond debit.

The next day, the ES drops 100 points. That's -$5000. Now your performance bond is still the 10K, but the cash available in your account is only 5K, because your NLV, the value of your position +/- the performance bond, is now only 5K. So you now have only 5K available in cash.

Your performance bond is pulled from your cash account every afternoon when the CME closes for that one hour.

Now...I could sell my positions at the open for negative 5000 bux.

That leaves me with a cash balance of 15K.

I could then try to re-enter the same position, but I would be doing it with 5K less. So I enter same positions with 15K +10% instead of 20K. Now I have less wiggle room, because I have the same 10K performance bond, but now only 5K as a buffer in cash, instead of 10K.

If the market drops another 100 points, which is 5K, my cash balance and performance bond requirement equal each other, and I am most-likely margin called. The positions are closed, and I am left with a 10K loss in total.

I have 10K in cash left in the account. I cannot open a new position identical to the ones I had, because I lost that cash by being margin-called. It requires a 10K+% performance bond, but I have only 10K left in the account. I gots no extra 10 initial %.

And it doesn't have to be a margin call to get to that 10K loss. You can do it to yourself as well, by closing the positions, WHEN THEY DO NOT HAVE TO BE CLOSED.

I did that three times during my trading journey, and I promised myself I would not do it again. This latest drawdown has been hell, but by golly, I must stick with the plan. Gotta' keep on with good music and good vibes, man.

More...


I still don’t understand performance bonds … the examples you gave with 5 ES going down 100 points overnight would put you down 25k and I don’t see many brokers keeping the 20k account open during that. Unless that math was just off in the example. If you held that long for some swing trade did you at least add any near the bottom with your extra margin? January smoked a lot of people.
 
Overnight said:
I have no link that can describe it.

Here's how it goes.

Let's say you have 20K cash in your account. You have an open position in the ES that requires a 10K performance bond+10% on the initial. Let's call it 5 ES contracts, assuming a performance bond of 2K per contract. Your position is even at the moment. So your position is +/- 0, but you have a 10K PB requirement. Your account is debit by 10K.

You now have only 10K cash in your account, because of that Performance Bond debit.

The next day, the ES drops 100 points. That's -$5000. Now your performance bond is still the 10K, but the cash available in your account is only 5K, because your NLV, the value of your position +/- the performance bond, is now only 5K. So you now have only 5K available in cash.

Your performance bond is pulled from your cash account every afternoon when the CME closes for that one hour.

Now...I could sell my positions at the open for negative 5000 bux.

That leaves me with a cash balance of 15K.

I could then try to re-enter the same position, but I would be doing it with 5K less. So I enter same positions with 15K +10% instead of 20K. Now I have less wiggle room, because I have the same 10K performance bond, but now only 5K as a buffer in cash, instead of 10K.

If the market drops another 100 points, which is 5K, my cash balance and performance bond requirement equal each other, and I am most-likely margin called. The positions are closed, and I am left with a 10K loss in total.

I have 10K in cash left in the account. I cannot open a new position identical to the ones I had, because I lost that cash by being margin-called. It requires a 10K+% performance bond, but I have only 10K left in the account. I gots no extra 10 initial %.

And it doesn't have to be a margin call to get to that 10K loss. You can do it to yourself as well, by closing the positions, WHEN THEY DO NOT HAVE TO BE CLOSED.

I did that three times during my trading journey, and I promised myself I would not do it again. This latest drawdown has been hell, but by golly, I must stick with the plan. Gotta' keep on with good music and good vibes, man.

More...

Thanks for your thorough explanation, was not familiar with it.
I think (if desired) one can open spreads in an other account to hedge your position (though this usually is a losing position if not planned beforehand)
Let’s be positive about it and say “in the long we are all dead and indices make new ath’s “
 
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