How crazy do you have to be to trade Palladium futures?

[trader221]

It is a contract that has almost no liquidity but with arbitrage opportunities.
I have observed it for a long time and designed an algorithm which is superbly profitable (in demo).
But I'm still reluctant to pull the trigger with money. And especially that it takes a lot of money to be able to trade it (high margin)

 

[maxinger]

Totally not crazy.
Totally not interested.

Volume is rather pathetic.
The margin requirement is horrific.

There are other better things to trade.

 

[ffs1001]

..... and designed an algorithm which is superbly profitable (in demo).

There is a massive difference in a strat being profitable in demo and it working in live.
And this difference will be exagerated for something which has very low volumes.

If theres one thing ive learnt (by losing money) is that very low liquidity is a "negative edge". On paper, your trade should make a profit, but in practice it will be a loser.

 

[Actuarial_Fun]

I love trading Palladium futures, but I am highly selective with spots, due to it's illiquidity. Margin requirement used to be much more reasonable. After enough 10% moves in a day, requirements shot higher. I'm hoping they will relax again soon.

 

[Overnight]

I love trading Palladium futures, but I am highly selective with spots, due to it's illiquidity. Margin requirement used to be much more reasonable. After enough 10% moves in a day, requirements shot higher. I'm hoping they will relax again soon.

They did. as of yesterday. You didn't get the memo?

See pages 17-18.

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2022/04/Chadv22-150.pdf

 

[Actuarial_Fun]

They did. as of yesterday. You didn't get the memo?

See pages 17-18.

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2022/04/Chadv22-150.pdf

Nice, we are getting there! IB still has 300K initial margin LOL and Ameritrade is a bit lower at 80K. I'm sure IB is a mistake. Just haven't bothered letting them know yet.

 

[globalarbtrader]

Looking at my list of minimum capital requried to trade everything (https://github.com/robcarver17/reports/blob/master/Minimum_capital_report) I'd personally want to have at least $500k in my account to (final row, column 6 is £400K), regardless of what the margin was, assuming that was the only thing I was trading.It has by far the largest $ risk of any contract; a third more than the large Ethereum contract in second place.

Liquidity isn't bad, over 500 contracts a day, and neithier are costs.

Rob

 

[David's faith]

If you fuck it up you will have a shiny new palladium floor in the house. And garage door. Even the spree around your house...

 

[treeman]

I've both made and lost money on it. The margin requirements make it prohibitive though. I don't like to take a position on it with less than $1M in the account, given the sheer size of the contract, and it's volatility.

 

[Ed48]

Does your algorithm only work with the futures contract?

I'm just wondering if there are other palladium derivatives you could use eg. options, ETF?