How does futures day-trade margin work?

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pbylina

How does futures day-trade margin work? I mean I see $500 for ES. So if I open account with $2000, then I can buy 4 contracts? The question is: How long can I hold 4 contracts without margin call? ie.: if account Equity goes to $1900 I can still have 4 contracts open? What if account equity goes to $2500 with 4 contracts open, can I buy another contract or do I need to close all 4 contracts first?

Thanks!
 
You will have to ask you broker/FCM since it will differ from FCM to FCM. This is basically a risk question not a margin question as the margin is set by the exchanges and calculated at EOD.
 
You will need slightly more to cover comms to buy 4 and not be instantly margin called.

As soon as account drops below 2k like 1c then your out, all positions will close.

1 positions enough on a 2k account, too much even, keep your greed in check.
 
rmorse said:
You will have to ask you broker/FCM since it will differ from FCM to FCM. This is basically a risk question not a margin question as the margin is set by the exchanges and calculated at EOD.
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Thanks man.
 
I'm hoping that the 2000$ is a hypothetical number. I'm sure someone has traded with this little but myself I'd be terrified.

The ES Mini has a multiplier of 50. So for example, the ES Mini had a high of 2075 and a low of 2030.25 on Dec 31. That's a range of 44.75 multiplied by 50 = 2237.5.

So you could basically go bust on an average daily range with one contract. Well you'd get a margin call.

So even using that 2000$ plus 4 contracts you had, without worrying about margin calls. A simple move in the S&P of 10 points would bust that 2000$.

The futures market has interested myself but I don't have any scalping strategies and the contract sizes are so leveraged that my daily chart strategies would be way above my risk thresh hold for my account size.

As far as margin and how it works I don't trade futures so I'm not sure. But interactive brokers shows a margin requirement for the E-Mini of 2875$ for intraday initial and a maintenance of 2300$. From what I've caught reading a bit about futures is some brokers can offer lower margin requirements but are able to adjust these on the fly if volatility gets above their thresh hold which could force you into a margin call when your in a bad spot.
 
Metamega said:
I'm hoping that the 2000$ is a hypothetical number. I'm sure someone has traded with this little but myself I'd be terrified.

The ES Mini has a multiplier of 50. So for example, the ES Mini had a high of 2075 and a low of 2030.25 on Dec 31. That's a range of 44.75 multiplied by 50 = 2237.5.

So you could basically go bust on an average daily range with one contract. Well you'd get a margin call.

So even using that 2000$ plus 4 contracts you had, without worrying about margin calls. A simple move in the S&P of 10 points would bust that 2000$.

The futures market has interested myself but I don't have any scalping strategies and the contract sizes are so leveraged that my daily chart strategies would be way above my risk thresh hold for my account size.

As far as margin and how it works I don't trade futures so I'm not sure. But interactive brokers shows a margin requirement for the E-Mini of 2875$ for intraday initial and a maintenance of 2300$. From what I've caught reading a bit about futures is some brokers can offer lower margin requirements but are able to adjust these on the fly if volatility gets above their thresh hold which could force you into a margin call when your in a bad spot.
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Yeah its just example lol.
 
pbylina said:
Yeah its just example lol.
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In that case let me explain how that usually works. There are two margins Initial (in your example $500) and Maintenance (always lower than initial) for example $400. When you buy you need to post $500 in margin and you will not get margin call until you have $400. In case of 4 contracts you will get margin call when account value drops to $1600 = $400x4 which with 50x leverage just 2 ES points move against your position.
 
pbylina said:
How does futures day-trade margin work? I mean I see $500 for ES. So if I open account with $2000, then I can buy 4 contracts? The question is: How long can I hold 4 contracts without margin call? ie.: if account Equity goes to $1900 I can still have 4 contracts open? What if account equity goes to $2500 with 4 contracts open, can I buy another contract or do I need to close all 4 contracts first?
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I don't mean any of this rudely or as a criticism, but your questions demonstrate your total inexperience of futures-trading (of course, that's why you're asking for advice, I understand, but I also suspect that you're also not quite hearing the answers being offered to you, here!).

You need a minimum $10,000 of risk-capital to think about trading futures, IMO, and that's for one contract. (Yes, I know some people will tell you $5,000, but I think they're all naive and misguided).

Again, no hostility intended, but asking about trading 4 contracts with $2,000 and using any imediate gain to buy a fifth is just "from another planet".

I'm posting only in an attempt to be helpful, by mentioning (since nobody else has done so yet) that you're really going to need a dramatic re-orientation of your perceptions and plans, here, to avoid sudden disasters. I'm not saying that's good, or bad: simply that that's the way it is. And I wish you good luck. ;)
 
Yep too much looking at historic charts and thinking it's going to be that easy live and dreaming about becoming rich in 2 weeks flat.

Sadly you will blow account #1 quickly, account #2 quicker, #3 quicker then you'll start to slow down, over the next account or 2, get to BE kinda area make some lose some, then years on from that start to make small money.

That's how it's been for 98% of, what makes you think your in that top 2% ??

We all thought we would be in that 2% when we started :(
 
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