Initial and Maintenance Margin Requirements

J

jamesdean217

Hi all,

Just a quick beginners question RE: futures margins. How is initial and maintenance margins used against your account.

Say for a ES contract with IB. (intraday = 2813 and maintenance = 2250). If I had US$5000 in an account, would that mean I would not be able to open a position?

I'm getting different answers through a search on the web. At first I thought maintenance margin was calculated against the value of your position as well (so say if ES went down 5 ticks), it would not reach your maintenance margin because the value of your position is still >$2250. But on the IB margins page it says the maintenance margin is required in cash in addition to the initial margin ($2813 + $2250). Does this apply to all brokerages?

Thanks in advance.
 
Quote from jamesdean217:

Hi all,

Just a quick beginners question RE: futures margins. How is initial and maintenance margins used against your account.

Say for a ES contract with IB. (intraday = 2813 and maintenance = 2250). If I had US$5000 in an account, would that mean I would not be able to open a position?

I'm getting different answers through a search on the web. At first I thought maintenance margin was calculated against the value of your position as well (so say if ES went down 5 ticks), it would not reach your maintenance margin because the value of your position is still >$2250. But on the IB margins page it says the maintenance margin is required in cash in addition to the initial margin ($2813 + $2250). Does this apply to all brokerages?

Thanks in advance.
More...

If you are planning to open an account, why don't you ask your prospective broker(s)? They have sales, trading desks and customer service to answer questions like this.
 
Each broker deals with margin differently, so you have to do the work and ask each broker you are considering. Be specific with them about your plans, ie intraday via overnight, as this will make a world of difference to your answer.
 
Thanks for the quick replies guys.

I definately plan to do my due-diligence before moving forward, but I'm hoping to see what the industry standard is. This way I can narrow my list of potential brokers and ask the appropriate questions to those that fit my criteria.

Does anyone have experience with the initial and maintenance margin requirements of IB?
 
Quote from jamesdean217:

Thanks for the quick replies guys.

I definately plan to do my due-diligence before moving forward, but I'm hoping to see what the industry standard is. This way I can narrow my list of potential brokers and ask the appropriate questions to those that fit my criteria.

Does anyone have experience with the initial and maintenance margin requirements of IB?
More...

Do you trade intraday or overnight?
 
Intraday. Although on some rare occasions I will also look at spreads against some of the Asia-Pac indices as well, so this would include holding lots "overnight" (or until asia opens).
 
Quote from jamesdean217:

Intraday. Although on some rare occasions I will also look at spreads against some of the Asia-Pac indices as well, so this would include holding lots "overnight" (or until asia opens).
More...

Intraday, IB is pretty tight on margins, but there are tighter. To answer your question, there is no average among brokers. You will find futures brokers with intraday margins from $300 to $7000 per contract.
 
Quote from el pollo:

$2813 to open the position
$2250 must remain to keep it open

IN OTHER WORDS, if you started with 5 GRAND, you can lose $2749 and then they close it out!

Intraday just means get flat by 4:15PM ET, for most brokers, you usually can start trading again in the evening.

This is basic stuff.
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Thanks for the replies.

So an additional $2250 in maintenance margin is not required in liquid cash in your account to open a position with IB?

LOL yeah, I was a bit confused by the example on the IB site referring to initial/maintenance margins. It suggests you need to maintain the maintenance margin in addition to the initial margin at the moment a position is opened.

Thanks for clearing that up.
 
Quote from jamesdean217:

Thanks for the replies.

So an additional $2250 in maintenance margin is not required in liquid cash in your account to open a position with IB?

LOL yeah, I was a bit confused by the example on the IB site referring to initial/maintenance margins. It suggests you need to maintain the maintenance margin in addition to the initial margin at the moment a position is opened.

Thanks for clearing that up.
More...

:confused: Initial (beginning) margin BECOMES maintenance (continuing - lesser) margin.
 
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