Margin do you really need it?
- Thread starter bat1
- Start date
There is no margin in futures. It is a performance bond. A deposit to cover any potental move the next day.
One gold contract 100oz. at $900.00 an oz. is worth $90,000.
The exchange may require a minimum of $3,000 everyday to hold the position for one more day.
You still have a $90,000 investment. Treat it like that. Use the leftover $87,000 to earn more somewhere else.
The return on your futures contract should be measured against the total value of the contract ($90,000) and not just the daily deposit($3,000).
Big *SIGH*. Yes, futures use a performance bond for leverage rather than borrowed funds, but is is still commonly called margin. If you want to start a campaign to get the entire futures industry to stop using the term "margin" please have a go at it.
It is the nature of leverage itself that causes a problem for traders, not whether the leverage comes from using a performance bond or borrowing funds.
Nothing causes problems to people other than their own incompetence and/or stupidity.
Margin can be used to either destroy a trader or help facilitate success.
A grounded trader with skill, patience, and a firm understanding of money management can use margin to trade with little capital investment and become sucessfull.
A new trader with only thoughts of new cars and girls with no real system and piss poor money managerment will be destroyed quicker than the grounded trader makes his first trade.
It's all about how you handle margin...
A grounded trader with skill, patience, and a firm understanding of money management can use margin to trade with little capital investment and become sucessfull.
A new trader with only thoughts of new cars and girls with no real system and piss poor money managerment will be destroyed quicker than the grounded trader makes his first trade.
It's all about how you handle margin...
If you are trading on margin and are losing money, you would probably also be losing money not trading on margin. So you need to look at how you trade. That being said, I would say don't trade on margin until you can break even for at least 6 months, before you even start thinking about it again.