Need 10:1 Leverage
- Thread starter trader220
- Start date
If you want to trade 40 contracts, and will only put up 25k, this means that you can only take a loss of $625 per contract before you run out of money. This is 12.5 points.
The thing is that these days, in only the past month, we have had several gap openings between either the Friday close to Sunday open, or even the 5pm close to 6pm open, that were a good 10 points or so. In these cases, the gap was in complete opposite to the preceding trend.
If price is moving, its highly unlikely that your backer would be hit hard because its fairly easy to liquidate you within a few ticks of your max loss of 12.5 points which your 25k would cover as price approaches that loss. But when the markets close, even for an hour, your 25k might not cover the loss from where it opens, which you can't do anything about.
If this was during the day, I'd say fine, you might find someone crazy enough. Perhaps your strategy scales into a trend, and if you get lucky and catch one and keep adding, you can very quickly build a buffer, but you cannot hold a position like this overnight when the market is closed with such a small buffer.
These days, a nuke might very well go off and the gap open will be much more than your 12.5 points of buffer will allow.
The thing is that these days, in only the past month, we have had several gap openings between either the Friday close to Sunday open, or even the 5pm close to 6pm open, that were a good 10 points or so. In these cases, the gap was in complete opposite to the preceding trend.
If price is moving, its highly unlikely that your backer would be hit hard because its fairly easy to liquidate you within a few ticks of your max loss of 12.5 points which your 25k would cover as price approaches that loss. But when the markets close, even for an hour, your 25k might not cover the loss from where it opens, which you can't do anything about.
If this was during the day, I'd say fine, you might find someone crazy enough. Perhaps your strategy scales into a trend, and if you get lucky and catch one and keep adding, you can very quickly build a buffer, but you cannot hold a position like this overnight when the market is closed with such a small buffer.
These days, a nuke might very well go off and the gap open will be much more than your 12.5 points of buffer will allow.
This is half correct. Yes, if you are holding the position when the CME deems it "marginable" at 4pm CT but there are many futures brokers who want the commissions that will let you take the trade off just before the cutoff and put it back on after the 5pm open at $500 margins. You cna then hold it all night and day until the following 4pm. Crazy by the firms as they are taking the risk but check around. You will find it.
I guess if you insist on doing something dumb...there is a way.
To be fair, at current pricing, 40 contracts on ES would require only $198K to hold through the close. But still, it seems an excessive request of any firm. Why not try four contracts? That would require only $19.8K, and you have more than that and wouldn't need a prop firm.
He doesn't have 200k, he has 25k and wants to hold 40 ct overnight...therein lies the absurdity.
Yes, that is why I suggested he take his 25K with 4 contracts instead of 40 contracts. Thus, no need for a prop firm. My quote was to point out Scat's $5,000,000 position thingy.
Of course but he knows that...maybe
Clifford - Not sure we're talking about the same thing. Holding a contract overnight means holding it between 3:15-3:30pm and 4-5pm (CST) when Globex is closed. Retail brokers offer intraday margin of $500/contract, but I am specifically seeking overnight, which is typically +/- $5,000/contract.
This sounds like a question for Old Man Morse! (OMM).
Hiya @Robert Morse ! Care to chime in on how your particular brokerage would treat this scenario?