Open E Cry raises ES margins from $500 to $2250

[DerekD]

Quote from rcanfiel:

intraday trading is not automatically safer. People who do this tend to load up on a lot more leverage. If someone suddenly said Pakistan and India exchanged nuclear weapons (even if untrue) for example, then the clever people long $500 daytrading margins to control a lot of eminis would be in a bloodbath. And they plan to keep doing it, day in and day out, possibly for many years. The exposure is there. And it is conceivable the brokerage would go under having a lot of these customers.

News doesn't break that way. Anyone who has been trading for years would know that. Let's say the news event you described happened above. What happens many days if not weeks ahead is the rumor that tensions will escalate. Then one day the event actually happens. Since news does NOT disseminate simulateously to all, those with "advanced" (meaning earlier knowledge) will sell first in what would be an orderly sell off in liquid markets. By the time everyone else gets it, (the johnny come lately's) that's when you get your gaps.

So since day traders are the ones taking pips/ticks/handles and their time frames being ticks to minutes, their risk of large moves is less and their size tends to be significantly smaller than a position or swing trader. The collective of which would not take out a FCM provided that exercise automatic liquidation of positions that fall below a certain threshold.

Only a few safeguards need to be in place to prevent a firm being taken out by them. With today's modern systems, it's fairly easy to implement. Especially for a futures only firm. Add in naked options and things get tricky seeing as options are relatively illiquid.

We have been in a period of relative calm. We have had burps, like the southeast asian currency/market crisis a few yeras ago. the trunami. The yellowstone caldera, arab-israeli tensions, the great depression, a dirty bomb/radiation bomb/bioterror in a western city, etc. It only takes a STORY about something to wipe out these highly leveraged day traders.

Not really so much for futures day traders. Maybe stock, option and, currency traders.

 

[DerekD]

Quote from ids:

Let me clear the situation. Futures only accounts have 1/2 intraday reduction. Options are not.

Thanks.

Good of the firm to be proactive and prudent by putting the suspension on and taking it off quickly. Last time, it lasted for 6 weeks. That seemed a bit excessive.

BTW, TWS is working out better than ever. Keep up the good work.

 

[rcanfiel]

Quote from DerekD:


News doesn't break that way.[/B]

Where did you learn to trade, the bathroom? Catastrophic news does not leak out in a tidy manner.

Anyone sitting there with their account maxed to the hilt long with $500 eminis and thinking they can just zip out, will find everyone else is stampeding out the same exits.

$500 controlling approx $70,000 in a large scale way (many contracts) is called "looking for bankruptcy" in this modern inferno called 2008.

 

[DerekD]

Quote from rcanfiel:

Where did you learn to trade, the bathroom? Catastrophic news does not leak out in a tidy manner.

Anyone sitting there with their account maxed to the hilt long with $500 eminis and thinking they can just zip out, will find everyone else is stampeding out the same exits.

$500 controlling approx $70,000 in a large scale way (many contracts) is called "looking for bankruptcy" in this modern inferno called 2008.

Yeah? Whatever. Anyone who has been through the major events knows what I'm talking about.

Take the suprise fed action a few years ago. The market was moving before it was widely disseminated. Daytraders who don't use stops, be it mental or hard, will die long before rare major market moving events. In fact, most of them blow out when volatility edges up over a month or two from historical norms.

As for the rest of us who trade using prudent money management skills, since news DOES NOT disseminate to all simulatenously, let alone being reacted to simultaneously, we're not worried because we've been there and done that.

Hasta pasta.

 

[rcanfiel]

Quote from DerekD:

Yeah? Whatever. Anyone who has been through the major events knows what I'm talking about.

Hasta pasta.

Obviously, you have never traded through a catastrophic event.

But, hasty banana

 

[scriabinop23]

Quote from DerekD:

Yeah? Whatever. Anyone who has been through the major events knows what I'm talking about.

Take the suprise fed action a few years ago. The market was moving before it was widely disseminated. Daytraders who don't use stops, be it mental or hard, will die long before rare major market moving events. In fact, most of them blow out when volatility edges up over a month or two from historical norms.

As for the rest of us who trade using prudent money management skills, since news DOES NOT disseminate to all simulatenously, let alone being reacted to simultaneously, we're not worried because we've been there and done that.

Hasta pasta.

ugh.. how about the surprise fed action on tuesday.. what was that... 60-70 handles per contract immediate spike?

of course, only a fool wouldn't have been expecting a cut..


[everyone is so sure of themselves here its hilarious]

 

[DerekD]

Quote from scriabinop23:

ugh.. how about the surprise fed action on tuesday.. what was that... 60-70 handles per contract immediate spike?

of course, only a fool wouldn't have been expecting a cut..


[everyone is so sure of themselves here its hilarious]

MMmm... pre-market? The convo is about daytrading and margins well below SPAN minimums. Which only kick in during RTH.

 

[DerekD]

Quote from rcanfiel:

Obviously, you have never traded through a catastrophic event.

But, hasty banana

Look, for a minute there I was going to waste time proving my point. You know, the ego thing sparked in me. But then I remembered your religious postings and views in "those other threads" and realized it would be a lesson in futility.

I'd like to say you can seperate a person from their religious views, but when they're way out there like yours, it tends to be an all emcompassing aspect of their life and worldview.

Anyway, for your own personal amusement... go grab an intraday chart of the ES during Jan 3, 2001. Start from 12:00EST to 13:30EST. Do tick, 1min and 5 min bars. Bear in mind that the official time of the FED action was 13:15.

Next, 9/11/01. Happened before market open.

Check Feb 26/1993 - 1st Trade center bombing. Check from 11:30EST to 13:00EST. Bear in mind that the official time of the explosion was 12:17EST.

Yeah, see? It's not an instanteous reaction because news isn't disseminated instanteously.

Trade Globex without stops and get smoked. Trade with them and at most get singed - sometimes more than you'd like. Trade with stop limits that have a narrow spread between stop and limit? Generally bad idea.

 

[ProfLogic]

Quote from DerekD:

Look, for a minute there I was going to waste time proving my point. You know, the ego thing sparked in me. But then I remembered your religious postings and views in "those other threads" and realized it would be a lesson in futility.

I'd like to say you can seperate a person from their religious views, but when they're way out there like yours, it tends to be an all emcompassing aspect of their life and worldview.

Anyway, for your own personal amusement... go grab an intraday chart of the ES during Jan 3, 2001. Start from 12:00EST to 13:30EST. Do tick, 1min and 5 min bars. Bear in mind that the official time of the FED action was 13:15.

Next, 9/11/01. Happened before market open.

Check Feb 26/1993 - 1st Trade center bombing. Check from 11:30EST to 13:00EST. Bear in mind that the official time of the explosion was 12:17EST.

Yeah, see? It's not an instanteous reaction because news isn't disseminated instanteously.

Trade Globex without stops and get smoked. Trade with them and at most get singed - sometimes more than you'd like. Trade with stop limits that have a narrow spread between stop and limit? Generally bad idea.

Well stated.
Other examples are the London bombing or even the fat finger trades that occured a couple years ago.
The markets (the charts) are smarter than the individuals trading in (on) them. Use stops or evaporate and learn to READ PRICE ACTION!

 

[ProfLogic]

Quote from scriabinop23:

ugh.. how about the surprise fed action on tuesday.. what was that... 60-70 handles per contract immediate spike?

of course, only a fool wouldn't have been expecting a cut..


[everyone is so sure of themselves here its hilarious]

Confidence comes with experience from one's ability to read price action in real-time.
Here's my trading chart leading into the "surprise" Fed action.