The top 3 guys who make over 1 million a year at my firm...

Quote from Swan Noir:

Mav, your comments and opinions are always appreciated (particularly on anything prop related) but keep in mind I didn't jump in until he started to talk in terms of contracts ... here's his comment:

"In the futures market, whatever capital you have you can control a leverage 20 to 1. So if you had $5,000 working capital you can control $100,000 (approximately) worth of the standardized contract. In bonds, the cost is a lot cheaper. And my firm has big economies of scale relative to a retail punter so its even cheaper for them."

Rether than trying to figure out what he means I was hoping he would tell me. In fact ... lol ... I am still hoping he will tell me but he may be asleep. I find that whatever brain cells I have left should be devoted to figuring out what I think ather than a set of facts and assumptions that someone else throws out. Frankly, much of the time, I get pretty damned surprised by what they actually mean. Since it is his example let's see what he is trying to tell us. My story is a simple one. I can trade one conract intra-day for about each 1K I have to cover margin. I don't chooe to leverage out that far but could.
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>> I'm sorry if it's confusing.

If you buy or sell 1 Australian 10-year bond you are eligible for ONE $100,000 notional value bond due in a certain amount of time.

So that simple 1-lot controls $100,000 of actual money.

but the exchange doesn't actually need you to have $100,000 in the account to control that amount. You only need, for Australian 10-years.... to have about $1300 (at an average/crappy retail rate) left in the account for your margin.

Every 1-lot tick is $45/tick. Every day the account would be asked to be credited back to it's required value so the exchange has no risk.

>> Another one... controlling a 1-lot in the Australian SPI controls $100,000 worth of the standardized cash product non-deliverable.

I believe the requirement, since it's an equity, is about $5,000.

So the SFE, just to have access to a 1-lot, would require you to leave in $5,000 in the account. It's $25/tick. If it moves 50 ticks against you, you've lost $1,250 (1%).

This is what I mean by the leverage. If you actually look at the real rates that a prop shop is able to control versus the capital they're put in, the leverage ration becomes insane...

>> This is why I often suggest retail punters to try get access to bond markets. The margin is cheap. You can have $10,000 and get a lot more limits/free-room in Bonds than you can with commodities/equities. Also, bonds are fundamental. But they move more rigidly and probably aren't as momentum flicky as you might find commodities move.

But bonds are all cousins of each other in one way.

This is all I was referring to with regards to only having $10k or $20k to use.
 
Quote from s0mmi:

>> I'm sorry if it's confusing.

If you buy or sell 1 Australian 10-year bond you are eligible for ONE $100,000 notional value bond due in a certain amount of time.

So that simple 1-lot controls $100,000 of actual money.

but the exchange doesn't actually need you to have $100,000 in the account to control that amount. You only need, for Australian 10-years.... to have about $1300 (at an average/crappy retail rate) left in the account for your margin.

Every 1-lot tick is $45/tick. Every day the account would be asked to be credited back to it's required value so the exchange has no risk.

>> Another one... controlling a 1-lot in the Australian SPI controls $100,000 worth of the standardized cash product non-deliverable.

I believe the requirement, since it's an equity, is about $5,000.

So the SFE, just to have access to a 1-lot, would require you to leave in $5,000 in the account. It's $25/tick. If it moves 50 ticks against you, you've lost $1,250 (1%).

This is what I mean by the leverage. If you actually look at the real rates that a prop shop is able to control versus the capital they're put in, the leverage ration becomes insane...

>> This is why I often suggest retail punters to try get access to bond markets. The margin is cheap. You can have $10,000 and get a lot more limits/free-room in Bonds than you can with commodities/equities. Also, bonds are fundamental. But they move more rigidly and probably aren't as momentum flicky as you might find commodities move.

But bonds are all cousins of each other in one way.

This is all I was referring to with regards to only having $10k or $20k to use.
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thanks for the explanation :)
 
The terminology is causing the confusion

Just stick with standard terminology: initial margin (= performance bond) etc

BTW, I would have expected Bone to make an appearance on this thread :)
 
Quote from s0mmi:

>>No I think each Oil Contract is for $100,000. So if you had $5,000 left in the margin with your Brokerage, you would be given a 1-lot... to win/lose $10/tick

>> For example every 1-lot on the U.S. tnote is a lot cheaper. It might only cost like $900 U.S. or so. Commodities and Equities usually much more expensive than Bonds when it comes to the leverage comparison.

I don't know what the notional value of the Oil contract is but it's usually a nice round number like that.
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I do not view margin as a cost. Margin is margin. Lower margin is just a reflection of a lower relative volty. The man who you said trades with cash and no leverage, is in my view a very smart man and someone I would want to know more about (compared to the other millionaires who trade with high leverage).
 
The hypothesis was if I were day trading CL. I really don't know how they do it over there but here I can certainly trade a 4 lot of CL in a $5,000 account as long as I'm flat by the close. I'm not trying to be rude but you can't be so taken with your new found knowledge that you think you know more about what our margin requirements are than we do.

Here are some AMP margins. I don't trade there but they tend to be low requirements for retail US although the Brent day margin seems higher than I would have thought. And yes, we know prop is lower. I was only looking for an actual example of what your requirement would be on a specific trade. I already know what mine is.


Name Symbol Exchange Initial Margin DayTrade Margin

ICE Brent Crude BRN $5,300.00 $2,000.00
Crude Oil CL CL $4,510.00 $1,000.00
Australian Dollar 6E $2,013.00 $500.00
E-mini S&P 500 ES $4,510.00 $400.00


Quote from s0mmi:

>>No I think each Oil Contract is for $100,000. So if you had $5,000 left in the margin with your Brokerage, you would be given a 1-lot... to win/lose $10/tick

>> For example every 1-lot on the U.S. tnote is a lot cheaper. It might only cost like $900 U.S. or so. Commodities and Equities usually much more expensive than Bonds when it comes to the leverage comparison.

I don't know what the notional value of the Oil contract is but it's usually a nice round number like that.
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CL contract is 1,000 barrels.

$94.17 as I write, so notional is $94,170.

Divide that by whatever margin you use and that is your leverage. Realistically it varies by person as I have never ever come anywhere close to using allowed margin levels, preferring to be much more conservative.
 
For what seems like a pretty low content thread by a poster who is pretty low content as well this thread is on fire.

This guy is just a rambling looney toon.
 
Quote from actionzip54:

For what seems like a pretty low content thread by a poster who is pretty low content as well this thread is on fire.

This guy is just a rambling looney toon.
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it's talk live from battle ground. that is what is great about it.
 
Unless someone is with a too big to fail firm, trading without margin = leaving significant sum with brokers in accounts that are totally uninsured. It is lunacy. Since relatively few post T-Bills what you are doing -- in most cases -- is leaving money either interest free or at below market rates and taking undo risk to boot. Insanity in most cases.

BTW, I know rates are pitifully low but people did it when interest rates were five time what they are today. There is no rational for taking more counter party risk with most brokers than you must.

Quote from tradingjournals:

The man who you said trades with cash and no leverage, is in my view a very smart man and someone I would want to know more about (compared to the other millionaires who trade with high leverage).

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