I wonder if Alaron would have allowed him to hold past first notice day on an electronic Corn/Wheat/Soy contract?
This Crazy Margin Call!
- Thread starter TradingBillions
- Start date
I think the answer he is looking for is that:
There is an requirement on how much you must have your account as a safety for how many lots you can trade. So if their requirement is for you have have $2000 per lot, so you must have 4000 in the account to even trade 2 lots. These requirements changes bases on if you have trading during the day or holding overnight. And when you a get a margin call, it doesn't mean you owe them the amount (unless the price did go against you), but it means you need to at least meet the $ amount in your account or they will be forced to liquidate your trades (and take the loss or profit from the trade).
Think of the $ requirement as a way for the brokerage to cover their butt if there is a big move against your position, they want to have enough money in the account so they won't go negative and you wind up actually owing them money in addition to the funds in the account already.
There is an requirement on how much you must have your account as a safety for how many lots you can trade. So if their requirement is for you have have $2000 per lot, so you must have 4000 in the account to even trade 2 lots. These requirements changes bases on if you have trading during the day or holding overnight. And when you a get a margin call, it doesn't mean you owe them the amount (unless the price did go against you), but it means you need to at least meet the $ amount in your account or they will be forced to liquidate your trades (and take the loss or profit from the trade).
Think of the $ requirement as a way for the brokerage to cover their butt if there is a big move against your position, they want to have enough money in the account so they won't go negative and you wind up actually owing them money in addition to the funds in the account already.
This is why the lure of trading is so tempting to people...
STEP 1: Understand what the hell you are trading.
STEP 2: Make sure you understand step 1 before placing ANY real money trades.
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In regards to this, spend some time at www.cme.com and www.cbot.com - there is free info there, including how this stuff works that you are trading.
STEP 1: Understand what the hell you are trading.
STEP 2: Make sure you understand step 1 before placing ANY real money trades.
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In regards to this, spend some time at www.cme.com and www.cbot.com - there is free info there, including how this stuff works that you are trading.
Well if you closed them before market close then you should be ok but if you left them open then your screwed because you'd need $1900 per contract maintenance margin.So at market close it would go beeeep margin call instantly.
Wow, I am trading an account a few times your size (not huge), and I'm scared to trade even one contract. Be careful buddy ... you could screw yourself over and OWE $2,000.
Here's a little information you need to understand your margin problem, and why you might owe money to your broker:
Futures contracts are worth a lot more money than you are putting down; When you put $500 down on a Dow E-mini contract, you are in reality, trading a contract that is worth several tens of thousand of dollars. Obviously, since you don't have this kind of cash, you are not purchasing the entire contract, you are simply purchasing rights to the contracts profits or losses.
Overnight margin: The amount of cash you need to maintain in your account to hold each contract overnight.
Day margin: The absolute minimum amount of cash you must maintain in your account to maintain your position. If you fall below this level, your broker WILL liquidate your positions, and they do NOT care if they get liquidated at a huge loss to you.
I hope this helps, but dude, seriously .... don't trade 2 contracts just yet.
Here's a little information you need to understand your margin problem, and why you might owe money to your broker:
Futures contracts are worth a lot more money than you are putting down; When you put $500 down on a Dow E-mini contract, you are in reality, trading a contract that is worth several tens of thousand of dollars. Obviously, since you don't have this kind of cash, you are not purchasing the entire contract, you are simply purchasing rights to the contracts profits or losses.
Overnight margin: The amount of cash you need to maintain in your account to hold each contract overnight.
Day margin: The absolute minimum amount of cash you must maintain in your account to maintain your position. If you fall below this level, your broker WILL liquidate your positions, and they do NOT care if they get liquidated at a huge loss to you.
I hope this helps, but dude, seriously .... don't trade 2 contracts just yet.
Thanks for all the help guys! I have everything settled and I liquidated both contracts today. I will just stick with intraday trading for the lower margins, no night holding for me!
Ya need about 10k to trade YM properly minimum IMO.
They shouldn't allow these small crap margins its a scam of course.
They shouldn't allow these small crap margins its a scam of course.