what is actual cost of 1 6E contract?

Thanks for these responses. I can see that I will need to trade just 1 contract at a time. Even at that, i will be going into margin.

still, going on margin is scary. i've read that for futures, you have to pay it back by end of day. this would eat into my acct balance for any daily losses.

is this the norm for futures traders - to be on margin for large amounts? i see the margin requirements are extremely liberal compared to stocks & options.
 
Depending on the margin requirements of the symbol you're trading, the leverage of futures contracts can range from 10:1 up to over 100:1.

Its important to note that while overnight margin requirements are set by the exchanges, intraday margin is at the discretion of each broker. Some brokers allow as little as $500/contract intraday.

I just checked and IB's intraday margin on 6E is $5616, which is ~32:1 leverage. AMP is offering $500, which is like 360:1.
 
Quote from moarla:

No

Contract Specifications

The full contract specifications for the EUR futures market are as follows :

Symbol (IB / Sierra Chart Format) : 6E (EUR)
Expiration date (as of February 2011) : March 14th 2011 (the second trading day before the third Wednesday of every third month)
Exchange : GLOBEX
Currency : USD
Multiplier / Contract value : $125,000
Tick size / Minimum price change : 0.0001
Tick value / Minimum price value : $12.50


>> you see contract value? 125.000 USD
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I don't know where you copied the data from, but on CME website it clearly states 125,000 euros (link provided by Maximuus above). On bloomberg professional it also says 125,000 EUR.
 
future margin is like a minimum down payment on the house, put up the cash and you can flip the house. Don't worry about how much the house cost it's irrelevant.
 
Quote from MTE:

I don't know where you copied the data from, but on CME website it clearly states 125,000 euros (link provided by Maximuus above). On bloomberg professional it also says 125,000 EUR.
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Thats the contract size, but the actual value on the contract changes with every tick. If you have bloomberg type in ecu1 and look at the contract description... at 1.4442 the contract is worth $180,525.

Or 1.4442 x 125000

5yr
 
nkhoi - i like what you're saying.

can you spell it out for me:

let's say I have a 10K account balance all cash
I go long one 6E contract, which is worth 180K this am (or whatever it's worth - it's much more than my acct bal).
The contract goes down 1 tick intraday, and i'm still holding this eve
I need to sell it to pay back the margin by midnight tonight (right?),
how much do i lose of my actual cash account balance?

Thanks to all for the handholding for this newbie.
 
$12.50 is your loss, 1 tick in the 6E.

The margin will not come out of your account, its the cash you are required to have in your account to initiate the position.

5yr
 
Quote from pattyloo:

nkhoi - i like what you're saying.

can you spell it out for me:

let's say I have a 10K account balance all cash
I go long one 6E contract, which is worth 180K this am (or whatever it's worth - it's much more than my acct bal).
The contract goes down 1 tick intraday, and i'm still holding this eve
I need to sell it to pay back the margin by midnight tonight (right?),
how much do i lose of my actual cash account balance?

Thanks to all for the handholding for this newbie.
More...

Here's the process:

You go long one 6E contract. Depending on your broker, you put down between $500 and $2000-ish as a "performance bond" when your order executes. A performance bond is not "margin," because you do not go into debt. In fact, you may be able to receive interest on your unused balance.

Every day the contract is re-adjusted and the difference added/subtracted to your account. As long as your total account balance minus your performance bonds for other (non-6E) positions is greater than your bond requirements, you stay in the contract until you sell out of the position.

In the case you mentioned, a tick is roughly $18 based on a $180,000 contract value, so your account balance would be $10,000-$18 = $9,982 (before commissions). Since $9,982 is greater than even a strict $2,000 bond requirement, you don't have to put up any more money. If your position declined by 444 ticks, however, your equity would be $10,000 - $7,992 = $2,008, which would put you close to the "margin call" requirement.

Futures differ from options in that the risk profile is symmetric - the upside and downside risks are, for practical purposes, infinite. What most futures traders do to "cut off the tail" is create a synthetic call/put by going long/short a futures contract and placing a short/long stop loss order some distance away. The problem is that stop losses incur slippage, so your risk is not perfectly defined.

However, futures are generally more liquid than options, and don't have time value issues other than an adjustment to "roll" from one expiring contract to the new one.
 
it's becoming clearer. i've definitely seen the $12.50/tick mentioned everywhere. i just didn't understand if that had to be multiplied by some factor to get your total gain or loss per contract.

i see that if i had bought 2 contracts that lost 1 tick each, i'd be down $25.00 of my 10k (12.50 X # of contracts).

that seems manageable given I will only be doing 1 contract at a time, initially.

i plan to do very quick trades on a 1-minute chart. i know about setting stop-losses, which i plan to do.

I didn't think about going long and short at same time, if that's what you're saying. i was hoping to go long, sell it for a couple ticks gain, then maybe go short, buy it back for another couple ticks gain. that's the dream, anyway. we'll see how it goes in my simulated account for a few weeks.
 
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