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I can trade 2 Dax minis, but I'm buying 2 contracts that actually cost 12,100 (24,200)
The tick value of the Dax is 5, so with 2 cars, every tick up / down my account effectively gains / loses 10 euro.
Stoxx
I can trade 3 Stoxx minis, but I'm buying 3 contracts that actually cost 3,350 each (10,050)
The tick value of the Stoxx is 10, so with 3 cars, every tick up / down my account effectively gains / loses 30 euro.
So the underlying asset that I can trade with my account size for the Dax is worth a lot more, but price movement actually translates to quite a lot less - because of the smaller tick value.
Is the above correct? Or am I missing something obvious?
Can you help answer these questions from other members on NexusFi?
As part of your calculations you might consider the movement...what is the range of each instrument? What can I expect? Does each instrument move tick for tick?...Can I trade this instrument? Liquidity...etc
With an 6k account it wouldn't be smart to trade 2 contracts (with each 2800 margin), if the market would move against you lets say 35 points in the mini-dax (and this can happen within minutes or sometimes within seconds) you get a margin-call. (the value of the mini-DAX is 60k+ euros, points x € 5.--)
I thought the value of the Dax is 60k and the value of the Dax mini is 12k? isn't that why they were created? it's a smaller contract. it's not just trading the Dax with a crazy margin. a 35 point move would only be €350.
as erlendsol already said, the real value of a contract = points x point-value, so the value = FDAX 300k, FDXM 60k
not sure what you mean by: a 35 point move would only be €350.--?
Exact this €350 move would be the problem with your account:
2xmargin = 5672,28 + loss 350 = 6022,28 (but your account size is 6000, so it would be to small)
Right maybe I have the wrong idea about how it all works.
As a hypothetical situation, say you have an account with $10,000 in it, you're a position in a contract with a margin of $5,000 and a point value of $10. You still have $5,000 left in your account.
If the market moves 10 points against you, does that 'eat into' your remaining balance by $100?
So the market would have to move 500 points against you to trigger a margin call?
Or do I have it all wrong?
I see that my initial example below was a bad one - with $6k in my account, being in a position with 2 contracts of around 2,800 margin would leave nothing in my account to cover a swing against me.
Is the rule of thumb to always have at least twice the margin in your account before trading one contract?
edit: also yes I see that the actual value of the contract is the 'price' (points) x the point value - obvious really.
