Houston TX
Legendary Market Wizard
Experience: Advanced
Platform: TT Stellar & Tradestation
Broker: Primarily Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,059 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,226
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@Quantom it depends how it is set up by the broker. If your going to use sub accounts I believe the standard setup (I have this setup at two different brokers) is to have a master account, and then have sub accounts under it, including trading accounts, expense accounts and cash accounts. In this scenario, the master account holds nothing individually but is the sum of all the sub accounts. Actual margin requirements while calculated at the master and sub account level are enforced/required only based upon on the main account level.
An example
Main Account. Long 1 ES $3000 profit,
Short 1 NQ $2000 loss,
$100,000 Cash,
Margin Requirement $8500.
Account Value $101,000
Margin Excess $92,500 Sub Accounts
Trading Sub Account OneLong 1 ES $3000 profit,
Margin Requirement $12,000.
Account Value $3,000
Margin Excess <$9,000>
Trading Sub Account OneShort 1 NQ $2000 loss,
Margin Requirement $16,000.
Account Value <$2,000>
Margin Excess <$18,000>
Cash Account$100,000 Cash,
Account Value $100,000
Margin Excess $100,000 You will notice that while- Main Account Cash = Sub Account 1 Cash + Sub Account 2 Cash + Cash Account Cash
- Main Account Value = Sub Account 1 Value + Sub Account 2 Value + Cash Account Value
that's not always the case as- Main Account Margin Requirement <> Sub Account 1 Margin Requirement + Sub Account 2 Margin Requirement + Cash Account Margin Requirement
because there is an intra-product margin offset between ES and NQ (Note I made the margin numbers up) and hence- Main Account Margin Excess <> Sub Account 1 Margin Excess + Sub Account 2 Margin Excess + Cash Account Margin Excess
For what it's worth the intent of sub-accounts is NOT to have offsetting positions. In fact most brokers and the exchange will frown upon that and some brokers will even not allow it at all. They probably will allow you to use Trading Sub Account 1 for Strategy A, and Trading Sub Account 2 for Strategy B, and they occasionally have offsetting positions. Personally I use my sub accounts to separate my trades. One for Currencies, one for Bitcoin, one for Crude, one for NatGas, one for Fixed Income, one for Index's. Makes it easier to track and reconcile my PnL and to track margin requirements.
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