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Thank-you for the question. The quick answer is no - I would sell to meet the margin call at EOD. The more complete answer is yes which I explain below - but bear in mind I am still working with the idea of building a position.
Short Answer and not the real one:
EOD exiting system
Right now IB margin requirements are: Overnight Initial Margin 8,424
Overnight Maintenance Margin 6,240.
Yesterday I was short 5:$6,240 * 5 = $31,200
Avg 5 at 87.484
Close Yest 88.69
Open equity -1.206 * 5,000 = -$6,030
Cash Balance = $66,460 Net equity $60,430 - $31,200 = $29,230
$29,230 /$5,000 = $5.846
$5.846+87.484 = $93.33 (at $93.33 I must buy to cover margin at EOD).
From my faux-pas a couple of months ago when I messed up I have decided to pick my bail-out price, then leave enough to be able to buy one just below that level and using initial overnight amounts in case they increase the margin amount during the day and force me to break my short line just at the wrong time.
So now I'm using the $8,424 giving me a cushion of $2,184 per contract in case the thieves move the margins rates intra-day again! (so in this long answer I'm using the safety amount and not the overnight maintenance amount.)
Using this 3 month chart to explain:
My bail price is 92.03 and I want to be able to sell short1 last contract just below that 91.40 (so I want to keep $8,424 overnight initial margin $8,424 for that one). Cash is $66,460. $66,420 - $8,424 leaves $58,036 for the "trading line".
Net equity is $60,430 at close yest ($88.69).
So I am +$2,394==> OK but not able sell anymore in my trading line (keeping enough for the emergency sale of the last one.)
(If the price continued to rise I would look to buy-to-cover on the day following a close above $89.17. )
Strategy
Today, I bought one to cover at 86.20. This is because my currently position was poorly built and I want to hold less so I can sell higher. So now I am lighter and with a touch more cash.
Today:
86.36-86.20 =$0.16 *1,000 = $160
Opening cash balance today $66,460
Change in Cash $160
Closing Cash Balance $66,620
Less reserve of one $ 8,424
Cash for "trading line" $58,196
Holdings = short 4 Oct 2011 contracts
1 at 86.36
2 at 87.60
1 at 89.50
Avg 4 at 87.765
Lets say it bounces Tuesday and Wednesday and I sell one on Wed around 90.77
Then 5 at 88.286
Ok so what happens it if continues to rise after Wednesday towards the bail-out price?
Sell short1 last contract at vibration below bail-out price = 91.40.
Then short 6:
1 at 86.36
2 at 87.60
1 at 89.50
1 at 90.77
1 at 91.40
average price = 88.8717
91.40-88.8717= -2.52833 *6,000 = -15,170 open equity.
What happens if price continues to rise to bail-out of $92.03?
We could get a bounce on Tuesday and Wednesday and I'll sell more on late Wednesday.
(see the little graph in my post to Josh)
If it doesn't bounce I'm still short 4 contracts - that's enough (even for paper trading)
We have the boyz getting together in Europe over the weekend and no doubt "pump, pump pump" til you drop Benny will be up to QE3 tricks.
Why not trade your own shadow portfolio along me. We can get @josh and others in. I'll give you guys net equity $70,840 - let's be generous $71,000 -- and we can all trade mano-a mano.
Why not join in Joe - you'll beat the pants off us I'm sure!
The contest is open to anyone.
Mostly for those making occasional swing trades. If your style is scapling for a quick 20cents then that would be better in a separate thread, I think. This doesn't mean you can't bail on a trade quickly though - these things happen. No hard and fast limits on trades per week - but I'm visualizing the maximum round turns at about 15 or so per week.
Guidelines
If you can please post a chart clearly marked with your entry/exit price and times.
Optionally, if you have a target and a stop then you can enter and post those.
It's on the honor system so if you get stopped out and don't post it - well that is you cheating yourself.
You post your trades before you make them - if you can - or it not then within a few minutes.
If you get a margin call you must sell out to meet the margin call just like in real life.
------
Benefits:
If you trade it and post your results then you can learn from what you did correctly and incorrectly and thereby increase you confidence in your abilities.
Trading as a group can make it a bit more fun and get to see what the other guy/gal is thinking.
Please "throw your hat in the ring " before the end of the labor day weekend (so before 9am ET Tuesday 6 Sept 2011).
No requirement to start trading then though.
Late entries
I'm not sure how to do this but one idea is that we take the arithmetic mean (sum all net equity positions of all current participate and divide by the number of participants.) and that is your starting cash for the following Monday.
eg.
$85,000
$70,000
$63,000
Sum = $218,000 / 3 team players=$72,667
Other ideas? (we could use the mode or the median.) Perhaps the mode is fairest?