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Newbie to Futures: Margin relative to account size
Because I want to explore another asset class, which is more regulated and because I have the belief system that FX moves too erratically, when compared to some Futures. But maybe I am wrong.
Can you help answer these questions from other members on NexusFi?
yes, thanks matthew28,
I was confused about the initial margin that one has to put up. Did not realize, until recently, what you expressed so well above
cheers
@sienna I use NT7 and NT Brokerage FCM is Phillips. From my experimentation with a minimum funded account ($1000) you could technically trade 2 contracts... but if it went against you 1 tick I understand you'd be in violation. I was told their risk management team would liquidate your position.
To watch the market and learn to use thier system I used the following strategy: fund a $1k NT Brokerage account and get only ES/NQ/6E data ($5/month). To avoid inactivity fee ($25) and get a toe wet make a single trade per month using a 1 tick stop loss. Worst case scenario you lose $16.74 on the trade and your data plus losses is less than the inactivity fee. With discipline (a skill much needed to successfully trade) you could watch the market perpetually for limited cost and quite possibly a small gain. I used this strategy to watch the market and become very familiar with NT for many months before fully funding my account.
As far as risk management goes most will say 2% of your total account value in risk, so I understand that to be $25k account trading 1 contract with a $500 loss limit per trade. I also know for a fact that others trade $5000 balance per contract so that means $25k account trading up to 5 contracts. I personally funded with $30k and limit myself to 2 contracts only with a $500 catastrophe stop on most trades. This is because I'm too inexperienced to take more risk than that.
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
The notional value of a futures contract means very little to 99% of retail traders speculating on ES day trades or even on trades lasting a few weeks. Now if one is holding to expiration that is a different story all together ie take delivery.
Ron
Sent from my iPhone using Tapatalk
...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
As Sienna said he had traded forex I was emphasising the size of an ES contract size in relation to forex pip values that forex traders might be more familiar with. And not related to Sienna, but in general, perhaps if more retail traders had a realisation of how much a futures contract is worth they wouldn't be trying to trade futures with tiny accounts and losing 50% of it on a bad day.
Now is probably not the right time to get into futures as a beginner.
Unless you're already experienced with proven trading systems in place to aid you, in my opinion the current futures market condition is extremely erratic with very wild swings every day, both during regular hours and non-regular hours (when US market closes) as you can see from the real-time charts of the ES market yourself. And illiquid too.
I am not sure if you know this but the market is currently dominated by HFT manipulators with frontrunning, spoofing, wash trading, etc and that's well documented. Even the CME was sued for knowingly allowing HFT manipulators to do countless wash trades every moment of the day, which was found to be around 50% of all trades done, if I remember correctly. That means 50% of transactions you see in the futures market is fake.
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
I great futures market to dip your toe into and get started in is E-micro Euro M6E. At $1.25/tick and a centralized exchange as a CME product with no broker games to worry about. One can be wrong, just as an example only I'm not advocating this, on the entire RTH range and it's only going to costs ~$150 on a 1 lot. YM is also a good one but definitely can be more unforgiving. My wife calls it "YoungMan"....lol
Ron
Sent from my iPhone using Tapatalk
...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)