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But no, it would only be liquidated probably when it gets down to $750 or $1000 or so. Enough so that if there was a spike of volatility, the broker has dumped your losing position and is not exposed to the risk.
Trading CL with less than $25,000 is a bad idea in general.
A good article on margins, on how this is working, here (the example is on CL, so that's perfect ).
It's not a bad idea to understand what is an intraday/OVN initial margin, and an intraday/OVN maintenance margin.
Thanks for all the help guys. Sam the article is great and really clarified it for me even more. Thanks.
I don't want to sound like I keep asking more and more questions, but what are some Initial Margins you guys have gotten from brokers to open a CL position?
I believe Amp Futures and Mirus Futures requires $10,000 to open an account. CL margin is $2,000. If you have a good history with them, you can get it lowered to $500 or $1000 per car, especially if you have a higher balance, lots of trades, and a track record of winning.
DannyG,
Have you watched CL move in a live market? The only reason I ask is that I can't believe brokers have a margin at only $2000 (I know they do it just makes me understand how people blow up accounts so quickly). On Friday, CL went from a low of 76.06 to a high of 77.16 in 3 minutes. That's a $1000 move, if my math is correct. Yikes. I agree with Mike about needing $25000 before you start with just one contract.
Just to be precise here, the fluctuations in the price of crude * the multiplier * the # of contracts is added & subtracted from the account in real time.
Nothing changes when the position is closed (except you pay the commission).
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