does it insulate you from losing more than you have in your account? i heard with futures, you can lose more money than you have in the account...
A day trader who bought hundreds of oil contracts was told he owed $9 million after IB trading-platform issue meant it failed to show oil's historic plunge below $0 Shalini Nagarajan May 13, 2020, 10:56 PM GMT+8 ___________________________________________________________________ In general, NO. Brokers are actually worried that your Futures account going negative. Brokers are extremely extremely extremely worried about newbie gullible traders (see above Canadian oil day trader) doing funny things So they have various safety measures like - stopping you from over trading - stopping you from trading contract that is expiring soon - holding position overnight ... What we are worried are: - The exchange problem. I remembered couple of years ago, OMX Nordic Exchange was down for a few hours. That resulted in me losing a few thousand dollars in just a few hours (because I couldn't close my position). - Internet problem (someone with sharp teeth might bite the submarine cable ...) - trading platform problem (see above IB platform)
When you trade futures, there's what's called the INTRADAY MARGIN. So for example, if the intraday margin at your broker is set at $1000 per contract, you must maintain your account balance above that amount. Should your account drop below to $999 because you're holding on to a loser, your broker will automatically liquidate your position. So to answer your question, since your account cannot drop to a negative balance, you cannot lose more than what you have in your account.
That’s incorrect because auto-liquidate assumes liquidity to liquidate your position. If you’re trading on intraday margin you absolutely can go negative in your account during a news shock. The probability is low, but definitely possible.
FOMC being the exception, almost all major economic news comes out before the open, and that would actually be treated as an overnight margin, not intraday margin. For instance, Amp Futures always sends me a damn email saying they will be hiking up the overnight margin because of this or that econ release. BTW overnight margin is much higher than intraday margin. So unless you are able to meet the overnight margin, you won't be able to trade the Globex, period (which means you can't go negative). Are we now on the same page? Edit: Come to think of it, I guess it could be possible if you're unlucky to catch the tail end of the trend just before the news hits the wire and get stopped out on the other side of the swing. But then again, I would think the broker would have kicked you out once the margin was triggered and not dick around until your stop is hit.
Not quite. Overnight margin is the margin you need to hold through the electronic close. That’s effectively one hour only on weekdays. During Globex intraday margin applies just like it does in RTH. I’ve also received those mails from AMP. If I’m not mistaken, I didn’t get those until fairly recently. Maybe something happened? There was an instant 100 point drop on the first hot CPI print. I never saw anything like it myself over the last decade. In summary, yes, your futures account can go negative, but it’s a low probability tail event. They do happen once in a while, though. And more often than in a random distribution.
Sometimes gold will have a nasty little spike on a 1 minute candle maybe just a wick. I often windered if that triggers every stop loss or since it was less than a minute maybe not everyone's SL got triggered or position liquidated.
That makes total sense but is a prop firm a broker? Because i have seen a youtuber running a trade copier on 10 futures prop firm accounts. Swinging close to 10 contracts on a trade. Who does that?! Who would let them do that? Ouch. It always has to go against you never in your favor. They wouldnt reimbuse you even when it was their fault is that how all brokers are? That reminds me of this trader who set up a backup internet service in case one goes down! He must have had a bad experience that prompted that! .
The same can happen at a prop firm if you are running at around max risk. Slippage during news events can and will happen everywhere, no matter where you have your account.
No it can’t, CQG has a hard stop at 20%, The worst can happen is you lose 80% of the money in a single session assuming you don’t have a hard stop by yourself.