Show me a broker or FCM that sent out margin calls during the move down. The only reason not many FCMs and brokers went under was because the market came straight back up. Nothing of that changes the fact that many accounts had been blown out had the market stayed at those low levels.
I traded more futures contract than you will trade for the rest of your life. Most all were hedges for various options books during many years of trading at Bank prop desks and hedge funds. I actually have no idea whether my futures trades alone were net profitable or not. I can only talk about my overall pnl.
You can open an account at AMP with $500 and trade the ES round the clock with $400 maint. Good to know that you could gather enough on a weekend via pan handling to trade the ES levered up at well over 100:1 (99.7% leverage) and try to get rich. The 1929 crash had up to 90% margin/leverage - hence the crash.
And what's wrong with giving the little guy a chance? Make the barrier to entry low and let the trader bootstrap a small account into a slightly bigger account and rinse repeat.
Nothing against the small traders - Futures trading has been lowering the bar as far as entry cost and giving massive leverage at rates that would seemed unimaginable not that long ago. The up side of this is aspiring traders operating on minimal requirements will not lose very much. Major market tops are always marked when margin/leverage are ate historical extremes, the subsequent market melt downs are attributed to this leverage which is what my first post was about.
Yes proffessor, a lot of people like to use lower margins and amp(and others) likes business and commission... the more you know...huh?
I called CME risk-management about this to clarify. The rep told me (paraphrasing)..."The requirement to get into a future contract is the maintenance margin of that contract. If it is a non-hedge/non-member account, it's the initial, which is 10% more. There is no such thing as DT margin at the CME." This leads me to believe that a broker offering a $500 DT margin for a contract, say ES, which is $5,225 for the initial, is requiring $500 of the speculator's account money, and the non-hedge/non-member FCM is putting up $4,725 of money from their own "accounts" to cover the position. So a broker who is helping to cover a traders' costs to initiate a position (hence the term "initial margin"), is taking on risks of their own. I don't understand the FCM business, and don't shoot the messenger. This is what the rep said in a nutshell. The summary that we all forget is here---> http://www.cmegroup.com/clearing/cme-clearing-overview/performance-bonds.html This leads me to a conclusion. Always trade only what you can to meet the initial per contract, regardless of what your broker says you can or cannot do, if neither you nor your broker wish to suffer any major surprises in the rare "flash-crash" scenario. WITH THAT SAID however, that does not mean that low DT margins are not profitable for any one particular broker. That business model must be working, or else it would not be used at all by anyone. Makes sense, yes?