I'm sure most of us have seen the 'bulls and bears' documentary from a while back. Have to say, am somewhat surprised to see a follow-up of sorts, in the form a 1 hour interview on Chat with Traders with one of the most memorable characters from 'bulls and bears' - ie. Rambo, John Moulton, the Chicago floor trader who moved to Australia & became a serious volume mover on the futures exchange there. In this interview, he mainly talks about his general trading philosophy / approach to money, etc, but a few details stood out: - He was in the hole right after starting in the 70s, but then was long 3 contracts of wheat in a limit-up market & fixed everything - Was able to somehow work out a deal with brokerage firm, to trade 1000 lots on $100k margin (33:09 in the video) - Now owns a 95 acre farm with hundreds of cattle, also has 7 children (58:48), so pretty successful by most counts My question is -- how do you trade 1000 lots on $100k margin?? bc that would be real helpful in quickly ramping up size of the account, esp. as he hinted a few times during the interview, his brokerage firm was quite lenient in letting him rack up a "debit" on already razor thin margin rates. That would be a super combo that's quite an edge in its own way -- after all, isn't that how some guy in France supposedly made like $10 million in his personal account, by buying $6 billion notional worth of derivatives without having to post margin? https://www.reuters.com/article/us-...-a-6-6-billion-unauthorized-bet-idUSKBN1JJ0SW From someone who truly deserves the sobriquet of "Rambo", he puts it this way: "It's only risk...if the firm...is demanding margin money from you." (32:30) Any ideas on how to get a setup that allows for trading of large size on thin margins, preferably where there's a lenient policy on posting margin?
Stupid to the max... both for the trader and for any broker who would allow. (That's how LTCM got into trouble and threatened the entire world's markets... a bunch of dumbass, academic PhD bond traders tried to get away with 100:1 leverage. How stupid can one get? With that kind of leverage, a 1% move against your position bankrupts you. How could anyone have such pompous hubris to think they could get away with that? 1%. 1 fucking percent! "Risk it all" with a 1% margin-for-error to bankruptcy"?. Are you nuts?) Even if you're an experienced, expert trader (lots of hopefuls and wannabes, but not many EXPERT traders around, you know)... you probably shouldn't try to lever up beyond 50-lots with a $100K account. "Shit happens", in case you hadn't noticed.
What would you be trading, because 1 lot can be big or small, depends on what you trade. If you would trade the ES you would be probably broke within the first hour of your first trade. If at least you could find a broker that is stupid enough to give you that margin.
Margins in the 1970's were not the same notional/nominal value as they are today. 100K was a respectable number back then. "margin" is not the equivalent of account value. "margin" is and always has been negotiable... between the trader and the FCM, which may or may not be the "broker". Trading volume and account size were and still are the biggest factors in negotiations.
In the interview, "Rambo" John Moulton mentioned trading bond spreads, it seems some of the really large locals tend to focus on bonds or ES The French guy built a position mainly on ES
If that is the logic, then I trade the ES with $1 margin, but my account size should be at least $1,500 per lot. I will not go broke with my $1 margin. Your argument makes no sense.
Doubt you realize. A 1000 contract position has a notional value of "140 $Million" currently. And you want to (1) risk your capital on that kind of leverage, and (2) find a broker who will "stand for your losses with the hope of making a few $$ commish on your trades when you have only $100K equity to back your play? Can hardly imagine anything more stupid/idiodic.
technically that's true though, isn't it - as long as ES notional value on that 1 contract doesn't go down by more than $1499, ie. such that you don't need to post additional maintenance margin. my understanding is that as long as you don't breach maintenance margin, you can hold on to that contract, & that you only get liquidated if you don't meet a margin call in a market that moves against you so adversely that you don't meet the margin requirements
Margin is not the account value. Using your example numbers, you need $1500 to initiate 1 contract of ES. Once initiated, your margin requirement to continue that position drops to $1. Margin is not the account value.