I am considering opening an IB account however i have many concerns which have not been addressed by IB. I am a University Graduate and i am currently self-employed. I wish to trade futures (CBOT, CME). I will be trading 1-2 contracts at a time, most likely the YM. I currently reside in the United Kingdom. I will be depositing $40,000 USD into my futures account. However, my problem is concerning margin, considering that i require $50,000 to trade one contract, i would require margin on my account. The problem is that being a Grad student and self-employed; will i be able to qualify for some sort of margin on my account? I have zero assets and hence after my initial deposit i have no net worth. I wish to trade under my account, however my alternative is to trade or create an advisor account for my father. He runs his own business and will obvioulsy get margin on his account. My issue is with taxation, as in the UK i can get nearly $12,000 per year which is free from Capital Gains Tax (Income Tax). If i trade for my father he will not get this tax allowance as his business already generates profits way in excess of this mark. What should i do? Any help and advice would be greatly appreciated. Sorry for the newbie type questions, i feel really foolish asking such dumb questions
Every futures acocunt is a margin account. Initial overnight margin for 1 YM is about 2800 $ at the moment, so you would need a minimum account balance of 5600 $ to open a 2-contract position. However, during RTH (regular trading hours), only 1/2 of the overnight margin is required. My advice for a beginner: Open an account with IB (minimum deposit 2000$ as far as i remember) and then use their paper trading feature (aka simulation account) before risking real money. Once you feel ready for the "real thing" increase your deposit to no more than 10.000$ and put the other money aside. I would also strongly advise you to learn more about risk control and money management (how much to risk per trade?) before playing with real money. Otherwise the lifespan of your account will be very short. Sound money management won't give you an "edge" to win, but it will hopefully let you survive long enough to learn enough to get profitable. Always remember that futures trading is a zero-sum game: You can only win by taking money away from other traders. And there are people out there with years of experience and extensive knowledge of the markets.
Even after depositing $40,000 into your account your net worth is still $40,000. The fact that your funds are not in a bank but in a brokerage account is insignificant for your net worth.
Thanks for the reply mate, i will be trading paper money, and starting very small to start with. I know im destined to lose from the start thats why i am making sure my trading plan works and i can apply it to real-time before i start trading any real money. I have been sorting out the risk control and money management issues in my trading plan, i will see how this works out with the paper trading. Im just continually learning right now playing equities, doing quite well but probably beginner luck.
If you want to paper trade for more then a month or so, don't get a paper trade account at IB. If you don't generate $10 in commissions every month at IB then they'll charge you up to $10 / month as a maintenance fee (plus market data). Get a paper account somewhere else, then open your IB account when your ready to trade real money.
I don't think 10/month is very much for a really good sim that closely resembles, no, is exactly the same as the real platform you will be using in the future. Using a sim is not only for testing a method, but also for learnig to execute trades. It is important to use real actual data, so to pay for that data seems reasonable. Are there any free sims out there that use realtime actual data and execute on the bid/ask? Ursa..
Point taken. Go do it w/ IB, just be aware of the $10 commission + $10 for market data charge so it's not a surprise
the performance bond to trade a YM contract isnt $50K. Read up on the IB website. Paper trading. ButtonTrader has a nice sim trader. Its free for 6 mo.