Newbie questions (leverage & perfomance bond)

Discussion in 'Index Futures' started by Bronce, May 4, 2007.

  1. Bronce


    Hi guys,

    Wanna ask a few questions related to leverage and margins...

    Is there a limit on the amout of leverage that can be undertaken when opening a position?
    I am in process of research on futures, and havn't yet found any information about maximum leverage allowed on CFTC website. (I guess there is no limits imposed because it is a hedger's instrument but I dont know yet...)
    So, as I see it so far - the only boundary on leverage is the margin call... Is this the way it works?

    i.e. one can undertake 'unlimitedly' large position relative to his/her account size. He/she is out of the game if market goes against. If market goes in favor - it's ok.

    Is it the way it is?

    Thank you
  2. The final margin requirements are set by the broker. For example, I can buy 1 YM contract for each $1300 in my account with Interactive Brokers, but with Infinity Brokerage I only need $600 in my account by trade one Dow contract.

    Also--Most have a daily loss limit. If your trade goes against you too much they may liquidate your position for you. This has happened to me once.

    Do you have a futures broker yet?

    CajunSniper / Administrator-Trader
  3. Bronce


    Hi Spectra,

    margins are set as per contract or am getting you wrong?

    for example, if a broker has initial margin for ES equal $3500, then in order to be able to trade 1ES contract I must have $3500 in my account. And to trade 100ES contracts I must have $350000?

    no, no broker yet...

    (was considering Cybertrader for index e-minis but Schwab decided that this firm had to evolve back into the 'cave-man' times. And just about the same time IB went nuts IPOing. Guess that's going to be my choice.)
  4. Bronce


  5. yes Bronce