I am a total futures noob so bear with me. I trade stocks and that's it, but I am curious, have the time, and love to learn.-----I will not be trading futures for a long long time if EVER----- I do not entirely understand margin and if it is directly related to leverage offered by your broker. For example when trading ES(emini S@P500) IB's website has initial daytrading margin at $3094. I saw nothing on the website that stated the leverage they offer, so this leads me to believe that the $3094 figure tells you the leverage by simple math. Current ES.H quote: 842.75 Multiple that by $50 = $42,137.50 is how much $ amount 1 contract is. So am I correct that the leverage IB is using is $42137.50/$3094=13.6??? What if you are long ES.H and it moves 20 points(80ticks) against you and you lose $1000. If your account was opened with exactly $3094 are you now unable to trade the ES and do you get any margin calls while you are holding? Thanks, UT
yes, you pretty much got how it works, once you took a position, your maintenance margin becomes important (don't have the exact figure here for IB), if you go below that IB closes your position (IB doesn't do margin calls). Also at the close IB goes to overnight margins which are twice as high, so you might get liquidated there too as your maintenance margin will be twice as high.
----------- IB Maintenance Margin Minimums Futures: 50 units of Futures currency/contract Examples: USD-denominated contract: $50/contract IB Initial Margin Minimums 125% of Maintenance Margin --------------- 1)Does this mean that you only need $50 in excess cash in the account to continue holding a 1 contract ES position? 2)And does the 125% of the minimum($50) which = $62.5 mean what you need INITIALLY to take on this position?
no you got this all wrong, I looked it up, initial margin is 3094 usd, as long as you got enough maintenance margin 2475 USD you won't get liquidated. http://www.interactivebrokers.com/en/trading/marginRequirements/margin.php?ib_entity=uk
cvds, Where did you get this number from '$2475' or how did you calculate it. Thanks for your time. --edit I found it on the same page as the $3094.... stupid me...
This may be the first time ever on ET someone asked how a financial instrument worked before actually trading it. There may be home for humanity yet!
RandomCapital, Thanks...yea I like to understand the process of actually executing a trade then study its inner workings. Throw someone in front of a major league pitcher and they will fail miserably but at least they know whats coming and what to practice. On the other hand have someone practice for a year then jump in front of a pitcher and they are going to be confused. awestruck and fail, even worse.... Thanks guys...