Your thoughts about index-futures brokers with low intraday margin

wmwmw · Dec 21, 2022

virtusa said:
The red text confirms that when you catch an open loss on some positions, you need more money, so more margin. The aim of a margin is to protect the broker against your losses. So the reserve just in case if the positions go down is called MARGIN.
You use it to go under the initial $1,000 margin that you have. So in reality your margin is not $1,000, but more. If you need 20K to hold 10K margin positions, your margin is $2,000 instead of $1,000.

My reaction was on the ES. Were you not speaking about the ES and $5,000 margin?
Without the $500 margin you would not be able to keep all these positions, so you use the $500 margin, you need it. My conclusion is that your real margin is lower than $5,000. Take away the $500 margin and you get in trouble.

I cannot see how the $500 margin can be useful if you don't use it. Useful means good for using. If you don't use it, it is not useful. But if you use it, your pretended margin is fake.
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I am daytrading Gold, eur, and ES at the same time. What if I need to trade more instruments like bitcoin, oil, natural gas? I said in my previous post I need room for multiple instruments. Do you understand what is called "multiple instruments"? Sure you sound like you did not understand what it mean.

"I cannot see how the $500 margin can be useful if you don't use it."
Well, I can't see how it can do harm to me even I don't use them.
You are like to say your house doesn't need 5 rooms since you don't sleep in every of them.
This is my last post to you and I need to finish this stupid conversation

virtusa · Dec 22, 2022

virtusa said:
I don't start from leverage, I start from the risk I want to take.
I calculate the total cost of a losing trade and the risk percentage that I accept for that loss.

This is an example for ES with a $5,000 account.
As I can only trade entire contracts, I round the number of contracts up or down.
So 0 till 0.5 rounded down, +0.5 rounded up.

So for 2 contracts ES I need a margin between $2,100 and $3,400 per contract. The risk goes from 13.21% till 8.16%.

If I feel that the risk for a specific trade is to high, I just take 1 contract less.

At the start I compounded till I reached a certain level and from then on I took out my profits on a regular basis. So I don't compound eternally.
The advantage is that after a few weeks I had enough profits to avoid going broke. From that moment on I ccould wipe out my account and start again by using my profits to fund my account again.

I will never trade the ES with $500 margin. To me that sounds insane. Because that would mean that my risk for 1 loss would be around 55% of my account.

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The excel I added gives a wrong view on risk because of the small size that is traded.
The risk of 10% can vary between:

MAX risk of 19.9% and 10%.

MIN risk of 6.8% and 10%.

All depends on the size. The "error" in risk is a result of the rounding of the size to entire contracts. The bigger the size the smaller the "error".

If you trade 10 contracts, the risk range is reduced:

MAX risk of 10.5%.

MIN risk of 9.6%.

With the size I trade, I have MIN and MAX risk very close to the default risk that is used in my spreadsheet. So the example with 2 contracts was not really a good one.
Trading is not just about buy low and sell high. There are much more things that can impact the final $$$ result.

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Your thoughts about index-futures brokers with low intraday margin

wmwmw

virtusa