Is margin variable according to price, and why? | Traders Hideout


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Is margin variable according to price, and why?

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Legendary Market Wizard
Switzerland
 
Trading Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
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xplorer View Post
This post by GFIs1 caught my attention.

Although I noticed that margins did not appear set in stone, I did not know that they can vary according to price.

If I read the post correctly, margin increases with the price rising, and viceversa.
Question 1: why?

Question 2: does it apply to all futures instruments (presumably so)?

Yes!!!

Hi @xplorer
Margin is directly connected with the price level of a future.
Of course every broker is free to adapt own levels...

Now concerning the DAX - An example
Watch here my first trade in my Dax journal on February 21st 2012:
https://futures.io/trading-journals/17862-gfis1-1-dax-trade-per-day-journal-2.html#post193659
Dax was on a level of 6909 - a margin with IB of 7200 €

now one more - the LAST trade of my journal on June 15th 2017:
https://futures.io/trading-journals/17862-gfis1-1-dax-trade-per-day-journal-305.html#post644764
Dax was on a level of 12754 - a margin with IB of 14850 €

So - the DAX made quite some up and the margins were doubled...
All that can not being seen equally with derivatives.

With one Dax future contract you move € 250000. That is the leverage when you touch

Have a look at margins with Interactive Brokers live here:
https://www.interactivebrokers.com/en/index.php?f=marginnew&p=fut

Get some insight into reading the table

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We have a Initial Margin - this is what you need for the FIRST contract...
then we have Intraday Margin - that means the margin for 2nd to x contracts
And beware of OVERNIGHT Margin - that means what you need to pay 15min. before future closing time
when holding overnight until normal futures market reopens again on following day.

If you are not having enough capital on your account - then all your hang over margin contracts are sold
immediately to the price near closing automatically.

Hope this helps
GFIs1


Last edited by GFIs1; June 18th, 2017 at 06:22 AM.
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