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Greetings from a newcomer
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Greetings from a newcomer

  #1 (permalink)
Trading Apprentice
Jutland, Danmark
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: CL
 
Posts: 2 since Sep 2015
Thanks: 2 given, 0 received

Greetings from a newcomer

Hi all,

I'm new in the community and haven't even started trading yet. I'm in the phase where I am analysing and planning strategies and platform, indicators and account setup. I have a background in risk management from previously working in a commodity trading company and have some C# software development from working in a software company. Basically all strategies I am planning are mean reverting multi contract spread trading entering and exiting on momentums and trends. That's the plan so far and I would be glad if it evolved to a bit more than just a plan. My difficulties are however not a lack of creativity in building different kinds of strategies but some technical stuff related to trading which are conditions and constrains I need to fully understand and apply. E.g. understanding how Margins apply. Perhaps a friendly soul could elaborate on the following uncertainties I have.

It is to my knowledge that Initial Margins only applies if a position is held from one trading session to another. So if I were to go long into 10 CL contracts my account should then at least contain 10.000, in order to enter the trade, since the intraday margin is 10.000 USD using NT brokerage. If I hold this position on session close my account should then at least contain 50.600 USD (5.060 Initial Margin), is that correct? Suppose then I was instead holding a long position on 10 CL contracts DEC 2015 and a short positions on 10 CL JAN 2016 in order to trade the timespread. Would there then be a netting effect on the required margin of these two opposite trades given they are both traded on the same exchange? If so, how does the netting affect apply on intraday margins, would I then be able to trade 20 of each rather than 10? I am also interested in more knowledge on how maintenance margins are called / calculated. Is there an exhaustive list containing all that information somewhere? Looking in the internet and even in these forums I can't find a goto place, that explains and has all relevant information to read about this area and I would therefore be very happy if anyone could elaborate on some of the above.

//Z.

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  #2 (permalink)
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  #3 (permalink)
Elite Member
Omer עומר / Israel י
 
Futures Experience: Master
Platform: NinjaTrader, Proprietary,
Broker/Data: Ninjabrokerage/IQfeed + Synthetic datafeed
Favorite Futures: 6A, 6B, 6C, 6E, 6J, 6S, ES, NQ, YM, AEX, CL, NG, ZB, ZN, ZC, ZS, GC
 
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Zaid View Post
Hi all,



It is to my knowledge that Initial Margins only applies if a position is held from one trading session to another. So if I were to go long into 10 CL contracts my account should then at least contain 10.000, in order to enter the trade, since the intraday margin is 10.000 USD using NT brokerage.

//Z.

very wrong question...
don't go that path by maximizing your gearing

take the following rule :
a trade should expose you to maximum 2%
with 10.000 US$ and let's say a stop of 10 ticks and 10$ per tick
that would nearly be 2 contracts (making abstraction from slippage)
if your stop is more then 10 ticks, you are down to 1 contract

take that as very good advise that will protect you from loosing your money very fast

anyway when you start
start on SIM only, trade for some time
and see what you can do..
post your progress and the community might help you with other useful info

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  #4 (permalink)
Trading Apprentice
Jutland, Danmark
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: CL
 
Posts: 2 since Sep 2015
Thanks: 2 given, 0 received

Hi rleplae

Fist thank you very much for answering.

However, I can easily see how my question can be misleading and viewed related to maximizing gearing. This is definitely not something I want to do. The example was more meant to be a simple use case and perhaps it was too unrealistic.

What I would like to know, if you donít mind answering, In other words is how does the following apply?

Initial Margin
Intraday Margin
Maintenance Margin
Netting effect, if a such exists?

Yes I am and will be using sim trading while building strategies and testing strategies in NT.

//ZAG

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  #5 (permalink)
Elite Member
Omer עומר / Israel י
 
Futures Experience: Master
Platform: NinjaTrader, Proprietary,
Broker/Data: Ninjabrokerage/IQfeed + Synthetic datafeed
Favorite Futures: 6A, 6B, 6C, 6E, 6J, 6S, ES, NQ, YM, AEX, CL, NG, ZB, ZN, ZC, ZS, GC
 
rleplae's Avatar
 
Posts: 2,501 since Sep 2013
Thanks: 1,706 given, 3,708 received
Forum Reputation: Legendary


Zaid View Post
Hi rleplae

Fist thank you very much for answering.

However, I can easily see how my question can be misleading and viewed related to maximizing gearing. This is definitely not something I want to do. The example was more meant to be a simple use case and perhaps it was too unrealistic.

What I would like to know, if you donít mind answering, In other words is how does the following apply?

Initial Margin
Intraday Margin
Maintenance Margin
Netting effect, if a such exists?

Yes I am and will be using sim trading while building strategies and testing strategies in NT.

//ZAG

Simple explanation through Google(MB trading)
Margin is the equivalent of a "good faith" deposit. Margin deposits are set by the exchange and are subject to change with price movement and market volatility.

In futures, there are four margin numbers at work.
  • The Intraday Initial margin is the amount of free funds that must be available in an account to enter the trade.
  • The Intraday Maintenance margin is the value of the account that must be maintained to hold the position during the session.
  • The Overnight Initial margin is the amount of free funds that must be available in an account to hold the trade overnight.
  • The Overnight Maintenance margin is the value that the account must remain above to continue to hold the position.

The margin depends/varies on :
  • Broker
  • Instrument
  • Exchange

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