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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.
Can you help answer these questions from other members on NexusFi?
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
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 don’t 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.
