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:$ :$ :$ REALLY DUMB FUTURE question
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:$ :$ :$ REALLY DUMB FUTURE question

  #1 (permalink)
Elite Member
Toronto , Ontario, Canada
 
Futures Experience: Beginner
Platform: Sierra Chart, SC
Favorite Futures: Emini ES, CL, USD/CAD
 
Posts: 288 since Jun 2016
Thanks: 782 given, 269 received

:$ :$ :$ REALLY DUMB FUTURE question

Hi,

My name is John, I am EXTREMELY new to this trading futures market as I have been drawn in by the potential to make money if done right and properly.

One thing I don't clearly understand is how can brokers allow you to open up a trading account with only $400-1000 dollars?


When I looked at the ES chart, the price is 2000+, how the heck can you trade something worth that much with only 400 dollars in your trading account?

I have heard about this margin thing but not quite sure, but in simple english, if i put up the 400, someone (most likely the broker) must be putting up the other 1600 in order for me to buy 1 contract.

But then as I have read, they charge interest on the money they put in, so like where do you find the interest rates for like Ninjatrader.


If you wanted to just trade with your own money and not pay a single penny in interest or borrow any penny at all, do you need to have the amount 1 contract goes for right now in the ES market?

Thanks for taking the time to read my thread. Please help me.


John

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  #2 (permalink)
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  #3 (permalink)
Membership Temporarily Revoked
Prescott/AZ
 
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Platform: ToS, MotiveWave, Firetip
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John, buy the elite membership here for $100 and study the market for a year or two before you risk even one dollar.


noobforlyfe View Post
Hi,

My name is John, I am EXTREMELY new to this trading futures market as I have been drawn in by the potential to make money if done right and properly.

One thing I don't clearly understand is how can brokers allow you to open up a trading account with only $400-1000 dollars?


When I looked at the ES chart, the price is 2000+, how the heck can you trade something worth that much with only 400 dollars in your trading account?

I have heard about this margin thing but not quite sure, but in simple english, if i put up the 400, someone (most likely the broker) must be putting up the other 1600 in order for me to buy 1 contract.

But then as I have read, they charge interest on the money they put in, so like where do you find the interest rates for like Ninjatrader.


If you wanted to just trade with your own money and not pay a single penny in interest or borrow any penny at all, do you need to have the amount 1 contract goes for right now in the ES market?

Thanks for taking the time to read my thread. Please help me.


John


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  #4 (permalink)
Elite Member
Toronto , Ontario, Canada
 
Futures Experience: Beginner
Platform: Sierra Chart, SC
Favorite Futures: Emini ES, CL, USD/CAD
 
Posts: 288 since Jun 2016
Thanks: 782 given, 269 received


Allin View Post
John, buy the elite membership here for $100 and study the market for a year or two before you risk even one dollar.

For sure, but first i want to understand how much money i need to even open up an account without having to borrow a single penny. Then I would have to decide.

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  #5 (permalink)
Membership Temporarily Revoked
Prescott/AZ
 
Futures Experience: Intermediate
Platform: ToS, MotiveWave, Firetip
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Allin's Avatar
 
Posts: 62 since Jun 2016
Thanks: 8 given, 31 received

No matter how much money you have you will always be trading on margin, either with your broker or with the exchange for overnight holds. Here is the AMP schedule.

https://www.ampfutures.com/trading-info/margins/?utm_campaign=Client+Notice&utm_...RycnITaJw&_hsmi=31021946

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  #6 (permalink)
Elite Member
Toronto , Ontario, Canada
 
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Favorite Futures: Emini ES, CL, USD/CAD
 
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Allin View Post
No matter how much money you have you will always be trading on margin, either with your broker or with the exchange for overnight holds. Here is the AMP schedule.

Hey thanks for replying, if you don't mind me asking. Why is that? I mean if you have money to fully buy 1 contract, why do you still have to trade with margin? Just doesn't make sense logically when I think about it.

It makes sense if someone did not have the full amount, you can trade with borrowed money, but if I save up for one or 2 contracts and then learn and trade on SIM and then slowly start to trade (1 or 2 points and only 1 trade a day with a stop loss of 6-8 ticks)

I just need to learn how to open up an account, taxations (esp for traders within toronto, Ontario, Canada) and learn what patterns to look for in order to make an educated guess of which direction the graph will go and then look to either go long or sell short.

I am very well certain, signing up for the elite membership will give me tons of pure and factual information, and hopefully in the future I will be signing up!

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  #7 (permalink)
Market Wizard
London UK
 
Futures Experience: Beginner
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noobforlyfe View Post
When I looked at the ES chart, the price is 2000+, how the heck can you trade something worth that much with only 400 dollars in your trading account?

I have heard about this margin thing but not quite sure, but in simple english, if i put up the 400, someone (most likely the broker) must be putting up the other 1600 in order for me to buy 1 contract.

[..]

If you wanted to just trade with your own money and not pay a single penny in interest or borrow any penny at all, do you need to have the amount 1 contract goes for right now in the ES market?

Thanks for taking the time to read my thread. Please help me.


John

Hi John. You're mixing the value of a contract with the margin in your account. You don't need 2000$ in your account because the ES is trading at 2000. If that were the case, you could buy Oil for a mere 47 dollars.

Put it simply, you need a minimum amount (some brokerage accounts allow as low as 500$ to day trade) and then you can place a trade, irrespective of the price of the futures instrument.

Each futures instrument has a minimum increment/decrement value called tick. The tick for each futures instrument has a different value.

In the case of the ES, 1 tick value is 12.50$. This means that the absolute minimum amount you can make or lose is 12.50 USD.

The ES value is represented by quarter points. Each one of those quarter points represents 1 tick.

As I write, the ES price is between 1988.25 and 1988.50.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Say you buy 1 contract at 1988.25 and manage to sell it at 1988.50. You will have made 1 tick profit, which equates to 12.5 dollars. If you manage to sell it at 1988.75 then you will have made 2 tick profit which equates to 12.5x2=25 dollars and so on. Of course if you buy and the price goes in the opposite direction you will lose money in the same fashion.

Once your trade is closed and you have made money that is the new account balance. If you have lost money and you are now under the minimum allowed you won't be able to trade and likely experience a margin call.

There's more to it but these are the basics. Hope it helps.

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  #8 (permalink)
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xplorer View Post
Hi John. You're mixing the value of a contract with the margin in your account. You don't need 2000$ in your account because the ES is trading at 2000. If that were the case, you could buy Oil for a mere 47 dollars.

Put it simply, you need a minimum amount (some brokerage accounts allow as low as 500$ to day trade) and then you can place a trade, irrespective of the price of the futures instrument.

Each futures instrument has a minimum increment/decrement value called tick. The tick for each futures instrument has a different value.

In the case of the ES, 1 tick value is 12.50$. This means that the absolute minimum amount you can make or lose is 12.50 USD.

The ES value is represented by quarter points. Each one of those quarter points represents 1 tick.

As I write, the ES price is between 1988.25 and 1988.50.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Say you buy 1 contract at 1988.25 and manage to sell it at 1988.50. You will have made 1 tick profit, which equates to 12.5 dollars. If you manage to sell it at 1988.75 then you will have made 2 tick profit which equates to 12.5x2=25 dollars and so on. Of course if you buy and the price goes in the opposite direction you will lose money in the same fashion.

Once your trade is closed and you have made money that is the new account balance. If you have lost money and you are now under the minimum allowed you won't be able to trade and likely experience a margin call.

There's more to it but these are the basics. Hope it helps.

Hey that was really helpful,so then ultimately lets say you make an entry and exit with a profit of $100 (which is 2 points), Would the broker deposit $100 at the end of the day - the broker (assuming discount broker, not full service) charge which is on average 2-4 bucks tops. Or would it be $100- commission - (interest fee for the margin loan (if there is any) ).

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  #9 (permalink)
Market Wizard
London UK
 
Futures Experience: Beginner
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noobforlyfe View Post
Hey that was really helpful,so then ultimately lets say you make an entry and exit with a profit of $100 (which is 2 points), Would the broker deposit $100 at the end of the day - the broker (assuming discount broker, not full service) charge which is on average 2-4 bucks tops. Or would it be $100- commission - (interest fee for the margin loan (if there is any) ).

Your trading platform usually reflects instantaneously the new account balance, at least in terms of how many ticks you have made/lost. Some trading platforms allow you also to configure commission costs, so that value also would be factored in your new balance.

In any case, you should get daily statements from your broker which then square the situation with what happened, both in terms of profit/losses and in terms of commissions.

Again, I'm keeping it basic.

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  #10 (permalink)
Elite Member
Toronto , Ontario, Canada
 
Futures Experience: Beginner
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Favorite Futures: Emini ES, CL, USD/CAD
 
Posts: 288 since Jun 2016
Thanks: 782 given, 269 received



xplorer View Post
Hi John. You're mixing the value of a contract with the margin in your account. You don't need 2000$ in your account because the ES is trading at 2000. If that were the case, you could buy Oil for a mere 47 dollars.

Put it simply, you need a minimum amount (some brokerage accounts allow as low as 500$ to day trade) and then you can place a trade, irrespective of the price of the futures instrument.

Each futures instrument has a minimum increment/decrement value called tick. The tick for each futures instrument has a different value.

In the case of the ES, 1 tick value is 12.50$. This means that the absolute minimum amount you can make or lose is 12.50 USD.

The ES value is represented by quarter points. Each one of those quarter points represents 1 tick.

As I write, the ES price is between 1988.25 and 1988.50.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Say you buy 1 contract at 1988.25 and manage to sell it at 1988.50. You will have made 1 tick profit, which equates to 12.5 dollars. If you manage to sell it at 1988.75 then you will have made 2 tick profit which equates to 12.5x2=25 dollars and so on. Of course if you buy and the price goes in the opposite direction you will lose money in the same fashion.

Once your trade is closed and you have made money that is the new account balance. If you have lost money and you are now under the minimum allowed you won't be able to trade and likely experience a margin call.

There's more to it but these are the basics. Hope it helps.

Hey so then, what is the actual price you buy the contract at then? Since you said you don't need 2000$ to buy one contract if the ES is trading at 2000$

Sorry for my extreme lack of knowledge, I feel quite stupid lol

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