How to adjust leverage - Beginners and Introductions | futures.io
futures io futures trading


How to adjust leverage
Started: by FrazMann Views / Replies:166 / 5
Last Reply: Attachments:0

Welcome to futures io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Reply
 
Thread Tools Search this Thread
 

How to adjust leverage

  #1 (permalink)
Trading Apprentice
Aberdeen/Scotland
 
Futures Experience: None
Platform: None atm
Favorite Futures: Crude cl
 
Posts: 16 since Dec 2016
Thanks: 23 given, 7 received

How to adjust leverage

Hi,

I guess some ppl will have a good chuckle about this but I'd like to confirm how to adjust the leverage one uses.

From what I have understood, the leverage of a position is fixed with the following:

Leverage = Nominal Value / Initial Margin.

Am I correct in assuming from an account point of view, it becomes:

Leverage of account = Nominal Value of a contract x Number of Contracts / Account Balance

Thanks for clarifying the above for me.

Fraz

Sent using the futures.io mobile app

Reply With Quote
 
  #2 (permalink)
Elite Member
Canada
 
Futures Experience: Intermediate
Platform: NinjaTrader & Jigsaw
Broker/Data: Rithmic
Favorite Futures: ZB FESX
 
Posts: 72 since Dec 2016
Thanks: 53 given, 33 received

You can trade different products with smaller or larger tickers and varying volatility, you can trade more or less contracts, or you can spread and hedge. These will all vary your risk


Sent from my iPhone using futures.io

Reply With Quote
 
  #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
 
rleplae's Avatar
 
Posts: 1,912 since Sep 2013
Thanks: 1,358 given, 2,872 received
Forum Reputation: Legendary


Yes you are correct.

While it is possible to trade highly leveraged, you will find reference to a kind of 'rule of thumb',
where for any position you should not risk more than 2% of your account..

Example :
If you have 10K in your account, 2% = 200$
if your stop is 10 ticks and the tick value of the instrument is 10$
you would trade maximum 2 contracts

While the same 10K might easily give you the possibility to leverage up to 10 contracts and more
it is not a good idea to do ...

Reply With Quote
The following 3 users say Thank You to rleplae for this post:
 
  #4 (permalink)
Trading Apprentice
Aberdeen/Scotland
 
Futures Experience: None
Platform: None atm
Favorite Futures: Crude cl
 
Posts: 16 since Dec 2016
Thanks: 23 given, 7 received

@rleplae thanks for clarifying. Could I ask one more follow up question please.

With regards to margin calls, If you had the following:

Account balance: $10k
Initial margin to open one position : $1k
Maintenance Margin: $500

Is the $500 dependant on your $1k position only, or do they take into account your total account balance?

Ie
1)10k at start
2) long 1 contract for 1k.
3) contract drops to $500 (Margin Call?)

Or

Is it triggered once my total account value drop to $500? (So I can loose $9.5k)

If it's the 1st then I'm assuming my stop should b between the initial entry point and the $500 point otherwise its guaramteed that i would need to top up that position before it reached my stop.

Thanks again for your help.



Sent using the futures.io mobile app

Reply With Quote
 
  #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: 1,912 since Sep 2013
Thanks: 1,358 given, 2,872 received
Forum Reputation: Legendary

futures io Member Poll

When was your last family vacation?

 

FrazMann View Post
@rleplae thanks for clarifying. Could I ask one more follow up question please.

With regards to margin calls, If you had the following:

Account balance: $10k
Initial margin to open one position : $1k
Maintenance Margin: $500

Is the $500 dependant on your $1k position only, or do they take into account your total account balance?

Ie
1)10k at start
2) long 1 contract for 1k.
3) contract drops to $500 (Margin Call?)

Or

Is it triggered once my total account value drop to $500? (So I can loose $9.5k)

If it's the 1st then I'm assuming my stop should b between the initial entry point and the $500 point otherwise its guaramteed that i would need to top up that position before it reached my stop.

Thanks again for your help.



Sent using the futures.io mobile app

Maintenance margin is a minimum balance, your account should not drop below

Stretching your account to maximum leverage is a very bad idea...
The 2% rule should keep you in safe waters

Reply With Quote
The following user says Thank You to rleplae for this post:
 
  #6 (permalink)
Trading Apprentice
Aberdeen/Scotland
 
Futures Experience: None
Platform: None atm
Favorite Futures: Crude cl
 
Posts: 16 since Dec 2016
Thanks: 23 given, 7 received

Perfect, thanks for clarifying bud

Sent using the futures.io mobile app

Reply With Quote

Reply



futures io > > > > How to adjust leverage

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

Market Analysis w/Dave Forss @ IQFeed

Apr 25
 

Introducing iSystems with Stage 5 Trading

Apr 27

*NEW* FIO Journal Challenge featuring NinjaTrader ($2,000+ of prizes)

May

Prototyping Python Strategies (part 2) w/Ran Aroussi

Elite only

Ask Me Anything w/Raymond Deux @ NinjaTrader

May 3

An Afternoon with FIO member Softsoap

Elite only
 

Machine Learning & Data Mining Bias w/Kris Longmore @ Robot Wealth

Elite only

Brannigan Barrett (TBA)

Elite only

FIO member Gomi (TBA)

Elite only

FuturesTrader71 (TBA)

Elite only

EasyLanguage Programming w/Chris @ ABC Trading Group

Elite only

Portfolio Diversification w/Brendon Delate

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Should I adjust for contract changes? romajc ThinkOrSwim 1 December 20th, 2015 01:29 PM
Adjust Thinkorswim Time frame to Second Andystock ThinkOrSwim Programming 1 September 15th, 2015 12:10 PM
Adjust TWS chart bar opentime question realcapri IB Trader Workstation 0 October 27th, 2014 03:52 AM
How to adjust price scale??????? KennyK NinjaTrader 4 September 30th, 2013 11:22 PM
Is there a way to adjust time zone ? GridKing Tech Support 2 July 4th, 2011 05:16 PM


All times are GMT -4. The time now is 05:40 PM.

no new posts
Page generated 2017-04-23 in 0.12 seconds with 19 queries on phoenix via your IP 23.20.65.255