Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
Can you help answer these questions from other members on NexusFi?
I understand some of the margin hikes as leverage is tremendous in futures markets. But I think these hikes affect the small guy much more than the big guy. I hated it years ago back when they took day trading of equities up to a 25k account requirement. They did it in name of protecting small guy. How about let small guys make their own decisions on how they want to trade. Hopefully futures markets don't eventually try to squeeze out smaller traders leaving nothing but hedge funds to make all the money.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
What it does to affect the big guy is that just like when they hiked crude/silver, it forces the large positions to either increase their capital or liquidate some of their positions.
So if the pervasive sentiment is that "speculators" are propping prices up to high, a way you can TEMPORARILY provide some relief is to up the margin requirement.
A large block/institutional position with 2000 contracts open, would have to add a large some of their money in order to maintain their current position.
In the case of crude and silver, it caused a lot of large position holders to sell some of their long positions in order to meet the margin requirement (rather than reallocate additional capital away from other ventures). which in turn results in a selloff and a reduction in price.
As we saw with crude and silver, it results in a pretty stark/immediate decrease in volitility and a temporary respite from the prevailing trend.
Crude is scheduled to gradually decline back to original margins ($5k) over time. These sudden margin adjustments in my opinion, are used as market maintenance tools against price action and volitility. I don't think they're targeted at small or large traders per se.
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
Honestly on gold they probably needed to increase margins. 50 plus moves in a day is just to big to be over leveraged whether small or big trader.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
