NexusFi: Find Your Edge


Home Menu

 





Brokerage or Method that will reduce overnight margin costs.


Discussion in Commodities

Updated
      Top Posters
    1. looks_one kevinkdog with 8 posts (6 thanks)
    2. looks_two SuperBliss with 7 posts (2 thanks)
    3. looks_3 kkfx with 2 posts (2 thanks)
    4. looks_4 WolfieWolf with 2 posts (1 thanks)
      Best Posters
    1. looks_one Big Mike with 2 thanks per post
    2. looks_two tigertrader with 2 thanks per post
    3. looks_3 kevinkdog with 0.8 thanks per post
    4. looks_4 SuperBliss with 0.3 thanks per post
    1. trending_up 6,768 views
    2. thumb_up 18 thanks given
    3. group 8 followers
    1. forum 25 posts
    2. attach_file 3 attachments




Closed Thread
 
Search this Thread

Brokerage or Method that will reduce overnight margin costs.

  #1 (permalink)
 SuperBliss 
Denver, CO
 
Experience: Beginner
Platform: NinjaTrader
Broker: NA
Trading: NA
Posts: 62 since Jan 2010
Thanks Given: 383
Thanks Received: 8

I am currently trading the Swiss Franc.

I trade only the Franc in both of two separate accounts, both of them are smaller sized accounts. I trade long in one account and short in the other account. I do this so I can be long and short at the same time if necessary.

My trading technique requires me to hold positions overnight.

Overnight margin on the Franc is about $2,400 per contract. At that rate I can only afford to trade a couple contracts in each account.

My question is does anyone know of any brokerage or have any ideas or methods that would allow me to reduce my overnight margin to the number of contracts that I am either net long or net short between the two accounts?

So, for example if I am short 5 contracts in one account and long six contracts in the other account, is there a way to pay overnight margin on just the one net long contract? Afterall, that is my actual net risk.

I have heard that SPAN does something similar to this but only within one account (not between two or more accounts) and only on accounts that are worth over 100k.

Thanks,
Bryan

Started this thread

Can you help answer these questions
from other members on NexusFi?
NexusFi Journal Challenge - April 2024
Feedback and Announcements
Request for MACD with option to use different MAs for fa …
NinjaTrader
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
ZombieSqueeze
Platforms and Indicators
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Retail Trading As An Industry
67 thanks
Battlestations: Show us your trading desks!
48 thanks
NexusFi site changelog and issues/problem reporting
47 thanks
GFIs1 1 DAX trade per day journal
32 thanks
What percentage per day is possible? [Poll]
31 thanks

  #3 (permalink)
 
sam028's Avatar
 sam028 
Site Moderator
 
Posts: 3,761 since Jun 2009
Thanks Given: 3,824
Thanks Received: 4,629


Why not using a single account and manage two synthetic/virtual positions ?

Success requires no deodorant! (Sun Tzu)
Follow me on Twitter
  #4 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,645 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,336


SuperBliss View Post
I am currently trading the Swiss Franc.

I trade only the Franc in both of two separate accounts, both of them are smaller sized accounts. I trade long in one account and short in the other account. I do this so I can be long and short at the same time if necessary.

My trading technique requires me to hold positions overnight.

Overnight margin on the Franc is about $2,400 per contract. At that rate I can only afford to trade a couple contracts in each account.

My question is does anyone know of any brokerage or have any ideas or methods that would allow me to reduce my overnight margin to the number of contracts that I am either net long or net short between the two accounts?

So, for example if I am short 5 contracts in one account and long six contracts in the other account, is there a way to pay overnight margin on just the one net long contract? Afterall, that is my actual net risk.

I have heard that SPAN does something similar to this but only within one account (not between two or more accounts) and only on accounts that are worth over 100k.

Thanks,
Bryan


I have never understood the logic of being long and short at the same time, except for bookkeeping purposes. It seems like a pretty expensive way to bookkeep (less efficient use of margin, more commissions being spent).

Do what @sam028 says: manage the positions outside of your account. Add them together in your head, or on a sheet of paper. Trade only the net position.

Follow me on Twitter
  #5 (permalink)
 steve2222 
Auckland, New Zealand
 
Experience: Beginner
Platform: Sierra Chart
Broker: AMP/CQG
Trading: Whatever moves in my timezone
Posts: 1,896 since Sep 2009
Thanks Given: 3,379
Thanks Received: 1,540


sam028 View Post
Why not using a single account and manage two synthetic/virtual positions ?

Indeed NT software allows you to simulate being long and short at the same time.

The following user says Thank You to steve2222 for this post:
  #6 (permalink)
 SuperBliss 
Denver, CO
 
Experience: Beginner
Platform: NinjaTrader
Broker: NA
Trading: NA
Posts: 62 since Jan 2010
Thanks Given: 383
Thanks Received: 8


sam028 View Post
Why not using a single account and manage two synthetic/virtual positions ?

I run multiple strategies on the same market so I have to have two separate accounts in order to be long and short at the same time.

NinjaTrader has the ability to run multiple ATM strategies that trade in opposite directions but it is very limited and doesn't work the way I need it to.

Trying to create synthetic / virtual positions that behave the same way being long and short at many different price levels doesn't work when you get down to the nitty gritty.

Another problem is translating risk / reward parameters. Treating each trade as a separate individual trade with its 'own' contracts makes handling risk / reward simple and clear. Trying to combine the risk/reward parameters of one trade with another trade synthetically is a bit more complicated. Trying to combine the risk/reward parameters of many trades in one synthetic position is not only extremely complex but would require many more transactions as the price moved up and down.

Started this thread
  #7 (permalink)
 
kkfx's Avatar
 kkfx 
Mumbai, India
 
Experience: Intermediate
Platform: MT4, NT8,TradingView
Broker: AMP
Trading: Index,currencies
Posts: 116 since Jul 2010
Thanks Given: 325
Thanks Received: 160

You may use calender spreads to reduce your overnight margin, but the broker has to supported identify the spreads and the recommended margins by CME.

eg .If you are long 6S dec contract and want to hold it overnight, at the end of globex session, you may sell 6S mar contract to hedge your position...next day buy back the 6S mar contract to continue your long position....this way the margin required for overnight hold would be about 25% of the outright contract margin.

The following user says Thank You to kkfx for this post:
  #8 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,645 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,336


indiantrader View Post
You may use calender spreads to reduce your overnight margin, but the broker has to supported identify the spreads and the recommended margins by CME.

eg .If you are long 6S dec contract and want to hold it overnight, at the end of globex session, you may sell 6S mar contract to hedge your position...next day buy back the 6S mar contract to continue your long position....this way the margin required for overnight hold would be about 25% of the outright contract margin.

Two issues comes to mind::

1) in currencies, non-front months have very little volume and liquidity. On Friday, for example, the volume on Mar 14 6S was 13% that of the Dec 13 contract. One consequence is that you'll pay more in slippage entering the out market.

2) if you try this in other markets, where the back months have more volume, the risk is that the front month and the back months do not behave the same price wise.


The bottom line is that you can take any X number of strategies, and combine them to create one super strategy, which is then traded live. It may take some detailed logic and coding, but my experience is that in the long run, the benefits (reduced number of accounts, reduced margins, reduced commissions, reduced slippage costs) greatly outweigh the costs (time spent coding and debugging).

Follow me on Twitter
The following user says Thank You to kevinkdog for this post:
  #9 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,033 since Dec 2013
Thanks Given: 4,359
Thanks Received: 10,172


SuperBliss View Post
So, for example if I am short 5 contracts in one account and long six contracts in the other account, is there a way to pay overnight margin on just the one net long contract? Afterall, that is my actual net risk.

I have heard that SPAN does something similar to this but only within one account (not between two or more accounts) and only on accounts that are worth over 100k.

Some brokers have master accounts and sub-accounts. Margin is calculated at the master account level, so in your example (Short 5, Long 6) you would only be margined on the Long 1 position. I don't have a list of which brokers do this but it may be something you want to investigate/consider if margin is that tight.


kevinkdog View Post
I have never understood the logic of being long and short at the same time, except for bookkeeping purposes. It seems like a pretty expensive way to bookkeep (less efficient use of margin, more commissions being spent).

^+1

The following user says Thank You to SMCJB for this post:
  #10 (permalink)
 SuperBliss 
Denver, CO
 
Experience: Beginner
Platform: NinjaTrader
Broker: NA
Trading: NA
Posts: 62 since Jan 2010
Thanks Given: 383
Thanks Received: 8



SMCJB View Post
Some brokers have master accounts and sub-accounts. Margin is calculated at the master account level, so in your example (Short 5, Long 6) you would only be margined on the Long 1 position. I don't have a list of which brokers do this but it may be something you want to investigate/consider if margin is that tight.


^+1

Thanks for the feedback.

I will definitely look into other brokers. So far the two I have asked have told me that its not possible.

Also, as far as being long and short at the same time i agree there are some drawbacks when considering book keeping.

For me, the advantage of being long / short the same time is how this method effects me emotionally / psychologically. I feel like I have more time to think, prepare, strategize, etc about the market and the price action than if i'm trading uni-directionally.

Also, i feel like there are opportunities that arise from being long / short at the same time that are less difficult to find compared to trading uni directionally.

I refer to those opportunities as useful-risk opportunities. To me useful-risk opportunities can be described, for example, as when one trade's loss overlaps with another trade's gain.

Most importantly, I'm very curious as to what others are experiencing with their trading.

Do you mind if I ask what psychological advantages / disadvantages you experiencing with your trading at the time?

Started this thread

Closed Thread




Last Updated on January 10, 2014


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts