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Reduced Overnight Margins ?


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Reduced Overnight Margins ?

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  #1 (permalink)
 mdsvtr 
Memphis,TN
 
 
Posts: 232 since Sep 2010

I read this from a Futures trading website , and wanted to see if other traders could verify the following..... ' Some Futures have reduced Overnight Margins as low as 1/4 of the Exchanges overnight requirements " ?

If anyone's Broker that they trade with ( or if they know of any brokers ) , that have reduced " Overnight " Margins , could you please post them ?

Much Thanks - Michael

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  #3 (permalink)
 kevinkdog   is a Vendor
 
 
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Some brokers will allow reduced margin overnight. The key is you have to be out at close. So, with ES, for example, you could buy in the morning, enjoy reduced margin, exit right before 4:15 close, and then when next session started, just reenter and still have reduced margin.

Each broker is different, so you have to check each broker for their particular rules.

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  #4 (permalink)
Alphachase
Nicosia, Cyprus
 
 
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This is unrealistic, overnight margins can't be lower than exchange minimums. Day margins maybe reduced by brokers, but at the time of session close overnight exchange requirements must be met and/or any open positions will be liquidated in order for an account to comply with exchange overnight margins.

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 kevinkdog   is a Vendor
 
 
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Alphachase View Post
This is unrealistic, overnight margins can't be lower than exchange minimums. Day margins maybe reduced by brokers, but at the time of session close overnight exchange requirements must be met and/or any open positions will be liquidated in order for an account to comply with exchange overnight margins.

Not exactly. As far as the exchange is concerned, the requirement for full margin is at session close. So, the way around it with many brokers is to be flat at session close, and reopen the position at start of next session. So, you definitely can have a position overnight with less than exchange minimum margin. It all depends on your broker. Some allow this, some don't.

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  #6 (permalink)
 kevinkdog   is a Vendor
 
 
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I should also add that my personal feeling is that trading with these lower margins is just a recipe for eventual disaster, since it encourages folks to overleverage ("oh wow! I can put on 10 ES contracts in my account! I better do the maximum...")

But that is another discussionI suppose

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  #7 (permalink)
Alphachase
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kevinkdog View Post
Not exactly. As far as the exchange is concerned, the requirement for full margin is at session close. So, the way around it with many brokers is to be flat at session close, and reopen the position at start of next session. So, you definitely can have a position overnight with less than exchange minimum margin. It all depends on your broker. Some allow this, some don't.

Yes, Kevin. Technically, with some brokers you can open a position with reduced margin even during first seconds of new session. But term "overnight margin" means exchange maintenance margin which can't be avoided when dealing with exchanges (at least for retail clients). So, one should exit before session close and reopen at session start.
The answer for @mdsvtr would be to look for brokerages that allow reduced DAY margins and ask them for DAY margin hours and rates. They are different with different brokers.

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  #8 (permalink)
 mdsvtr 
Memphis,TN
 
 
Posts: 232 since Sep 2010

Thanks for the responses.....

Something that kevinkdog mentioned.....
" Some brokers will allow reduced margin overnight. The key is you have to be out at close. So, with ES, for example, you could buy in the morning, enjoy reduced margin, exit right before 4:15 close, and then when next session started, just reenter and still have reduced margin. "

Even with this being a viable method, I guess it still won't help me in what I'm looking to accomplish, which is..... Hold positions overnight , but at a reduced Overnight Margin rate

As an Example:
Lets say that I enter into a trade ( 1 contract ) and am Long, my entry price is 2110.00 and by the close of that day, it has moved 10 points in my favor to 2120.00
At this point, I still have strong bias that the trade will continue to move higher, and I wish to stay in the trade

This is my main question / concern..... If I close out of the trade and then re-enter when the next session begins ( it a 15 or 30 minute wait time ? ) , that if I do this, I am basically starting a brand new trade.... have closed out the trade from earlier that day , and am starting over in a sense ..... No longer able to scale in ( If I wish ) or continue making profits from my initial entry at 2110.00

Is this pretty much how this would work ?
So in essence , by closing my trade, waiting 30 minutes and re-enetering, will I still ' theoretically " be ( Making the same profits ) , as if I had not closed out the trade, and just continued staying in the trade ( through the " Overnight " 30 min. time span ) and thus incurred the Overnight Margin ?

I hope my question is not to confusing

Thanks again for the help

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  #9 (permalink)
 mdsvtr 
Memphis,TN
 
 
Posts: 232 since Sep 2010

I forget to mention..... in my trade example, I am referring to trading the ES

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  #10 (permalink)
Alphachase
Nicosia, Cyprus
 
 
Posts: 191 since Dec 2013
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Quoting 
So in essence , by closing my trade, waiting 30 minutes and re-enetering, will I still ' theoretically " be ( Making the same profits ) , as if I had not closed out the trade, and just continued staying in the trade ( through the " Overnight " 30 min. time span ) and thus incurred the Overnight Margin ?

No, if you close the trade, then this is it. If you don't have enough funds on your account to go with maintenance margin your position should be closed. But by closing your position you would take your 10 points profit (which would be booked to your account immediately). Then you can buy 1 contract again at the beginning of new session and it would be a brand new trade.

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