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Noob and need to understand overnight margin
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Noob and need to understand overnight margin

  #1 (permalink)
Trading Apprentice
Billings Montana USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: YM
 
Posts: 4 since Oct 2012
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Noob and need to understand overnight margin

I'm sim trading and plan to continue to sim trade for several more weeks.

Got a question about overnight margins as it would apply to the YM.

I understand that as long as I don't hold past 4:15pm eastern, then overnight margin does not apply to me, but what about entering a trade in the overnight session, say after 6:00pm? Or, what if I want to enter a trade before the cash market opens in the morning? Will the overnight margin requirement apply to both of these trades? And what if I want to make several trades in the overnight session, does the overnight margin accumulate or is it cleared once I exit a trade?

Thanks

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  #2 (permalink)
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  #3 (permalink)
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Georgia, US
 
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Ozland View Post
I'm sim trading and plan to continue to sim trade for several more weeks.

Got a question about overnight margins as it would apply to the YM.

I understand that as long as I don't hold past 4:15pm eastern, then overnight margin does not apply to me, but what about entering a trade in the overnight session, say after 6:00pm? Or, what if I want to enter a trade before the cash market opens in the morning? Will the overnight margin requirement apply to both of these trades? And what if I want to make several trades in the overnight session, does the overnight margin accumulate or is it cleared once I exit a trade?

Thanks

This will depend on your broker. Day trading margins are granted by brokers as a way to generate more volume and get more client business. So, a broker will use its own discretion as to how much overnight margin and what hours. Some will have $500 between 8am and close, and then $1500 from open to 8am, some will use $500 all hours except into the close.

As for "accumulation," it does not work this way. Margin is the amount required to open a position. So you can close and open as many times as you like, as long as your open position does not exceed margin requirements.

I suggest calling your broker and talking to someone on the phone to sort these questions out--they are very good questions and probably few traders understand margin as well as they should.

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  #4 (permalink)
Elite Member
Quebec
 
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Platform: NinjaTrader wt Rancho Dinero's profiling tools
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I am with Mirus and the overnight margins only apply if you carry a position during the daily shut down.

For the ES, NQ, YM the daily shut down is 3:15-3:30pm Central.

For 6E the daily shut down is 4-5pm Central.

For TF the daily shut down is 5-7pm Central.

So if you place a trade and close it before the daily shut down then the overnight margin would not apply. If you place a trade and want to hold it during the daily shut down then the overnight margin would apply.

Hope this helps.

P.S. starting October 18, the daily shut down period will change.

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  #5 (permalink)
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josh View Post
This will depend on your broker.

I suggest calling your broker and talking to someone on the phone to sort these questions out--they are very good questions and probably few traders understand margin as well as they should.

Great guidance (as always from @josh) even for the "not so" Noob trader. Margin can be a trader's best friend or worst enemy, IMO, understanding your broker's margin requirements is an essential step in developing a trading system/method. Since this requirement can change at a particular time of day, traders may need it adjust their position sizes if they intend to trade the overnight (Asian, European) sessions, or deposit more capital into their trading accounts. Knowing this information ASAP going into the learning/development process can alleviate many surprises when taking the step from sim to live trading. Great question @Ozland this "tells" you're on the right path, stay your course.


Last edited by Cashish; October 14th, 2012 at 05:19 PM.
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  #6 (permalink)
Trading Apprentice
Billings Montana USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: YM
 
Posts: 4 since Oct 2012
Thanks: 0 given, 2 received

Thanks for the replies, and, yes, I will contact the broker once I select one.

It was and still is my understanding that overnight margin requirements are set by the exchanges. For the YM it is $2750 and the maintenance is $2500.

What I'm trying to figure out, and know now that I'll need to contact a broker to find out, is when the overnight margin begins and ends and whether or not the overnight margin applies to a brand new trade put on, say, after 6pm ET but then is traded out of in an hour or so. When I do contact a potential broker, I'll also ask at what time in the morning I can enter a trade and not be subject to the overnight margin rules.

When I finally do go live, this shouldn't be a concern of mine for a while because I can't see myself trading more than one contract for quite some time.

Thanks

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