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Margin: initial vs maintenance vs day trading
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Margin: initial vs maintenance vs day trading

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Margin: initial vs maintenance vs day trading

I'm confused about margin. My broker for ES: $5,500 initial, $5,000 maintenance, $500 day trading.

1. If I ONLY want to day trade, do I need $5,500 initial margin in my account per 1 lot (ES)?

2. If I ONLY want to day trade, do I need $5,000 maintenance margin in my account by 4 pm CT per 1 lot (ES)?

3. If ONLY day trading the ES, I must buy after 8:30 am CT and sell by 4:00 pm CT, correct?

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  #3 (permalink)
Trading Apprentice
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If you only day trade, the day trading margin is valid the entire trading-day (5pm to 4pm CT)

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Market Wizard
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ALC77 View Post
I'm confused about margin. My broker for ES: $5,500 initial, $5,000 maintenance, $500 day trading.

1. If I ONLY want to day trade, do I need $5,500 initial margin in my account per 1 lot (ES)?

2. If I ONLY want to day trade, do I need $5,000 maintenance margin in my account by 4 pm CT per 1 lot (ES)?

3. If ONLY day trading the ES, I must buy after 8:30 am CT and sell by 4:00 pm CT, correct?

As I understand it:
As long as you are in and out of your position in a single day trading period, you are only subject to the initial margin.
If your account falls below the maintenance margin during the course of the trading day then you will get a margin call to deposit more funds.
If you carry your position open past the close of markets on any given day, then you would be subject to the maintenance margin.

So when you open your position, the initial is taken by the the broker as security for the duration of the trade. Keep a position open overnight and you will need to cough up the maintenance amount as well.
Check the CME for open and close times. Your broker will give you this info as well.

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Grantx View Post
As I understand it:
As long as you are in and out of your position in a single day trading period, you are only subject to the initial margin.
If your account falls below the maintenance margin during the course of the trading day then you will get a margin call to deposit more funds.
If you carry your position open past the close of markets on any given day, then you would be subject to the maintenance margin.

So when you open your position, the initial is taken by the the broker as security for the duration of the trade. Keep a position open overnight and you will need to cough up the maintenance amount as well.
Check the CME for open and close times. Your broker will give you this info as well.

Where does the $500 day trading margin come into play then?

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Market Wizard
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What instrument are you talking about? That would help clarify.

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Trading Apprentice
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he wrote that he trades ES and day trading margin means day trading margin.

So if your broker allows you to day trade with this $ 500.-- margin, you can trade 10 contracts with a $ 5000.-- account.

Of course it is theory and would be "stupid" to use it that way.

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  #8 (permalink)
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ALC77 View Post
Where does the $500 day trading margin come into play then?

My understanding is slightly different from @Grantx's -

Initial margin: you need this to start trading at all.

Day margin: you can go down to this level as long as you trade only within day market hours (means you can't keep a position open after the market's official closing time)

Maintenance margin: you need this level if you intend to keep a position open after market's official closing time, in other words, keep positions open overnight.


So, to recap


ALC77 View Post
I'm confused about margin. My broker for ES: $5,500 initial, $5,000 maintenance, $500 day trading.

1. If I ONLY want to day trade, do I need $5,500 initial margin in my account per 1 lot (ES)?
Yes, if you have not traded before

2. If I ONLY want to day trade, do I need $5,000 maintenance margin in my account by 4 pm CT per 1 lot (ES)?
No

3. If ONLY day trading the ES, I must buy after 8:30 am CT and sell by 4:00 pm CT, correct?
I don't follow the ES, but I think when they refer to day trading they mean when the 23-hour Globex session starts and stop, essentially you can trade within those 23 hours - I may be wrong on that


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@ALC77

Another point: depending on your broker's requirement, it may be that the 5500 USD initial margin may be what they require if you intend to carry positions overnight, but if you do not, even the initial margin may be considerably lower.

Again, this is a per-broker requirement so you may be better off checking with them.

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With Interactive Brokers you have different margins for every contract.

Here the example of today for German DAX Future: in EURO

Intraday Initial 1 14338.46 FIRST contract DAY
Intraday Maintenance 1 11470.77 2nd to x contract DAY
Overnight Initial 28676.91 FIRST contr. Night
Overnight Maintenance 22941.53 2nd to x contract over night

Sorry - table does not work nicely
Hope this helps
GFIs1

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