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Futures Broker: Margins
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Futures Broker: Margins

  #1 (permalink)
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Futures Broker: Margins

Hi all, I am looking to see if I can get some feedback for discount brokers. I had been looking at AMP and Mirus and both offer some great margins but still not sure which I want to go with. Any suggestions, feedback?

Thank you in advance.

Dan

 
  #2 (permalink)
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  #3 (permalink)
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  #4 (permalink)
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You may also contact @mattz from Optimus Futures.

He's quite often around here and I'm sure he'll answer all your questions and give you a good starting point regarding your broker selection.

 
  #5 (permalink)
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Daytrader999 View Post
You may also contact @mattz from Optimus Futures.

He's quite often around here and I'm sure he'll answer all your questions and give you a good starting point regarding your broker selection.

Thank you!

 
  #6 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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bustainc View Post
Hi all, I am looking to see if I can get some feedback for discount brokers. I had been looking at AMP and Mirus and both offer some great margins but still not sure which I want to go with. Any suggestions, feedback?

Thank you in advance.

Dan

Since you are new to futures trading, I'd be very careful with margins.

Exchanges set the minimum margins for overnight positions. Most brokers use these values (or higher).

For day trading, many brokers will have smaller margin requirements, but you have to be out at the end of the day or a specified time.

This seems like a good thing, right?

I'd argue that smaller day trade margin requirements are bad on 3 levels for new traders:

First, you have to be out at end of day. This will drive you to trade more often, generate more commissions for the broker, and pay more money in spread costs. My experience is the more you trade, the harder it is to turn a consistent profit, since your trading costs are higher.

Second, you will tend to overtrade. Many people think that they should trade as many contracts as their margin will allow. Overtrading almost always leads to disaster.

Third, with $500 margins, you might think you only need $3-5K to open an account and trade 1 contract. On the mini S&P, that is a huge amount of leverage (contract size to acct size is about 15 to 1). Problem is your risk of ruin is directly impacted by your account size. Smaller accounts only need a small losing streak before they are wiped out.


My point is: As a new trader, just assume you'll use exchange minimum margins, not "day trading" margins. Then broker margins would not matter. Eventually, if get good, you might utilize dt margins, but to start with them is suicide.

 
  #7 (permalink)
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kevinkdog View Post
Since you are new to futures trading, I'd be very careful with margins.

Exchanges set the minimum margins for overnight positions. Most brokers use these values (or higher).

For day trading, many brokers will have smaller margin requirements, but you have to be out at the end of the day or a specified time.

This seems like a good thing, right?

I'd argue that smaller day trade margin requirements are bad on 3 levels for new traders:

First, you have to be out at end of day. This will drive you to trade more often, generate more commissions for the broker, and pay more money in spread costs. My experience is the more you trade, the harder it is to turn a consistent profit, since your trading costs are higher.

Second, you will tend to overtrade. Many people think that they should trade as many contracts as their margin will allow. Overtrading almost always leads to disaster.

Third, with $500 margins, you might think you only need $3-5K to open an account and trade 1 contract. On the mini S&P, that is a huge amount of leverage (contract size to acct size is about 15 to 1). Problem is your risk of ruin is directly impacted by your account size. Smaller accounts only need a small losing streak before they are wiped out.


My point is: As a new trader, just assume you'll use exchange minimum margins, not "day trading" margins. Then broker margins would not matter. Eventually, if get good, you might utilize dt margins, but to start with them is suicide.

Thanks for the reply. I've been messing around with the demo for the past 2 months on e-mini and CL just trying to decided here what broker would be best. The goal is 40 ticks a day on CL which has been (fairly) easily attainable. Most of my trading is with equity options just had been looking to get into futures. One thing that does strike me about these low margins is that it seems one with say, a $50K account, could really do well with those margins, but, as you said, that could turn as well. I guess I am just a little amazed at the low barrier to entry, guess I have been missing out all these years!

 
  #8 (permalink)
Market Wizard
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bustainc View Post
Thanks for the reply. I've been messing around with the demo for the past 2 months on e-mini and CL just trying to decided here what broker would be best. The goal is 40 ticks a day on CL which has been (fairly) easily attainable. Most of my trading is with equity options just had been looking to get into futures. One thing that does strike me about these low margins is that it seems one with say, a $50K account, could really do well with those margins, but, as you said, that could turn as well. I guess I am just a little amazed at the low barrier to entry, guess I have been missing out all these years!

Don't let the low barrier to entry fool you...it is there precisely to suck in small fish, and take their money.

Also, be careful about transferring demo performance to live performance - the two are completely different.

First, you may not be using a genuine market emulator, but really a simulator. As an example, Tradestation has a terrible simulator - making money with it is trivial. It is just not realistic. Second, once your emotions get involved, trading becomes a lot tougher.

As far as 40 tick per day goal in CL, that will be tough to do consistently. As one point of reference, I know one big trader in Chicago whose goal is 40 ticks per MONTH. He trades huge size in ES.

As long as you realize trading is about 100 times tougher than anything you ever did before, you'll be OK.

Good Luck!

 
  #9 (permalink)
Membership Temporarily Revoked
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Broker/Data: TOS/Schwab
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kevinkdog View Post
Don't let the low barrier to entry fool you...it is there precisely to suck in small fish, and take their money.

Also, be careful about transferring demo performance to live performance - the two are completely different.

First, you may not be using a genuine market emulator, but really a simulator. As an example, Tradestation has a terrible simulator - making money with it is trivial. It is just not realistic. Second, once your emotions get involved, trading becomes a lot tougher.

As far as 40 tick per day goal in CL, that will be tough to do consistently. As one point of reference, I know one big trader in Chicago whose goal is 40 ticks per MONTH. He trades huge size in ES.

As long as you realize trading is about 100 times tougher than anything you ever did before, you'll be OK.

Good Luck!

Ya, I've traded before, ran a small l/s book for a family office in Westwood, CA, just making the switch to the futures markets.

What do you think of the TOS platform for demo? I was considering running my live TOS feed on one screen and then ZenFire or Ninja for my order entry to whatever broker I use.

Again, I appreciate you taking the time to respond.

Dan

 
  #10 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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bustainc View Post
What do you think of the TOS platform for demo?
Dan

I've never used TOS for demo. In fact, I never use demo to prove out any strategy. I use demo only to check automation settings, etc.


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