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Newbie to Futures: Margin relative to account size
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Newbie to Futures: Margin relative to account size

  #11 (permalink)
Sienna
Melbourne, Australia
 
Futures Experience: Beginner
Platform: Ninja Trader
Broker/Data: Ninjatrader Brokerage
Favorite Futures: Transiting to ES,CL, YM
 
Posts: 41 since May 2012
Thanks: 22 given, 9 received


Dorky View Post
Why are you switching/expanding from fx to futures?

Because I want to explore another asset class, which is more regulated and because I have the belief system that FX moves too erratically, when compared to some Futures. But maybe I am wrong.

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  #12 (permalink)
Sienna
Melbourne, Australia
 
Futures Experience: Beginner
Platform: Ninja Trader
Broker/Data: Ninjatrader Brokerage
Favorite Futures: Transiting to ES,CL, YM
 
Posts: 41 since May 2012
Thanks: 22 given, 9 received


matthew28 View Post
Hi Sienna,
Also remember how much an ES contract is worth. The ES is currently at a value of about 2,000, with a big point value of $50 ($12.50 per tick). Therefore one contract of the ES is worth about $100,000. The same as a full size 100K forex contract ($10 per pip), or ten mini 10K contracts ($1 per pip), or 100 micro 1K contracts ($0.10 per pip). Think about how many contracts, or the value, you traded in your forex account. Sometimes people forget how large a futures contract is and trade far too much size. Apologies if stating the obvious.

yes, thanks matthew28,
I was confused about the initial margin that one has to put up. Did not realize, until recently, what you expressed so well above
cheers

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  #13 (permalink)
Elite Member
Burlington, Vermont
 
Futures Experience: Beginner
Platform: StockTwits
Broker/Data: Robinhood
Favorite Futures: ES, GC, ZB
 
nathanologist's Avatar
 
Posts: 701 since Jun 2015
Thanks: 872 given, 775 received


@sienna I use NT7 and NT Brokerage FCM is Phillips. From my experimentation with a minimum funded account ($1000) you could technically trade 2 contracts... but if it went against you 1 tick I understand you'd be in violation. I was told their risk management team would liquidate your position.

To watch the market and learn to use thier system I used the following strategy: fund a $1k NT Brokerage account and get only ES/NQ/6E data ($5/month). To avoid inactivity fee ($25) and get a toe wet make a single trade per month using a 1 tick stop loss. Worst case scenario you lose $16.74 on the trade and your data plus losses is less than the inactivity fee. With discipline (a skill much needed to successfully trade) you could watch the market perpetually for limited cost and quite possibly a small gain. I used this strategy to watch the market and become very familiar with NT for many months before fully funding my account.

As far as risk management goes most will say 2% of your total account value in risk, so I understand that to be $25k account trading 1 contract with a $500 loss limit per trade. I also know for a fact that others trade $5000 balance per contract so that means $25k account trading up to 5 contracts. I personally funded with $30k and limit myself to 2 contracts only with a $500 catastrophe stop on most trades. This is because I'm too inexperienced to take more risk than that.

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  #14 (permalink)
Elite Member
Chicago, IL
 
Futures Experience: None
Platform: NT8,NT7,TWS,FOREX.COM app
Broker/Data: InteractiveBrokers, NinjaTrader Brokerage FOREX.COM, IQFeed
Favorite Futures: The one I'm creating in the present....ES, ZF, ZN, ZB, FX pairs
 
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matthew28 View Post
Hi Sienna,

Also remember how much an ES contract is worth. The ES is currently at a value of about 2,000, with a big point value of $50 ($12.50 per tick). Therefore one contract of the ES is worth about $100,000. The same as a full size 100K forex contract ($10 per pip), or ten mini 10K contracts ($1 per pip), or 100 micro 1K contracts ($0.10 per pip). Think about how many contracts, or the value, you traded in your forex account. Sometimes people forget how large a futures contract is and trade far too much size. Apologies if stating the obvious.


The notional value of a futures contract means very little to 99% of retail traders speculating on ES day trades or even on trades lasting a few weeks. Now if one is holding to expiration that is a different story all together ie take delivery.
Ron


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It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
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  #15 (permalink)
Elite Member
Wiltshire, United Kingdom
 
Futures Experience: Beginner
Platform: daytradr
Broker/Data: Working on a TST combine
Favorite Futures: ES
 
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Blash View Post
The notional value of a futures contract means very little to 99% of retail traders speculating on ES day trades or even on trades lasting a few weeks. Now if one is holding to expiration that is a different story all together ie take delivery.
Ron

As Sienna said he had traded forex I was emphasising the size of an ES contract size in relation to forex pip values that forex traders might be more familiar with. And not related to Sienna, but in general, perhaps if more retail traders had a realisation of how much a futures contract is worth they wouldn't be trying to trade futures with tiny accounts and losing 50% of it on a bad day.


Last edited by matthew28; August 20th, 2015 at 12:37 PM.
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  #16 (permalink)
Membership Temporarily Revoked
Pahang Malaysia
 
Futures Experience: Intermediate
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sienna View Post
Because I want to explore another asset class, which is more regulated and because I have the belief system that FX moves too erratically, when compared to some Futures. But maybe I am wrong.

Now is probably not the right time to get into futures as a beginner.

Unless you're already experienced with proven trading systems in place to aid you, in my opinion the current futures market condition is extremely erratic with very wild swings every day, both during regular hours and non-regular hours (when US market closes) as you can see from the real-time charts of the ES market yourself. And illiquid too.

I am not sure if you know this but the market is currently dominated by HFT manipulators with frontrunning, spoofing, wash trading, etc and that's well documented. Even the CME was sued for knowingly allowing HFT manipulators to do countless wash trades every moment of the day, which was found to be around 50% of all trades done, if I remember correctly. That means 50% of transactions you see in the futures market is fake.

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  #17 (permalink)
Elite Member
Chicago, IL
 
Futures Experience: None
Platform: NT8,NT7,TWS,FOREX.COM app
Broker/Data: InteractiveBrokers, NinjaTrader Brokerage FOREX.COM, IQFeed
Favorite Futures: The one I'm creating in the present....ES, ZF, ZN, ZB, FX pairs
 
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Posts: 1,560 since Nov 2011
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Dorky View Post
Now is probably not the right time to get into futures as a beginner.



Unless you're already experienced with proven trading systems in place to aid you, in my opinion the current futures market condition is extremely erratic with very wild swings every day, both during regular hours and non-regular hours (when US market closes) as you can see from the real-time charts of the ES market yourself. And illiquid too.



I am not sure if you know this but the market is currently dominated by HFT manipulators with frontrunning, spoofing, wash trading, etc and that's well documented. Even the CME was sued for knowingly allowing HFT manipulators to do countless wash trades every moment of the day, which was found to be around 50% of all trades done, if I remember correctly. That means 50% of transactions you see in the futures market is fake.


I great futures market to dip your toe into and get started in is E-micro Euro M6E. At $1.25/tick and a centralized exchange as a CME product with no broker games to worry about. One can be wrong, just as an example only I'm not advocating this, on the entire RTH range and it's only going to costs ~$150 on a 1 lot. YM is also a good one but definitely can be more unforgiving. My wife calls it "YoungMan"....lol
Ron


Sent from my iPhone using Tapatalk

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)

Last edited by Blash; August 21st, 2015 at 12:25 AM. Reason: correct grammer
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  #18 (permalink)
Sienna
Melbourne, Australia
 
Futures Experience: Beginner
Platform: Ninja Trader
Broker/Data: Ninjatrader Brokerage
Favorite Futures: Transiting to ES,CL, YM
 
Posts: 41 since May 2012
Thanks: 22 given, 9 received


Blash View Post
I great futures market to dip your toe into and get started in is E-micro Euro M6E. At $1.25/tick and a centralized exchange as a CME product with no broker games to worry about. One can be wrong, just as an example only I'm not advocating this, on the entire RTH range and it's only going to costs ~$150 on a 1 lot. YM is also a good one but definitely can be more unforgiving. My wife calls it "YoungMan"....lol
Ron


Sent from my iPhone using Tapatalk

Thanks everyone, including Blash
Very informative

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