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is 'initial margin' the per contract rate?


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is 'initial margin' the per contract rate?

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  #1 (permalink)
3L CH33PO
NYC NY USA
 
 
Posts: 4 since Sep 2020
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Hi,
I trade /RTY lately (1 contract) and opted for 2 contracts today and it rejected the order.
The initial margin is $7,150. Does that mean I need $7,150 per contract?

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  #2 (permalink)
lightsun47
Toronto, Canada
 
 
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Depending on your broker, the day trading margins are different.

For me, I need a minimum of $750 in my account to trade one contract of ES.

So, if I have, for example, $2000 in my account, then I can only trade 2 contracts max because it covers the minimum requirement of $750 per contract, which is $1500 for 2 contracts in this case. And so on.

But it is not recommended to trade like this because the more contracts you risk as a beginner, the more you fail and your account will deplete in no time. Been there. Done that. Trust me. Don't. Do. It.

Just go with one contract per $5000 imo to be on the safe side. Take it slowly. You will progress gradually. Good luck.



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  #3 (permalink)
 bobwest 
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Sarasota FL
 
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3L CH33PO View Post
Hi,
I trade /RTY lately (1 contract) and opted for 2 contracts today and it rejected the order.
The initial margin is $7,150. Does that mean I need $7,150 per contract?

Margin is per contract.

That sounds like a very high day-trading margin, but it does depend on your broker.

"Initial margin" strictly speaking does not apply to day trades, but to trades that are held past the evening close (16:00 US Central Time for RTY), and is set by the exchange.

But yes, margin is per contract. Check with your broker for day trade rates, and initial and maintenance margin if you are holding past the nightly close. For that matter, check with your broker if there is ever something unexpected with a trade.

Bob..

When one door closes, another opens.
-- Cervantes, Don Quixote
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 cory 
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3L CH33PO View Post
Hi,
I trade /RTY lately (1 contract) and opted for 2 contracts today and it rejected the order.
..

switch to the micro M2K then you can trade for than 1 contract.

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  #5 (permalink)
3L CH33PO
NYC NY USA
 
 
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Thank you for replies.
Good advice!

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  #6 (permalink)
3L CH33PO
NYC NY USA
 
 
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lightsun47 View Post

For me, I need a minimum of $750 in my account to trade one contract of ES.

$750 for ES? . . . wow! What broker?

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  #7 (permalink)
 bobwest 
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3L CH33PO View Post
$750 for ES? . . . wow! What broker?

Any number of brokers offer margins in this range and less. $500 per contract for ES is fairly common, and I believe I have seen $400. Note that this is for day trades, which must be closed by the end of the CME "day," which ends at 4:00 PM (16:00) Central Time. Within the day-trading window, the exchange does not impose its own margin requirements. After that, it does. So brokers can offer whatever they like, and they often do.

You should understand that unless you are very experienced and highly skilled, margins this low are nearly suicidal, because the extremely high leverage of low margins creates high risk.

So it's OK to look around for a different deal, but don't be quick to go for the very low ones, or if you decide to change, don't use the minimum allowable, if it's this low. Since you're just starting out, you need the protection of using fairly high margin. Go slowly.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #8 (permalink)
3L CH33PO
NYC NY USA
 
 
Posts: 4 since Sep 2020
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Thanks Bob,
I think I'll stay where I am for a while.

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