Question about CL and QM Contracts

December 5th, 2009, 05:41 PM

DannyG

Mike sorry 1 more question. I am Daytrading and Say I put the minimum margin requirement set by a broker of $2000 for a CL contract. I go long on a CL contract trade and it ends up going down .30 cents. My loss is $300 so my margin is down to $1700 now. Would the broker liquidate the trade as soon as it went below $2000, so say even $1999? or would it keep going down until I closed it?

Ask your broker to know for sure.

But no, it would only be liquidated probably when it gets down to $750 or $1000 or so. Enough so that if there was a spike of volatility, the broker has dumped your losing position and is not exposed to the risk.

Trading CL with less than $25,000 is a bad idea in general.

Mike

December 5th, 2009, 07:30 PM

A good article on margins, on how this is working, here (the example is on CL, so that's perfect

).
It's not a bad idea to understand what is an intraday/OVN initial margin, and an intraday/OVN maintenance margin.

December 5th, 2009, 08:26 PM

sam028

A good article on margins, on how this is working, here (the example is on CL, so that's perfect

).
It's not a bad idea to understand what is an intraday/OVN initial margin, and an intraday/OVN maintenance margin.

Nice, yes -- but also keep in mind that most brokers today will not call you, there is no chance to re-up the account, it's just "boom" liquidate.

Mike

December 5th, 2009, 08:58 PM

Thanks for all the help guys. Sam the article is great and really clarified it for me even more. Thanks.

I don't want to sound like I keep asking more and more questions, but what are some Initial Margins you guys have gotten from brokers to open a CL position?

December 5th, 2009, 10:14 PM

DannyG

Thanks for all the help guys. Sam the article is great and really clarified it for me even more. Thanks.

I don't want to sound like I keep asking more and more questions, but what are some Initial Margins you guys have gotten from brokers to open a CL position?

I believe Amp Futures and Mirus Futures requires $10,000 to open an account. CL margin is $2,000. If you have a good history with them, you can get it lowered to $500 or $1000 per car, especially if you have a higher balance, lots of trades, and a track record of winning.

Mike

December 5th, 2009, 10:41 PM

DannyG,
Have you watched CL move in a live market? The only reason I ask is that I can't believe brokers have a margin at only $2000 (I know they do it just makes me understand how people blow up accounts so quickly). On Friday, CL went from a low of 76.06 to a high of 77.16 in 3 minutes. That's a $1000 move, if my math is correct. Yikes. I agree with Mike about needing $25000 before you start with just one contract.

Andrew

December 6th, 2009, 12:10 AM

Ya the price movements are huge in CL. I dont plan on doing live trading anytime soon however, just paper trading atm.

traderwerks · December 6th, 2009, 02:24 AM

DannyG,

Just as an aside, margin is a common term for 'Performance Bond', so you can Google for that also.

The CME has a page on Performance Bonds. Performance Bonds / Margins for [AUTOLINK]CME[/AUTOLINK] Group Products

December 6th, 2009, 03:16 AM

Big Mike

Nothing is taken from your account until you close the position.

Just to be precise here, the fluctuations in the price of crude * the multiplier * the # of contracts is added & subtracted from the account in real time.

Nothing changes when the position is closed (except you pay the commission).

December 6th, 2009, 04:04 AM

cunparis

Just to be precise here, the fluctuations in the price of crude * the multiplier * the # of contracts is added & subtracted from the account in real time.

Nothing changes when the position is closed (except you pay the commission).

Yes, true, of course. I was oversimplifying

Mike

Question about CL and QM Contracts

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Question about CL and QM Contracts