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Question about CL and QM Contracts
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Question about CL and QM Contracts

  #1 (permalink)
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Question about CL and QM Contracts

I had a rather simple question about CL and QM Crude oil contracts. Basically my question is for CL I am aware its 1000 barrels opposed to QM 500 barrels being traded on the contract, but my question is when you purchase a CL contract to trade on your platform, how much money does that contract cost?

I am asking the intitial price of the CL contract, not the margin required in the account to keep the trade open. So when I buy it, is it $500 for that CL contract being used from my account to purchase it? or does the contract initially cost $1000 from my account?

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  #2 (permalink)
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Have you looked here?

https://futures.io/traders-hideout/1303-cl-vs-qm-crude-oil-tick-size-value-margins.html

Mike

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  #3 (permalink)
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Mike That post showed me a lot. In your post it says Margin requirement for a CL is $2000 but can be negotiated down. Now when I actually buy the contract, the cost taken from my account is $1000 correct? so my used margin is $1000 for that 1 CL contract? Just wondering because when I trade crude with a forex broker, its usually .50 to purchase 1 lot.

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  #4 (permalink)
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DannyG View Post
Mike That post showed me a lot. In your post it says Margin requirement for a CL is $2000 but can be negotiated down. Now when I actually buy the contract, the cost taken from my account is $1000 correct? so my used margin is $1000 for that 1 CL contract?

If the margin is $2,000 then when you buy 1 contract, you must have $ 2,000 in your account. If the order goes heavily against you, the broker will liquidate your position before your account hits zero balance.

If you had $ 1,999 in your account and the margin requirement is $ 2,000, you cannot buy 1 contract of CL.

If you have $2,500 in your account, you can only buy 1 contract of CL, not two.

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  #5 (permalink)
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So there is no set price for a contract? just margin requirments from different brokerages? I have only been doing forex up to this point and I am used to paying a given amount for 1000 lots of crude oil. which is $500 at 50 cents per lot.

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DannyG View Post
So there is no set price for a contract? just margin requirments from different brokerages? I have only been doing forex up to this point and I am used to paying a given amount for 1000 lots of crude oil. which is $500 at 50 cents per lot.

I'm having trouble following I think.

Step 1: You need whatever your margin requirement is to be able to buy a contract.
Step 2: When you buy a contract, you will be filled at the price the market is currently trading. For instance $ 76.15 or whatever is the current price.

If you want to buy 1,000 lots of CL @ 76.15 and your broker has a $2,000 margin requirement, you will need to have $ 2,000,000 in your account. The same would be true if CL was trading at $125.00 or if it was trading at $50.00. Still 2 million needed in the account. The margin requirement is set by the broker (and the exchange) based on the daily volatility of the instrument.

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  #7 (permalink)
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Here is what I am asking.

Suppose I have a future account with apex and $2000 margin. the price of crude oil is at 76.00 a barrel and I go long on a contract. How much money is taken from my account as soon as I open that position for that 1 CL contract? There must be a cost taken out of my account to open that position?

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  #8 (permalink)
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DannyG View Post
Here is what I am asking.

Suppose I have a future account with apex and $2000 margin. the price of crude oil is at 76.00 a barrel and I go long on a contract. How much money is taken from my account as soon as I open that position for that 1 CL contract? There must be a cost taken out of my account to open that position?

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

Instead, think of it like a credit card. A temporary authorization is placed on your account equaling the margin requirement. If you have a $3,000 credit card limit, and a temp authorization is placed for $ 2,000, it will succeed. But if you try to buy another $ 2,000, it will be declined. If you close the position break even, the $2,000 temp authorization is just cancelled. If you close the position down 100 ticks ($1,000) then you'll get debited $1,000.

Regardless of the above, the $76.00 per barrel is never a factor. Only the margin, and the net position result (+/- xxx ticks) is a factor.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

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  #9 (permalink)
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Thanks that cleared a lot of things up for me. Its different with my forex account because when I buy the units of oil, it takes the money out of my account at .50 a unit plus any losses I am enduring at the current time.

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  #10 (permalink)
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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?

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