If my question was answered before then I apologize, please re-direct me to that post, if possible.
I am a new trader..I started day-trading Futures and Futures Forex.
I was always taught to close my position before the end of the day, or "else"! So my question is: if I hold my position overnight or for 2 days, I expect to be "punished" by my broker.
What exactly the broker's reaction will be if I hold my position (say EUR/USD) from Friday night to Monday or Tuesday?
Let say I have $3000 in my account.
Thank you Fadi for your clear explanation.
Yes, I am trading the 6E Future.
So the $2,250 is to be in my account while I hold a position overnight. So if I hold it for, say, three days, that amount should be multiplied by 3? or it is just one amount until I move beyond the margin left in my account?
In an other word, with a $5000 account, it is impossible for a small trader like me to be a swing-trader that holds positions for days or a couple of weeks? correct?
Depends really on your broker how the margins are set for overnight. Interactive Brokers for example has a double margin for futures...
It can be crucial to not have the position liquidated at a bad price
in the last quarter of an hour before the future market closes.
For swing trading you might have a look at other products (derivatives)
that are not so strongly margin oriented.
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Look at the period of how long you want to hold. Say 3 days, then look at the average range for the last few weeks in 3 day periods. This will give you an idea of what kind of swings you may experience.
I would suggest somewhere in the area of $10-15K per contract. And my only bearing on that is what my broker told me. That would make the comfortable with us holding a position overnight. You can do it with less, but you need as much room as possible to allow your position to work. If not you will waste your money on a margin call.
Talk with your broker and I am sure they would be more then willing to help determine what you need to trade the way you are wanting.
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I personally would not hold position overnight on margin with futures. That is extremely conservative and may not be necessary. But crazy stuff can happen while you think your safely tucked away for a nights sleep. Even with a stop in place in can get jumped in thin overnight markets. You try to hold overnight position with 5k and you might wake up owing your broker money. If I need some leverage for overnight positions will use options because at least can cap your losses. Now day trading I can be aggressive with margin but even then I am usually over 5k per contract. Day has its dangers but nothing like overnight. One of the biggest mistakes you can make as a trader is undercapitalization. Leverage is a tool but must be used very wisely.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
Last edited by liquidcci; May 14th, 2014 at 12:05 PM.
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holding a position in the emini(s) overnight really comes down to the 15min window that the Globex shuts down to settle books. that 15min window is further expanded by a total of 1.5 hours until trading resumes and they open up the pipes for trades. on most contracts, isn't that 6pm EST or 5pm CST?
so really holding a position overnight might not be worth the problem, and an alternative would be to simply close before the end of session, and come back at the beginning of session (say, take your wife out to dinner and come back to the office over the garage) and re-establish the position.
that is a synthetic solution
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