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Max margin utilization at brokerage account


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Max margin utilization at brokerage account

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  #1 (permalink)
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Hi guys,

New poll idea.

Max margin utilization at brokerage account (and did you receive a margin call?)

Total votes: 440
 


What was your maximum margin utilization at your brokerage over the last few months?

I also added an option to indicate whether or not you received a margin call (had a position forcibly closed by the brokerage).

For example, if your brokerage account has 100k and your biggest margin requirement for a trade is 25k during recent history, then you are only using 25% of your available margin.

The idea behind the thread is to look at how people fund their brokerage accounts vs how they use them. Are they maxing out their margin?

Please answer and share your thoughts.

Mike

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Never had a margin call; never will.

1-20%. We never over-expose ourselves. I guess that makes us conservative, but we believe in not being over-leveraged.

I just realized that even my sim/practice/paper accounts I do not use a margin higher than 20%. Maybe that is just a good habit for me to have.

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Oh boy, have I ever maxed out my margin! When I first started down the road of day trading, I was way under capitalized swinging for the fences. I voted for the 80-100% because on a few occasions I was funding my trading account with $1000 and day trading margin was $500. Silly for me to think I could get rich with $1000. Needless to say, things just didn't work out for me and for the most part blew the account. I don't recall a trade getting liquidated because of a margin call specifically. However I do remember on more that one, two, three, four....occasions trying to place a trade and not having enough margin because I basically blew the account. So without the facts, 80-100%.

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  #4 (permalink)
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My thoughts on margin are probably much different then most people. If you want to buy 4 ES contracts you need about $2000 in your account. If you have 100k in your account then that's only 2% margin. What's the difference if you have 100k in your savings account and just leave 2k in your trading account. Of course, you might get the margin call and might have to deposit more funds, but besides that, what's the difference? I'm not a newbie trader. Been doing this for a long time now, i just don't post much

Matt

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  #5 (permalink)
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Always best to have a specific stop loss based on swing highs and swing lows and then to risk no more than 2-3% per trade regardless of the margin provided by the broker. This is critical to longevity in this game.

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I trade the ES mini - My rule is 1 Mini ES per every 10.000,- USD in my account.

Stop Loss is between 1-2 % of my account.

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  #7 (permalink)
nantwich chesire
 
 
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Too me, it is not the amount of margin you use (I have accounts ranging from 1:30 to 1:800 leverage). It is the amount you risk on your stop loss is what needs to be a low percentage of your total capital (0.5 to 2%).

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  #8 (permalink)
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In the past I've had well funded accounts, but found it enabled bad behavior because there was a large account balance to fix it tomorrow.

I've restarted my journey with 2k. The pressure fuels me to trade better. I trade 1 es, and know where my stop losses are so not going to get margin called. Last month I dropped down to $500, and topped off the account with another 1.5k to start July with 2k again. So far July is going very well, and I've withdrawn 2k already to cover last months deposit and fees.

Trading this way functionally for me is the same as keeping a large balance but only risking 1% per trade. But if I go on tilt, my losses are capped.

Also if there's ever a problem with the broker, I'm not holding 100k with them. Why give the broker all this interest free money to use for their own gains?

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  #9 (permalink)
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For me risk management is the most important for a trader. I think we are talking about brokerage trading margins account for the long term. Because I have less experience in trading I don't pick a higher margins brokerage provider. That would encouraged me to take more risk in position size per trade. I like brokers that provide dynamic temporary margins during the current risk on/risk off market condition. So I can adjust my own trading risk to the market risk.
About risk% of a trading in relative to trading account is totally different. It is depended on what type of trading instruments, strategy types of trade, and time during the day of trading. I must define, configure, and select before get in to a trade. The risk% is vary on each trade.

travelbrit View Post
Too me, it is not the amount of margin you use (I have accounts ranging from 1:30 to 1:800 leverage). It is the amount you risk on your stop loss is what needs to be a low percentage of your total capital (0.5 to 2%).


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Big Mike View Post
What was your maximum margin utilization at your brokerage over the last few months?

Very different than most I suspect. For 2020 my brokerage account has averaged 74% margin utilization. My lowest utilization was 49.7%! These numbers in no way reflect the actual utilization of my trading capital though as much of it is not in my trading account.

Big Mike View Post
I also added an option to indicate whether or not you received a margin call (had a position forcibly closed by the brokerage).

Margin Call != Position Forcibly closed.

My account has gone negative equity three times this year. Next day wire in additional funds. No liquidations in the 11 years I have been with this broker.

The concept of Trading Capital vs Cash in Trading Account is actually very important. I once heard a CTA speak, and they said after being involved in multiple broker bankruptcies they only keep 25% of their trading capital in their trading account. Later on the same CTA went on to say their returns were X%. I could never confirm whether that was X% return on the account or on the trading capital!

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