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Absolutely. Every response is completely consistent, they all explain margin in the same way and trading futures in the same way, and all the respondents trade in futures markets and understand how their accounts work.
So at this point, if you read all of this thread again, I think you will have what you need. If not, then ask.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
@bobwest thanks for the helpful explanations. There's still a few things I'm unclear about.
1) In your first post, you said the broker would liquidate the position because it went in the red 8 points. Is that only because in that example, bob only had $40 in his account? If bob had $80 initially, then he would only be auto-liquidated at 16 points in the red, under one contract?
2)I want to get an idea of how things scale. What if bob enters 2 mes contracts, and only has $80 in total? Then one point against him liquidates his entire account? What if it's 2 contracts and $100 in balance?
3) Lastly, please give me an example of a profit calculation. Suppose bob opens 2 contracts long, having exactly $90 in his balance. MES moves 3 points up (and is now 1003 pts) and he closes. What is his total balance now?
1. In the example, "Bob" had $40, now he has none. Account is closed. If he had $80, and the contract kept going down, for as long as the trade is still open he still loses money. I gave the example of "Bob" having $4,000 and eventually losing it because he was too obstinate to close his trade.
Frankly, I do not have any idea how you are thinking about a trade or the margin for it. They don't exist off in some compartment separate from your account. You have enough margin, and so you trade. The trade is not off someplace else, it is right there in your account and so is your margin.
2. If you have 80 bucks you get to trade 2 contracts. That's what margin is. If you only have 80 bucks, you can't afford to lose any more than you have. When I say "If you have only 80 bucks," I mean that if there are only 80 bucks in your account, then you can't lose more than that. Saying you have 80 dollars in margin is exactly the same as saying you have 80 dollars in your account. See my answer to question 1.
3. Account starts at $80. MES moves up 3 points and he closes. One point in MES is worth $5 per contract (see my first post in this thread.) So three points is worth $15 per contract. All this happens in his account, so he now has $80 + $30 = $110.
Bob.
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Edit: Edited to fix profit calculation for 2 contracts.
When one door closes, another opens.
-- Cervantes, Don Quixote
2)If he currently has 2 contracts opened, then 1 point moving against him reduces his margin/balance by $5 or $10?
3) Would it not be 2x$15 since he has 2 contracts opened, not 1? So net profit was $30?
Thanks Bob, that pretty much clarifies everything I wanted to know about intraday margins.
I have one last question which is about the overnight margins, which doesn't happen during the 'day'. I assume for amp they would use CME's initial and maintenance margin?
My question is, when margin call happens, what exactly happens? Is money simply subtracted out of your balance, never to be seen again? Or is it kind of an ephemeral concept and just sort of stays in your account still.
I've no idea why you are always talking about margin calls, I trade futures since 15+ years and never got a margin call.
You always have to look that you have enough money in your account, otherwise it doesn't make sense to trade.
Once more, margin isn't a cost, it is just the amount of money you have to have in your account to allow you to trade, it doesn't mean that you have to pay the margin as cost if you get a margin call. Yes, all brokers have to use the CME margins if you hold positions overnight. Intray the broker will autoclose your trade if your balance falls below the margin (and charges a fee for the margin-call) and you cannot trade till you have not enough money in your account, but if you hold positions overnight, it can happen (with a huge gap) that your account-balance falls below 0, in this case the broker will close your account and you have to pay the amount below 0.
Regarding the last one. I have never had a margin call, but again, you don't pay margin or have it deducted as a fine it is just an amount of your account equity that is ring-fenced by the broker when you have a trade on.
For a margin call I believe the possible alternatives are the broker calls you and asks you to put more funds in your account to bring your equity up above the margin requirement, or they liquidate your positions because you no longer have that margin requirement to hold the position.
Then whatever trading loss you had on that position is deducted from your account equity. Some discount brokerages which provide very low commissions charge a fee for services such as these, having to intervene in a trade, on an individual event basis if required, but that isn't a margin fee, it is just one of their fees in their terms and conditions.
As Bob said, these are now questions for AMP and how they do things at their brokerage.
Edit: LOL. Now I'm typing replies at the same time as Tr8er. I'm not just copying what they say, honest
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Can you guys give me a specific example of when margin drops down to maintenance margin level? Lets say from mes 4000 to 3975, at night, two contracts long. 20 points against you should roughly correspond to a 10% drop in cme's initial margin. What happens to your balance/margin? What if I had a stop loss order at 3975? Would my position be closed before I have to auto-pay variation margin?
