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K, here are pics, in no particular order. There's all trades from where we left off from 06/30 to today. There's a fibbo of both the GC and CL that I am currently open in, as of today. There's the total account summary from 04/16 until today, 07/08.
But the real killer is the one which shows all trades from 07/01 to today, with no previous balance. I will post the pics here, then respond to the problem in next post.
Can you help answer these questions from other members on NexusFi?
Herein lies the problem. The CME, within the last week, upped the overnight margin on GC from $5,500 to $6,000 per contract. That threw a noodle into the works, because it goes like this...
I am now assuming that every trade I go into is with a cash account balance of $75,000. (Assuming no loss or profit from other trades outside of this one focus.)
So I was in a short GC position and scaled in at a bad time. When I entered the position, the overnight was upped from $4,500 to $5,500. So I started to scale out to maintain margin based on that number. Now the overnight is $6K margin, and had to scale out even more as price difference increased. That has messed up my analysis as I had been working on it. It's the Brexit that did it. But I did not expect such a swift and sudden change in margin requirements after the Brexit flutter seemed to settle a couple days after the voting results came in. Alas, I am still young and learning about it all!
So looking at that pic, the thought goes like this. If I had entered that trade with $75K in my account, I would have had to scale out based upon my account size and the overnight requirements. So what am I left with based on the above pic?
Well, let's do the math.
As of today, I had to scale out as the price fluctuated due to intraday price swings. The above pic is the final result for close yesterday. So where am I at? Welp...
Open cash account balance = $75,000
Current cash balance after reducing position from 10 contracts to 6 = 75,000 - 11,910 = 63,090
Current open position = -28,716
Current cash ($63,090) + open position ($-28,716) = 34,374 = GTNE (Gross Total Net Equity)
Current margin required on 6 GC contracts = $36,000
Current GTNE (34,374) - the margin ($36,000) = -1,626, my NTNE (Net Total Net Equity (I know that sounds redundant, but it's easier to understand methinks)).
This means I would have to shave off another contract before Friday's close, or the broker's SPAN crap could take over, and I am screwed.
When your open position is nearing the closing time, you are nearing the margin call time.
Current open position is down 1 tic. You are long 10 GC @ $1,300 per, but current price at the margin call time is $1,299.9. It is 10 contracts GC long at -1t*(1t=$10per tic)10*10 = $-100 = $99,900. 10 contracts down 1 tic in GC is 100 bux.
10 contracts @ 10K per contract overnight means you need $100,000 in your account to meet the minimum overnight margin requirement.
Let's plug in the formula...
Open cash account balance = $100,000
Current open position = $-100
Current cash ($100,000) + open position ($-100) = $99,900 = GTNE (Gross Total Net Equity)
Current margin required on 10 GC contracts = $100,000
Current GTNE ($99,900) - the margin ($100,000) = $-100, the NTNE (Net Total Net Equity)
So you need 100 bux more than you have in NTNE to hold that position overnight, because NTNE needs to be zero or higher to hold your positions. If you had 100 bux more,
your NTNE would be $0, and you'd be fine.
You're cool, no sweat, because in order to meet the margin requirement you just need to sell one contract to meet the overnight margin requirement, or get 100 extra bux into
your account fast fast fast.
It would be easier in this circumstance to just dump one contract to meet the margin requirement. So here is how that would work.
You have 10 contracts worth $99,900 open. Margin required is $10K per CT. You are short 100 bux? So you sell a single contract before the close.
You then sell 1 contract at a loss of 10 bux for that contract, and you now have 9 contracts...
Your cash balance is now $99,900 - $10 = $99,890. This is your new GTNE.
But your margin on 9 contracts is only $90,000. So you have $99,890 - $90,000 wiggle room. That's $9,890 you can suffer to be able to stay in the game!
Need a pause in this double post, I'll have some commentary for the second part of my blabbering.
Lax99, this is for you. Current stuff as of this post, positions, closures etc.
This is the continuation of the trading journal. Read through it, see if it makes sense to you. I am not sure it makes sense to me. These are latest pic updates.
Nice, looks like some great trading going on! Am I understanding correctly that you're Sim trading? I think I saw a SimNew notation on one of the images. In any case, great work and I'll be following!
Yes lax99, this has all been SIM. I...I just dunno' when to go live again, and if I should with this new idea. Been on phone with broker a bunch, and the CME (who probably hates me now because I am a pest with all my questions to them)...This is scary mother-fing stuff, you know?
REAL money is at stake, so I ain't playing games. I just wish I had more of a backbone. *sighs*
Made a couple CL trades today in a daytrade session, got +51t. Not going to post any more results except GC fibbo until I am out of the GC position, because it's starting to annoy me. It does look like I can close out the GC position trade for profit by end of November. Just still waiting for it. See pic below.
But I wanted to touch upon another issue I found in this GC trade, part two of post above...
Assume I was in this GC trade with $75K in account. Due to the CME upping their overnight margins from $4,500 per to $6,000 per, I had to shave off some positions to maintain margin.
Now...I have not been able to follow the market moves when I was asleep, but I am darn sure this trade would have blown out the account. Here's why...
On July 6th and July 10th, the price of GC rose to such a degree that I would have had to shave more contracts off.
In with 6 ct...The thing went up ~566 tics on 6 contracts while I was in it. My position is 1326.9. Price rose to ~1383.5
On 6 contracts, that's -$33,960. Minus the ~$12,000 I had to shave off the real cash account...
$75,000-$12,000=$63,000-$33,960=$29,040
$29,040- overnight margin requirement on 6 ct ($60,000)= -$30,960.
So what to do?
Shave.
Each contract I shave is going to take away $5,160 in value, but $6K in margin requirement.
So at $29,040, I shave off one contract. $29,040-$5,160=$23,880
Margin required on 5 GC contracts = $30,000 $30,000-$29,040=-$960
Close, very close...
So we shave off another ct.
$29,040-$5,160=$23,880 value.
Overnight margin required on 4 GC contracts is $24,000. $23,880-$24,000=$-120.
Close, but no cigar.
Let's shave off another one, so we have 3 ct.
$23,880-$5,160=$18,720.
Overnight margin required on 3 GC contracts is $18,000.
$18,720-$18,000=+$720. Yay, we have met the overnight margin requirement!
But you can see how quickly this can cascade into a total account failure. The bottom line here is...If the value of each contract in your open position decreases below the required overnight margin requirement for that contract in your open position, not only will your account get blown out, but you will owe the broker money.
This is very bad.
And that's all I had to say about that. My lesson learned...With $75K, don't mess with GC if you wish to scale into a 10 ct position. It's too much exposure. There are safer ways to do this. Like oil, and cows. (LE) I love cows. They are tasty.
Another week, another bunch of trades. Was finally able to get out of that nasty GC short this morning after 3 weeks, for what looks like a total loss of -$7,740 when all is said and done. I really don't enjoy three-week open positions. Bleh.
Here's six pics, in no particular order. Current open positions in CL, trading summary since we last left off on July 12, total summary for 07/12 to today, total summary for 04/16 to today, retraces I'm eyeing and some trading logs. Note, the latest HG trade you may see in the log doesn't count, since that was a test for data integrity. It's fixed, yay.
I think I'm ready to try this method live. But my God man, I'm scared. I'm having trouble getting over the fear of doing it live. Everything works GREAT in sim. But will it work live? Will I work live? Will I be able to stomach this sort of thing with my own real money? *sighs* Grrrr.
