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I am looking for a clear explanation on margin requirements for day trading verses holding a trade for multiple days.
The margins for the ES currently are: Initial Margin $13,200, Maintenance Margin $12,000 and Intraday Margin $500.
With a trading account of $20,000; Can someone explain what margins are in play and how many contracts could be traded in a day trade and also the same information for entering a swing trade held for multiple days?
Can you help answer these questions from other members on NexusFi?
One common question is, "what hours are 'intraday' for margin purposes"? It depends on your broker. On a CME product like ES, typically "intraday" means any time the market is open, until just before the close. So, you can open at full intraday margin from the 6pm ET open and hold until about 4:55pm ET just before the day close. If you want to hold past 4:55pm ET, you must meet full maintenance margin for the contract, or you will be liquidated sufficiently to meet the requirement. Note that this may vary by broker, and yours may institute an earlier liquidation period, so check with your broker!
In these turbulent times, it's good to be aware of increases in margin requirements and rules in place. For example, last week when volatility increased, Amp doubled required intraday margins (the following day they restored them). They also set in place a restriction that when ES gets 8 points from the limit up/down (and same for nq/ym/rty), they will require maintenance margins and will liquidate to meet if necessary. When crude went negative, they shortly after disallowed entering new positions in energies. Then they relaxed this and only allowed front month trading until 5 days to expiration.
The point is: be very aware of exchanged-imposed trading bands, exchange maintenance margin requirements, your broker's margin requirements, and all rules they have in place.
