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Why are NinjaTrader initial margins so low?


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Why are NinjaTrader initial margins so low?

 
Phorlan
washington, DC
 
Posts: 7 since Jul 2019
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Tradestation requires to have an initial margin of $13,200 to trade the
E-MINI S&P 500 ES and 50% of initial for day trading, which is between 8 am and 4 pm.

How come Ninjatrader only requires $1000?


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 bobwest 
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Phorlan View Post
Tradestation requires to have an initial margin of $13,200 to trade the
E-MINI S&P 500 ES and 50% of initial for day trading, which is between 8 am and 4 pm.

How come Ninjatrader only requires $1000?

If you hold a position past the daily close, you will have to meet the CME exchange initial margin. For intra-day trades, the exchange doesn't care and the brokers can require any margin they want.

Some are below $1,000. You would have to either close the trade or add to your margin to keep the position past the close because that's when you enter CME margin territory.

If TradeStation defines their day-trading window as from 8 to 4, that is also their choice. Once a new "day" begins at 1700 Chicago time, brokers are again free to require whatever margin they like, until the day's close. (The CME day begins at 1700 and ends at 1600 the next day, with a one-hour break before re-opening.)

For day trades, brokers make their own decisions based on their own risk calculations and how they want to position themselves in relation to their competition, and it can change as market conditions change.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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Phorlan
washington, DC
 
Posts: 7 since Jul 2019
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Thank you for your answer.
So would you say that Tradestation are doing novice traders a favor with those high intraday margins or are they just trying to protect themselves?

 
 
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 bobwest 
Western Florida
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Phorlan View Post
Thank you for your answer.
So would you say that Tradestation are doing novice traders a favor with those high intraday margins or are they just trying to protect themselves?

Well, I guess that would depend on how you looked at it.

Factually speaking, lower margins are more dangerous to the trader because you can get overextended, so new traders in particular should be cautious. But they also are more risky to the broker, who would be on the hook if there were any problem.

As I said, brokers will balance what their competition is doing (which may be appealing to small traders who don't understand their risks) vs. their own risk tolerance, and will make their decisions. Obviously, they will choose what they think is best for themselves, as the traders will as well.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
 
Phorlan
washington, DC
 
Posts: 7 since Jul 2019
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Yes, I've been playing on a friend Tradestation Demo, and I can see how easy it is to lose money. I'm getting ready to start and even though I do see how convenient it'd be to start trading the ES with a small account of $1000, after those six months done trading in SIM on my friend's account, I can tell it's not realistic to start trading the ES or CL with $1000. In that regard I do question the ethical stance of those brokers letting beginners open account with just one grand.

 
 
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 bobwest 
Western Florida
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Phorlan View Post
Yes, I've been playing on a friend Tradestation Demo, and I can see how easy it is to lose money. I'm getting ready to start and even though I do see how convenient it'd be to start trading the ES with a small account of $1000, after those six months done trading in SIM on my friend's account, I can tell it's not realistic to start trading the ES or CL with $1000. In that regard I do question the ethical stance of those brokers letting beginners open account with just one grand.

It's been this way forever and ever.

You can open an account for any amount you want, so long as you are at or above the broker's minimum. There are brokers that require only $500. I have seen $400. (Lately market prices have been wild, so I don't know what the current state of things may be.) A customer does not have to go into a position using the maximum leverage (lowest money they put up), and they should not, in my opinion. It is nuts to be so undercapitalized, but many do just that, imagining they will make a killing and be rich forever after.

Yet, there is a market for it, and since there is demand (eager customers who don't worry about risk), there is supply (brokers who will accommodate them).

I do think traders should understand their risks better, and should not take chances like this. But I do not think that any broker is that concerned with the ethics of it, other than that they operate within the rules. And in fact, the argument would be that it's the customer's money, and it's the customer's obligation to know what they can reasonably do.

But in answer to your question, no, I do not think any broker, TradeStation or any other, is at all concerned with the customers' risks, just with their own. None is any more ethical than that.

From your sim experience, I think you can understand that the majority of new futures traders simply lose their entire account. So brokers, who have seen this happen a thousand times, just take care of their own business.

Put that way, it may seem really bad on the broker's part, but I think a trader should understand the odds and make intelligent decisions about their risk. Someone has to, and no broker is going to do it for them.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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Phorlan
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Thank you Bob.
After trading in SIM for almost 7 months I don't feel I'm ready to go live and I'll state the reasons below, in case some new traders could find this interesting.

I haven't been able to be successful doing what traders call swing trading. I've found out that swing trading imply that I try to predict the future, even what will happen within an hour. Totally unacceptable to me, maybe acceptable to others, but not to me. I try to put myself in the same mood as if I was trading live, and when the trade goes against me I exit. It always means a loss of hundreds dollars. If I was going to start this kind of trading with a $ 1000 account, I think I'd be done in 5-6 trades, so 2-3 days. I decide to go long or short when all the signals from the MACD, MFI, RSI and VWAP are in my favor. If only one of those indicators are not in my favor, I don't move. What I have noticed is that if instead of getting scared, and I'm in SIM, i't stay in the trade a few times I could have ended up making a huge amount of money. The problem is you simply can't know that and I know that if I was trading live, I wouldn't be able to stomach watching a trade going against me for 10 minutes and I'd exit, sure, to see it go my way a moment later, but again, how could I know.

In SIM, always between 9:40 and 10:20, after that I'm done. I've been fairly successful to make either $23 (two ticks) or $46 ( another two tick trade) and $69 (another two tick trade). I set my profit target for two ticks obviously, but I've noticed I need to set up the stop loss at $400. If it's tighter it gets hit too often. So basically I risk 400 bucks to make a max of 69! The way I do is is by scalping for two ticks on the ES. One tick, after commission gives me 23 bucks. Each time those indicators mentioned above are in my favor I always make money, but with a maximum of 69 bucks, I'm not sure it's worth for me to imply this strategy live and start risking 400 bucks to make 23 to 69? I've heard you always get filled in SIM and not always when trading live. Entering with 2-3 contracts could eventually be interesting, but for some reason I can't help thinking I'm missing something here that will hit me in a bad way once I go live. I think I either need a much bigger account, probably 10K to start going live. So in that respect, yes, I think those "cheap" traders are not ethical.

I did try the micro futures and I believe this is a total scam. This is obviously an instrument designed by brokers to be able to collect commissions from people who don't have the money to trade the minis. The amount of time you need to stay exposed in a trade to make some decent amount of money, like 200 bucks trading micros is ridiculous.

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 bobwest 
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There's a lot there, and I don't know that I can comment all that much, in a way that would be of help. But a few things:

1. If you set a target at a very low amount and your stop at a much greater amount, you are going to lose on balance, just to speak plainly. If you're going to kill a profit at $23 (or $69 or whatever), but you'll take a loss up to $400, you have to have an unrealistically high percentage of winning trades, or the bigger losses will kill you. This kind of strategy is often tried for scalping, and if it is working then power to you -- but for many or most, it simply doesn't. Loss control is one of the main things you need to have a handle on, which means kill a loss quickly and while it's small, unless your trade selection is very, very good.

2. Micros do not have to be a ripoff. I don't know about TradeStation, but many brokers have very low commissions for micros, so your cost is low on a net basis. Roughly, since the point value of the MES micros are 10 percent of the full ES, you can often expect the commission to proportionately low. So then it's just a matter of using a scaled-down version of the full emini. No, you are not going to get rich using micros, but that is not the point. The point is to get out of sim and into something where you are trading with real money, just not much. Real money trading is not anything like sim trading, and once you are relatively familiar with trading, you really should get out of sim as quickly as you reasonably can. Otherwise you will never encounter the true nature and the true stresses of trading, which you will have to do at some point. It may not be now, but it will need to be at some point.

3. Sim fills may not be at all like live fills, especially for limit orders, which is what your targets will be. This is one of many reasons not to rely on sim forever.

4. No matter how you handle the transition from sim to live, always have enough margin that you can ride out a loss or a period of losses, which will come. Do not be underfunded.

I'm not sure these observations will help, but perhaps they will give you something to think about.

The emotional issues of trading are the biggest ones, always. How to deal with them is a very individual thing, and while I can encourage you, I don't have a way to solve them for you. These are things you would have to find yourself.

If you browse through the other threads of this journal, you may find topics and discussions that speak to you and that are useful in your trading.

Good luck, and I do hope you find something that will be helpful.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
 
Phorlan
washington, DC
 
Posts: 7 since Jul 2019
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Thank you for your time, Bob.

 
Phorlan
washington, DC
 
Posts: 7 since Jul 2019
Thanks Given: 0
Thanks Received: 1


Yep, I'm realizing that now.


 



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