Futures Day Trading Margins: Intraday Margin
4 stars based on
Trading margins represent a deposit with the broker to protect both the trader and broker against possible losses on an open trade. With this deposit, day traders are able to trade instruments valued much greater than the margin price via leverage.
With the general concept of margin in mind, futures trading margins consists of three margin types:. At a high level, Intraday Margin is the minimum account balance required to enter one contract during trading hours. At its most basic, the Intraday Margin of a product represents the minimum balance an account must maintain per contract while in a trade.
The differing margin requirements for the ES and CL primarily stem from the unique characteristics of each instrument.
There is generally less liquidity and higher volatility in the CL, so a higher margin requirement is necessary to protect against large moves in the opposite how margin works in futures trading of a live position. As a result, Jane could chose to trade:. While unadvised, Jane could theoretically trade up to 20 contracts of the ES or 10 contracts of the CL at once based on her account size. A market move in the opposite direction of an open position at Full Leverage how margin works in futures trading likely trigger a margin call from the brokerage trade desk.
Under this circumstance, Jane would have the opportunity to satisfy the margin requirements, and continue to trade, by depositing the necessary funds, or face liquidation from the trade desk.
Should liquidation occur, Jane would be responsible for the losses of the trades in addition to a liquidation fee. Traders should always take note of the different Intraday Margin requirements of the contracts they are trading. Information regarding margin requirements, along with other product specs, are available here. With the general concept of margin in mind, futures trading margins consists of three margin types: Intraday Margin for Futures Day Trading At its most basic, the Intraday Margin of a product represents the minimum balance an account must maintain per how margin works in futures trading while in a trade.
Since how margin works in futures trading ES is a more liquid market and has more volume, an equally large move of ticks in the ES would generally occur over a longer period of time.
Because more contracts would be traded in a tick ES move, traders have greater opportunities to exit a position before an account is driven into debit, thus the day trading margin for the ES is less than the CL. As a result, Jane could chose to trade: Next Post Swing Trading: