Margin payments

[sak07]

I was wondering what most firms require in the way of margin payments. I have heard most require about 300* the points staked...but that seems like a large amount to me.

I know that Tradindex and Finspreads let you open accounts from one hundred pounds.....which must allow you to trade at least £1 a point.

I am hoping to start small around £1 a poin so can around tell me roughly how much I'd need...or would it simply be dependent upon where my stop loss is placed.

 

[rglenn]

Hi Sak07

Welcome to T2W

The amount of margin you require depends on what instruments you intend to trade.

For example The Dow Futures on Finspreads require a margin of £500 for each point. The Dow daily cash requires slightly less £250 for each point staked.

The minimum amount for someone learning to trade at 50p per point would I think should be about £1000.

Don't Jump in too deeply before you know what you are doing.

All the best

 

[sak07]

Why is it so much....why would they not allow me to trade £1 a point if I had a stop loss limiting my loss to £70...I thought £100 would be enough to open a deposit account and trade a £1 a point.

How about credit accounts...how do they assess if you are credit worthy...I don't suppose a 20 year old student could get a £1000 credit limit...could he....

 

[eminem]

Deal4free now has a margin requirement of 100 points for the daily Dow.

You can get a credit account if you are credit worthy, the SB companies will make all the same checks a credit card company would to assess whether you can have a credit card, i.e no CCJ's, previous credit history, electoral roll check, etc.

 

[rossored]

Sorry have to disagree here : DO NOT get a credit account. Deposit money that you are prepared to lose. If you have a credit account, you'll be owing the bookies money before you know it.

IG index will open a Limited Risk account for you to trade the Dow with about £400, with a compulsory stop (minimum 30 ticks), but its a minimum of £2/point. Also, its a pretty fat spread on daily dow at 11 points but instant execution, no re-quotes etc. And I would stay clear of TradIndex as imo the execution time for a trade is shocking.

Have a look on the review pages for reviews of the various SB companies if you havent done so already, and just get them to send you all the brochures, or check out the various websites.

 

[darrenf]

I beleive that if you want a credit account, the SB company would look for evidence that you have liquid funds elsewhere of significant value which could be called upon in the event of a margin call and could be transferred immediately.

If you don't have any other significant liquid funds, I doubt you would get a credit account.

The reason a "notional trading requirement" is required is that most stops are not guaranteed and a position could go beyond your stop, thus requiring more margin.

In the above example with CMC, a notional trading requirement (NTR) with CMC of 100 on the dow means that if you open a position of £1 per point. You will require £100 to maintain that position. However, if the position goes 70 points against you, you still have a 100 point NTR and you would have to stump up another £70 to maintain the position.

I am not sure what the minimum account size is with CMC but if you opened an account with £500, you would have a bank that would allow a few trades on the daily dow without being shut down if one trade goes against you. Beware though, even with £1 per point, it won't take many bad trades to wipe you out.

Another idea may be to look at IG. I'm not sure if they still do this but they used to allow you to open an account with no initial deposit. You could only ever place trades with a guaranteed stop (which of course makes the spread wider) but that then allowed you to fund each trade at a time, depositing the amount required to cover the guaranteed stop by debit card. ie if you have a 50 point stop at £1 pp, you paid them £50). This is what I did at first, but it was about 3 years ago now.

Hope this is of help

 

[darrenf]

PS. Rossored must have been typing his post at the same time as me as I didn't see it before. However, this confirms that IG still offer a similar type of account to the one I used to have.

Would agree though that the spread is pretty wide and therefore not suited to intraday trading. I would advise sticking to swing/ position trading, going for the bigger moves over a few days with this type of account.

 

[ChartMan]

Sako, £100 account and £1 a point = wipeout in 2 weeks, or less if you're lucky!!!!