Yes sorry margin. What is ES,YM and when you say 500 day trade margin ? as I am new to all this and thanks for your reply
The ES is the Emini SP 500, when you see the S&P500 on bloomberg it has an index value of 892 !! that doesnt mean the S&P is worth $892 ...it's actually worth 250*892= $223,000 have you got 223,000 ..to buy 1 S&P NO !! (well maybe) the Emini S&P is 1/5 the size so $50 * 892(index value) = 44,600 = 1 ES contract H9 expiry, you can only pit trade the real S&P500. ES for electronic
so basically if you want to buy 1 ES contract you would pay $44,600 thats at an index value of 892 ......lets say you did and it went up to 893 thats 893*$50 = $44,650 ie: you made 1point in the index or $50.
Margin >> allows you to buy or sell something worth many times more than the amount of money you put down ... ES is worth $44,600 but you can buy or sell 1 ES with having only $500 .....(i'm sure there are better explanations out there ...its new years day ...i'm drunk and bored !!!! so excuse my repetition and spelling) ..... some brokers charge different margins !! ..... exchange margins are around $3188 (something like this) so to buy 1 S&P Mini you would need to place down $3188 for you to be able to buy 1 ES contract worth $44,600 (Leverage!!!)
Most brokers have a different day rate ie: you must be flat at the end of cash close which is around $500 you can get it as low as $400 .....again increasing you leverage .....you can buy / sell something worth $44,600 for $500 or $400 ......$400 seems better (but thats a different story)
To place a trade you (should use a stop) ....example of a ES Trade lets say its at 892 and you think (however you may do this) its going to go up ...... you have $2500 in your account .....with $500 margin the max you can buy is 5 ES cars but dont do this (lol) ......
say you buy 3 lots palce a 1.5 (6tick loss) so margin is $1500 (btw this is not how i do it) you take 1 lot off at 892.50 take 1 off at 893 and 1 off at 892.50
You make on the 1st lot 2 ticks = 12.5 *2 = $25
2nd lot 1 point 4 ticks = 12.5*4 = $50
3rd lot 2 ticks = $25
total = $100 - broker fees (depends lets say $6r/t) so thats $18 = $82 profit your stop was 6 ticks ( 6*12.5 = $75/lot) 3 lots the most you would of lost if you got stopped is $225
account now $2582
Next you buy 3 lots at 894 again margin = $1500 6 tick stop the index pulls back and you get stopped loss = $225 + broker fees $225 + $18 = $243
account $2339 .....
If you see S&P 500 index on a spread bet firm at 892 ..... and you think its gna go up you place a trade of £20/point (or is it pip ... i aint got a clue) lets say point if it goes to 893 you make £20 if it goes to 894 you make £40 but you dont buy at 892 even if the price displayed is 892 they have a spread .. they may give you a price of 891to buy so when you place the trade you are down £20 thats their fee (something like that) and you also need to have a certain amount of money in your account to be able to place the trade (levarage)
,.................... GOD i must be bored !! little messy but hope it helps !!
