You might call us and say “what is your margin for the E-mini S&P”? Many of you request a specific number like $500 or at times even less. As a trader and developer of strategies, I would like to give you my input and the policy that is formulated by Vision Financial Markets LLC, my clearing firm partner.
Margin Rates are established for day- trading as a percentage of the overnight exchange mandated margin. For example, if the Emini S&P is at $5,500 for overnight margin, we provide 50%, and will grant margins as low as 20% of the overnight rate for certain clients. Essentially, if a customer has 5K, one can trade up to 5 contracts in day-trading ONLY.
We probably lose some potential customers because as opposed to our competitors, we don’t offer $500 margins or open $2,500 accounts (our minimum is $5K).
Let’s face it, at 20% of overnight margin for day- trading, the leverage is approximately 50 to 1. Is $500 or $100 to1 leverage prudent? We do not believe so.
Our core beliefs:
- Futures contracts are VERY leveraged already, and over leveraging could lead to a loss for a beginner trader faster than he anticipated. I have made a video about over leveraging and its impacts:
- Trading is about managing the risk, not working yourself up over a reward. We believe that by educating our customer about risk we can maintain customers for the long term, and get into the habit of “replenishing” your account every few years.
While we believe that most customers are responsible and would chose a reasonable number of contracts to trade with their capital, the difficulty of the markets could still drive one to add contracts to losing positions, reverse too often and skip some elements of prudent risk management. Even the best of traders can at times make the mistakes of an amateur trader; giving him/her a “helping hand” with decreased margins would not help the cause.
We at Optimus Trading Group are dedicated to giving you advanced technology, support desk with trading knowledge, and above all save as much as we can in commissions.
Granting you lower margins and high leverage rates could increase your trading and create additional commissions, however we want you here for the long term and being a little more prudent and less leveraged, let’s grow together.