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How much is this going to cost me? Futures Margins & Trading Times Explained

One thing to consider when going into futures trading is how much capital you’ll need to trade on a day-to-day basis. This is defined in part by the types of contracts you trade (see previous article) and partially by your margin. Margin is referred to as the cost of putting on a trade. And, it is the amount set aside in your account for each contract you trade. Your margin varies by the market and the session time (day/overnight). Margin for futures is different than with stocks. With futures, we aren’t paying interest and we are not borrowing money. We are setting money aside that is already in our account. Our margin acts as a security deposit for the trades we take because futures are highly leveraged assets. There are 4 types of margins in the futures market:

Initial margin is the minimum capital amount needed to open a trade.

Maintenance margin is the minimum capital amount needed to keep the trade open. If your account falls below this amount your broker can liquidate your position without notice. For example, with a $10,000 account… if your initial margin is $5000 and your maintenance margin is $3000, your broken would liquidate the position if your account lost more than $2,000 (the difference between initial and maintenance margins and your account size). I know it sounds like a high school math problem, but it’s really that simple!

Excess margin refers to the money left over in your account in excess of the initial margin requirements to open positions.

Day Trading Margins are the amount set by your broker in order to enter into a trade in $ value per contract during market trading hours. The day trading margins return to the initial margin requirements once the market closes. Once the market re-opens your broker will switch back to day trading margin requirements.

Many of these margins vary by brokerage, so make sure to visit your company’s website FAQ sections to identify their day/initial margin requirements. One benefit to trading futures is that it provides flexibility with trading times available to trade. Unlike equities and options markets, global futures trading is open six days a week for 23 hours a day. This provides multiple opportunities for traders to trade different market sessions including (US/Aussie/Asia/Euro). A benefit to trading futures is that you can choose to trade faster market sessions like the (US/Euro) or you can trade the slower market sessions like the (Aussie/Asia). Markets are open for two main sessions during the day. The US market session, or Day Session, runs from 9:30 AM – 4:15 PM ET. The US market accounts for 30% of futures contracts traded. The Aussie/Asia/Euro market session, also known as the Globex Session, runs from 4:30 PM – 9:30 AM ET. Globex accounts for 70% of futures contracts traded. Regardless of the session you choose, you’ve got plenty of diversity in your market offerings.

What Type of Trader Are You?

During our last article, we talked about the basics of day trading and how to know if it’s the right fit for you. Once you’ve decided to start your trading journey, you also have to know what kind of trader strategy you want to use. At NeuroStreet we break this down into Trader Type & Trader Style.
It’s important in this industry to assess your trading type or style. This is so you can figure out what works best for you, as an individual. You may be asking yourself – What do I mean by “type” and “style”?
A trader’s type relates to their time horizon, goals, commitment level, and availability to trade.
A trader’s style relates to their trading strategy and approach to making money.

There are three main types of traders:

The Scalper – This is a “fast” trader. They are taking several different trades throughout the day and are in and out of trades very quickly. They focus on making more trades with smaller profit margins and are often available to sit in front of the screen all day to accomplish this.
Day Trader – These traders focus on trends in bull & bear markets and trade on higher time frames than the “scalper” type. They are still trading throughout the day, but are less active in their number of trades and are focused on higher profit margins.
Swing & Position – These traders don’t have the ability to sit in front a screen all day, either because of scheduling conflicts or a full-time job. They still want to trade, but with better tools & resources that allow them the flexibility to maintain their day to day schedule.

Our core strategy is universal and can be traded by all 3 trader types. This is done by simply changing the timeframes they trade on.

A trader’s style refers to the strategy the employ in working with live markets. There are many different styles, although the five most common are:

Trend – Trading with the market’s directional bias.
Reversal – Trading when markets reverse direction.
Counter-Trend – Trading against the market’s trend direction.
Breakout – Taking a trade position within a trend’s early stages.
Momentum – Trading with strong upward or downward trends.

Our core strategy at NeuroStreet focuses on a combination of 3 styles: Trend, Momentum, and Reversal. This allows our strategy to remain effective in changing and dynamic markets. Every day the market will present different scenarios, and, by utilizing a combination of styles, you will be better prepared to react to these scenarios and remain consistent in changing conditions. Our overall “style” is directional at NeuroStreet we trade with the trends and momentums in the market. Even our reversals styles are still utilizing the direction of the flow of capital and accounting for the trend & momentum of the daily markets.
This may be a lot to take in or maybe you’re used to a different style or strategy. The NeuroStreet style will be outlined and featured in greater detail in future blog articles, so you can see if this will be right for you.

The price action is either a continuation or a reversal of a preceding dominant trend, depending on the timeframe you're trading. With continuation chart patterns, you can identify momentary pauses in a market trend, allowing you to set up your positions before the...

How much is this going to cost me? Futures Margins & Trading Times Explained

What Type of Trader Are You?

There are three main types of traders:

A trader’s style refers to the strategy the employ in working with live markets. There are many different styles, although the five most common are:

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