Margins
Futures contracts represent a large contract value that can be controlled with a relatively small amount of capital.
In order to protect themselves from losses, stock brokers, like Amp and NinjaTrader, require traders to maintain certain margins. The margin required by Amp (broker) for the S&P 500 – “ES” is $400 ($40 for one micro), while NinjaTrader requires $500 of margin for the ES ($50 for one micro). Margins are often different for the various financial instruments, including stocks, indexes, currencies, and commodities. Below are the most used margins on Amp. You can also click here to see the complete list of the current margins on Amp, and also here for NinjaTrader. At the NinjaTrader margin information page you will see trading prices too, which are per side, not roundtrip.
At the current time the regular day trade margin for the E-mini of the S&P 500 contract is $400 with Amp. The margin is $500 at NinjaTrader for the same contract.
Here is an important note for you to know.
Even though the broker information says that they will make a “margin call,” (meaning take your position out of play) at 80% below the required margin, Amp Global often does not do it until around 50% below the required margin. Sometimes I wasn’t taken out of a position until I hit about 25%. Amp charges much less for a margin call using micros, than does NinjaTrader. But NinjaTrader software doesn’t make mistakes when you are trading like Amp. I have had a lot of problems with Amp software making mistakes using TradingView software. Amp says that it is the fault of TradingView, but TradingView says that the issue is not theirs, it is with Amp. You could get around this problem by using a different platform to buy and sell on Amp, while using Tradingview to watch the chart. I have done that with half a screen for each, though you could use two monitors.
Let me clarify the margin stuff with an illustration
Mr. John Trader has $500 in his Amp account, because he had a great day trading micros and is up from earlier in the day, where he started with just $200. But now he has decided to trade the ES (that is the S&P 500 ES) with one mini and the price dropped kind of quickly leaving him with a $100 dollar loss. Now he is right at the $400 margin required to enter a new trade, but he is still in the same trade hoping for the price to go back up. At this point if he got out of the trade, he would still be able to get back into a trade on the ES, but he has decided to wait and see if the price moves up. It moves down two more full points (yes, eight ticks) and he is now at a $200 loss, leaving $300 in his account. He is now at 75% of the required $400 margin to trade the ES. According to the policy of Amp, they should have taken him out of this trade when the account crossed the 80% threshold, but they didn’t (for this fictional story, which has been pretty accurate from my experience). Now, John is hoping it starts moving up, but instead it goes down two more points, putting him at 50% of the required margin, having $200 left in his account.
At this point, If the Amp Global Brokerage takes him out of the trade for a margin call, John will also be charged for the margin call, in addition to his loss. But, for the sake of a happy ending to this short story, Amp did not take him out and the price bounced back up four points, leaving him with a loss of only $100 and he quickly gets out of the trade before it possibly and likely moves back down again. Okay, so I know it would have been a happier ending if it would have gone back up 20 points, but that is very unlikely and most of you would be thinking, “well, that is just not very likely.” So, I don’t want everyone thinking that my example is just rediculous. That wouldn’t help at all.
So, you may have been wondering, “And how much might the charge be for that margin call?” That is a very good question. If you are trading at Amp with one mini, a margin call is $25. However, Amp is very considerate on margin call fees. If you were trading with one micro, it would only be $2.50. That is pretty nice. At NinjaTrader your first margin call is $25 and all after that are $50, whether it is for a micro or a mini.
AMP Futures
NinjaTrader
SPECIAL MARGIN INFORMATION
If NinjaTrader raises the margins, like they often do with volatility, you can go their “Special Margin Update” page to see what the margins are currently, before starting trading for the day. When they raise them, it will most likely be double the current margins for everthing. So, the $500 margin for the S&P 500 E-mini becomes $1000.
Below is the lowest margin available to trade on Amp. It may be useful if your account gets below $40 and you would like one more trade to see if you can bring it up above $40. As you see below, it is the Micro CAD/USD at $31.25. To see the lowest margins for trading at NinjaTrader, click “Margins” here.
I wish I had known all the information above when I first started trading futures. It would have helped a lot and would have saved a lot of money.