When one acquires a certain amount of stocks, based upon the market price, one is entitled to an equivalent amount of certificates entitling one to the aforementioned investment. When the market value of these stocks increases, you can sell your stocks for the market value, entitling you to the difference. Hence, when yours stocks "go up" you make a profit. But, when your stocks lose value, you quite clearly lose value as well.
Now, rather than deal with hard market of stocks, you could opt for the softer market of futures. To begin your career as a futurist, you need only pony up to the margins set by each commodity on the market. So, for instance, you like that the margin (think of margins as ante in a poker game) for wheat -- or let's say sugar. The margin for a commodity may be $5,000 or so.
Once you have invested the initial margin amount you may begin to wheel and deal using smaller increments known as e-minis. Now, it may help you to think of this margin in term of your own home. Imagine putting down 20% of your home's value in order to steer its potential open market value. Heady stuff, indeed. But be wary and stay focused or you will suffer the fate of many a day trader in the 1990s.
Courtesy of the Online Trading Academy, let's indulge in a brief, but informative example. Let us presume that a given e-mini trading price is valued at $980. The market value is computed by taking the dollar value per e-mini point ($50) and multiplying it by the last trading price. Thus, $980 multiplied by $50 equals $49,000. Now, say the initial margin value is $5,625. This means for $5,625 you can determine a futures contract worth $49,000. This represents a 9:1 leverage ratio.
The leveraging power of futures and e-minis is significant, but futures trading will require easy access to a great amount of liquid capital. Your IRA or trust fund will do you no good. If the market moves against your futures, you will be responsible for meeting your margins should they fall below market value. Failure to do so will handicap your ability to trade as quickly and lucratively as you might like. - 31869
Now, rather than deal with hard market of stocks, you could opt for the softer market of futures. To begin your career as a futurist, you need only pony up to the margins set by each commodity on the market. So, for instance, you like that the margin (think of margins as ante in a poker game) for wheat -- or let's say sugar. The margin for a commodity may be $5,000 or so.
Once you have invested the initial margin amount you may begin to wheel and deal using smaller increments known as e-minis. Now, it may help you to think of this margin in term of your own home. Imagine putting down 20% of your home's value in order to steer its potential open market value. Heady stuff, indeed. But be wary and stay focused or you will suffer the fate of many a day trader in the 1990s.
Courtesy of the Online Trading Academy, let's indulge in a brief, but informative example. Let us presume that a given e-mini trading price is valued at $980. The market value is computed by taking the dollar value per e-mini point ($50) and multiplying it by the last trading price. Thus, $980 multiplied by $50 equals $49,000. Now, say the initial margin value is $5,625. This means for $5,625 you can determine a futures contract worth $49,000. This represents a 9:1 leverage ratio.
The leveraging power of futures and e-minis is significant, but futures trading will require easy access to a great amount of liquid capital. Your IRA or trust fund will do you no good. If the market moves against your futures, you will be responsible for meeting your margins should they fall below market value. Failure to do so will handicap your ability to trade as quickly and lucratively as you might like. - 31869
About the Author:
The futures market is a market ripe with e-mini trading potential. To experience the leveraging power of the futures market, one must have the viable skills to make it a lucrative endeavor. Best of luck.
