Stocks are temporary loans, for all intents and purposes. You acquire a certain amount, based upon your wherewithal, and then you take possession of a certain amount of certificates entitling you to the value of your 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.
Hard stocks, however, lead to hard losses. You may prefer the softer margins of the futures market. To begin this volatile 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 initial investment margin for a commodity, therefore, 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.
Now, thanks in part to the Online Trading Academy, let's indulge in a borrowed 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, as set by the Chicago Mercantile Exchange, is $5,625. This means for $5,625 you can determine a futures contract worth $49,000. This represents a 9:1 leverage ratio.
This tremendous leveraging power, however, comes at the cost of liquid capital. Replenishing undervalued or depleted e-minis means having instant access to cash. Your Roth 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
Hard stocks, however, lead to hard losses. You may prefer the softer margins of the futures market. To begin this volatile 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 initial investment margin for a commodity, therefore, 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.
Now, thanks in part to the Online Trading Academy, let's indulge in a borrowed 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, as set by the Chicago Mercantile Exchange, is $5,625. This means for $5,625 you can determine a futures contract worth $49,000. This represents a 9:1 leverage ratio.
This tremendous leveraging power, however, comes at the cost of liquid capital. Replenishing undervalued or depleted e-minis means having instant access to cash. Your Roth 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
