You’ve come a long way. You’ve successfully traded the stock market for a little over a year and now you are ready to tackle a new opportunity. In your mind you want to be able to maximize your opportunities by using your winning stock market strategies on the Futures market and begin to introduce some leverage. It’s an exciting time and the world is your oyster but before you jump in let’s take a look at why Index Futures are best suited to Day Traders.
Are you well capitalized?
Index Futures are certainly one of the most liquid and highly efficient markets you can trade. One major point that many traders miss is the fact that you need to be well capitilised in order to survive this particular market. If we take a look at the typical margin that the Sydney Futures Exchange (SFE) sets to trade the SPI 200 Futures market, you’ll find you need around $6,000 in margin in order to control just 1 contract. Keeping the example simple, let’s say the SPI 200 is trading at 5,000 points and we already know that the Aussie 200 futures contract trades at $25 per point. That means with $6,000 margin you are controlling 25 times 5,000 or $125,000 worth of index. As you can see we are talking some very large numbers.
How much capital should I have to control $125,000 worth of Index Futures?
Your number 1 priority as a trader is to protect your capital at all costs. If you make that your number 1 priority you won’t be too far away from being a profitable trader long term. One Futures Trading expert here in Australia would suggest you that you need at least $50,000 cash in your account for every 1 contract you trade on the SPI futures contract. Unfortunately the majority of traders you come across trade on less than $15,000 and many under $10,000. As you can appreciate this is putting way too much pressure on your account and stress levels 선물옵션
So Why is the Index Futures Market best suited to day Traders?
Due to the large position sizes and given the need to control your risk, you’ll find that exposing yourself to overnight fluctuations can truly decimate your account. As a result you may find that short term intraday trading allows you to control your risk appropriately and remove any chance of a large overnight movement. Lastly you may notice that many futures brokers give you the flexibility of half margins when closing your position before the day session ends. This means your margin is cut in half to $3,000 per contract which becomes much more manageable.