Here we go through an actual trade that we executed and made $1,100 on. We walk you through the charts, where we entered, and where we exited.
The preview window will tell you what the change in initial margin requirement would be for executing a buy on the ES E-mini Futures contract.
As you can see above in the red box, the commission is just $2.
And the initial margin requirement is $2,813.
You can verify this by going to your broker platform and viewing the Margin requirements for the E-mini S&P500 futures security.
As an example, we walk through the Interactive Brokers website:
2) Search for “E-mini” to find the security under CME (Globex)
This represents how much of our money or our margin is tied up from holding 1 contract of this E-mini security. Notice that overnight margin is at $5,625 — so roughly twice the amount.
When calculating return on capital for a futures trade, you can potentially use either the $2.8k or $5.6k as your calculation – depending on your needs.
For example, a $1,000 intraday return on 1 contract will happen when you get 20 ES points in your favor and can represent close to $1,000/$2.8k ~ 33% return on your margin.
Before you can do any of the above actual trading, you’re going to want to make sure you actually have permissions to trade futures in your account.
Not all brokerages allow you to trade futures. For example, Scottrade does not allow futures. Most other ones do allow.
In this example, we use Interactive Brokers as an example:
Login to Account Management -> Manage Account – > Trade Configuration – > Permissions
Under United States row – make sure “Options” and “Futures” are checked.