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What are margins in commodity trading?
In any commodity market, the commodity margin is the minimum amount of money that must be available with the trader before he/she can buy or invest in any commodity option. Here it can be thought of as collateral that allows a trader to engage in commodity trading.
What is a margin in commodity futures?
Understanding Margin Futures margin is the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity.
Why margin is needed for futures trading?
Margin tells traders how much capital may be needed to enter a position, and how much is needed to keep it open.
How many types of margin are there?
There are four types of margins available in MS-Word. They are left, right, top and bottom.
What is the difference between margin trading and futures trading?
Margin trading involves borrowing assets from a lender to trade more than you normally could. Futures involve an agreement to transact an asset on a specific date at a specific price and allows traders to bet on what they think the market will do in the future.
What is margin requirements?
A Margin Requirement is the percentage of marginable securities that an investor must pay for with his/her own cash. An Initial Margin Requirement refers to the percentage of equity required when an investor opens a position.
Why MCX margin is high?
Many brokers raised their margins to cover price volatility. India’s largest commodity derivatives exchanges, the Multi Commodity Exchange (MCX), raised trade margins to as high as 59.12 per cent on Monday to prevent its trading clients from defaulting due to a sharp decline in crude oil prices.
What is crude oil margin?
In April, MCX had levied an initial margin of 100 per cent on crude oil contracts with minimum initial margin of ₹95,000 per lot after crude prices plunged below zero. Further, an additional margin of ₹50,000 per lot was also levied on all other crude futures and on short side of crude options contracts.
What is an example of a margin?
Understanding Margin For example, if you have an initial margin requirement of 60\% for your margin account, and you want to purchase $10,000 worth of securities, then your margin would be $6,000, and you could borrow the rest from the broker.
Which is better margin or futures?
The one important difference you need to remember is that when you opt for margin funding, you pay interest on the amount funded. On the contrary, when you opt for futures trading, there is no interest payable by you. Of course, you do indirectly pay interest when you opt to roll over your position to the next series.