US OIL

[Caseynotes]

10 minutes ago, DavidUK84 said:

Just had this message.

"We’re increasing our initial margin requirement for Brent and US Crude. This is due to the recent price action of oil.
Our starting margin rate will be the larger of 80 points multiplied by your trade size or 5% of the notional value of your trade, based on the opening level. This rate is already in effect for new positions opened now, and will apply to any existing positions and working orders from 4pm (UK time) on Friday 24 April 2020."

Could some kind soul please explain to me what this actually means in practice? If I have a £1 a point position on say July WTI, how much additional margin am I actually going to need by 4pm tomorrow?

Thank you.

Hi, if you are a retail client this should not affect you as retail margin for oil is already 10% but if you are a registered professional client you normally only need 1.3% margin, this will be increased to 5% due to the increased volatility.

[DavidUK84]

Thank you. You've explained it much more clearly than they did.

 

[Caseynotes]

1 minute ago, DavidUK84 said:

Thank you. You've explained it much more clearly than they did.

 

👍

[Caseynotes]

Climbs to tag the weekly S3 level.

Daily chart;

[Caseynotes]

US Oil sitting on the weekly S1;

[cate]

On 22/04/2020 at 10:24, CharlotteIG said:

In terms of calculating margins, it is calculated as the higher of (1) 5%, or (2) 80 points times the positions.

For example, if you have one contract on US Crude Oil, then the result at a price of 1394.4 would be calculated as such (1) 10 x 1394.4 x 5% = $697.20, and (2) 80 x $10 = $800. The higher value in this example is $800, which would be the margin in this example.

Hi @CharlotteIG, I've just found this post. The calculation is really helpful, but my question is what number should I put in these formulae for a 0.25 position (the minimum size) in the US Crude 1 euro contract. If I replace $10 with .25 euro I get (1) .25 x 1800 (roughly, at present) x 5% = 22.5 euros and (2) 80* 0.25 = 20 euros. The dealing ticket asks for 45 euros margin which is double (1) and so I'm assuming that calculation is wrong and should use 10% not 5%. BUT, why does the "information" tab say the margin requirement is 80%? Is it about to go up 8 times at 4pm? Because the numbers don't seem to be consistent I'm feeling nervous about what logic has actually been put into the computer system, and what will actually happen to my free capital at 4pm.

[Caseynotes]

This is the message someone relieved and posted on the forum yesterday that I responded to, it says about the 80 points x size or increase to 5% but no mention of 80%

why the deal ticket says the margin factor is 80% instead of 10% but then calcs margin at 10% is a mystery.

[cate]

@Caseynotes Thanks for mentioning that you'd posted about this on another thread. That led me to @CharlotteIG 's worked example.  Yes, that's the email I received and was questioning. By now, my only real worry is what changes they've made to the code that will kick in at 4pm! Just hoping whatever variable is being displayed in the "margin" field (80%) isn't the same one that'll be picked up by the new calculation!

I've had odd things happen on occasion like a minimum stop distance that I'd expect to be about 5 points suddenly expanding when the market gets illiquid to something bizarre like several thousand followed by about 8 decimal places. I have every sympathy with what a nightmare this must be for anyone trying to keep the system functional through all this - just don't want to get on the wrong side of the changes!

[Caseynotes]

yes I perfectly well understand your concern, I'm fairly certain it is for professional clients and have seen them before as there is usually a rumble of complaints on the forum about having to stump up 3 or in this case 5% instead of the usual 1.3%. However, over little misunderstandings do real damage so hopefully IG will respond, though nearly 4pm now. screenshot everything is the best I can think of.

[cate]

5 minutes ago, Caseynotes said:

 screenshot everything is the best I can think of.

Good advice! Thank you!

[dmedin]

8 minutes ago, Caseynotes said:

screenshot everything is the best I can think of.

If you're dealing in serious sums of money you should be capturing all your trading by taking video output, e.g. with a utility like Snagit.  Far too tedious to take screenshots all the time.   www.snagit.com

Edited April 24, 2020 by dmedin

[Caseynotes]

3 minutes ago, dmedin said:

If you're dealing in serious sums of money you should be capturing all your trading by taking video output, e.g. with a utility like Snagit.  Far too tedious to take screenshots all the time.   www.snagit.com

good advice but there's only 6 minutes til 4pm?

[dmedin]

Just now, Caseynotes said:

good advice but there's only 6 minutes til 4pm?

👺

[Caseynotes]

US Oil, Spot, June and July;

[dmedin]

Oil is going to retest its lows bonnie loon

[CharlotteIG]

This just out: CHINA'S ICBC SAYS TO SUSPEND ALL OPEN POSITIONS ON FUTURES PRODUCTS LINKED TO CRUDE OIL, NATURAL GAS, COPPER AND SOYBEANS AS OF 0900 LOCAL TIME ON APRIL 28

[dmedin]

11 minutes ago, CharlotteIG said:

This just out: CHINA'S ICBC SAYS TO SUSPEND ALL OPEN POSITIONS ON FUTURES PRODUCTS LINKED TO CRUDE OIL, NATURAL GAS, COPPER AND SOYBEANS AS OF 0900 LOCAL TIME ON APRIL 28

Is that good or bad?

[Caseynotes]

12 minutes ago, dmedin said:

Is that good or bad?

China Bank warning to clients;

The bank also warned investors of a possible loss of all investments or cash deposits in those products due to commodities market volatility

Barbara Vacher @Barbra_IG

58s

[dmedin]

74% of clients long oil, are they about to get a rude awakening 😮

 

[funkyfred]

if i am short spot US Oil thru 10 pm does that mean I will receive these huge fees that people are complaining about getting charged on the long side?

[Caseynotes]

9 minutes ago, funkyfred said:

if i am short spot US Oil thru 10 pm does that mean I will receive these huge fees that people are complaining about getting charged on the long side?

possibly, generally you pay interest when long and receive it when short but that is not automatic, if any of the factors within the calc is a negative instead of a usual positive then the whole thing gets turned around. So shorts may end up negative and longs positive, see below 

 

[Jossy]

Hi all just looking for a bit of help regarding the fees acquired for holding long term currency positions? for example on GBPCAD the spread is 12 and is rollovered every quarter....doe this mean for one year it would cost €96 per point to hold the position for 12 months? seems very expensive. any help advice on this would be very much appreciated.

Eg: buy at spread 12 and sell at 12 = 24 / Quarter ?

thanks

[Caseynotes]

20 minutes ago, Jossy said:

Hi all just looking for a bit of help regarding the fees acquired for holding long term currency positions? for example on GBPCAD the spread is 12 and is rollovered every quarter....doe this mean for one year it would cost €96 per point to hold the position for 12 months? seems very expensive. any help advice on this would be very much appreciated.

Eg: buy at spread 12 and sell at 12 = 24 / Quarter ?

thanks

Hi, no, so when buying a Forward (FX Future) you buy the ask price, on rollover the position is closed at the bid price so you have paid the spread (the difference between the ask and bid). On opening the next contract you pay the ask price again, IG did used to also give a discount for rollovers but not sure if still do.

[dmedin]

59 minutes ago, Caseynotes said:

So shorts may end up negative and longs positive

Makes perfect sense 🤪

[Caseynotes]

1 minute ago, dmedin said:

Makes perfect sense 🤪

I know, math eh, go figure 🤔

[Caseynotes]

US Oil down to 14

Daily chart with weekly pivots;

[Jossy]

2 hours ago, Caseynotes said:

Hi, no, so when buying a Forward (FX Future) you buy the ask price, on rollover the position is closed at the bid price so you have paid the spread (the difference between the ask and bid). On opening the next contract you pay the ask price again, IG did used to also give a discount for rollovers but not sure if still do.

ok thanks for your reply. so every time the roll over happens i will only have to pay the spread once?

[Caseynotes]

5 minutes ago, Jossy said:

ok thanks for your reply. so every time the roll over happens i will only have to pay the spread once?

yeah that's right.

[Caseynotes]

New podcast discussing current oil supply/demand and rapidly decreasing storage.

Spot and Futures (May's negative price). The USO reverse split. A retail traders trap and Robinhood.

https://www.macrovoices.com/podcasts-collection/macrovoices-hot-topic-podcasts/836-hot-topic-14-crude-oil-black-swan-alert-with-jim-bianco

 

[Caseynotes]

Spot and Futures charts;