Day Trading Academy: Investing & Trading Education
As an example, you have purchased a gold futures contract with a contract price of $1,700 per ounce. The broker took the margin deposit of $7,425 from your account. Because the contract is for 100 ounces, the contract value is $170,000. The gold futures has a minimum price change -- "tick" -- of $0.10 per ounce. If gold increases by 10 ticks or $1, you have a $100 profit on the trade. At the end of the day, any profit is swept into your brokerage account. If the price of gold falls, the loss comes from your margin deposit. The maintenance margin amount for the gold contract is $6,750, so if your gold futures position loses more than $675, the broker will ask for more margin deposit.
To trade futures, you need an account with a registered commodity futures brokers. Commodity brokers must be registered with the Commodity Futures Trading Commission and the National Futures Association. A futures broker will provide trading software, education, training and trading advice to futures traders. The level of assistance can range from providing software and online training materials, to actual trading guidance, to futures account management in which a commodities trading adviser handles the actual trading for investor accounts.