Futures For You  |  OCT 2007

Futurs For You by Dan O’Neil

Futurs For You by Dan O’Neil MARGIN FOR ERROR After years of trading stocks exclusively, I’ve recently started trading futures. Unfortunately, I also just received my first margin call. While I was able to get through it without too much difficulty this time, it made me realize I probably didn’t do enough homework on how margin works on the futures side. Can you break down some of the differences between margin in the stock market and margin in futures? A margin call is indeed a harsh welcome to the world of futures trading. But after surviving one, the important thing is to learn more about how margin works in order to avoid another. Understanding the several different kinds of margin involved in futures trading is as essential to succeeding in these markets as anything else you could possibly learn. Having had previous investment experience in the stock market, your knowledge of margin was likely limited to the cash down payment and money borrowed from broker to purchase stocks. But in futures trading, margin has an altogether different meaning and serves a completely different purpose.

by Dan O’Neil