I am new in trading and want to trade in Futures. I used the span calculator for that and get the following result :

                  Buy 1 lot      Sell 1 lot
Initial margin     31,225         30,983
Exposure margin    18,729         18,772
Total margin       49,954         49,755

I have some general doubts regarding this result.

When I am buying (Not intraday, I want to take position) :

  1. Do I need at least the total margin amount 49954 in my trading account ?

  2. Suppose I have free cash of Rs. 1,00,000 in my trading account. If I buy 1 lot, what would happen to this amount?

When I am selling :

  1. I can understand that the broker charges exposure margin for any potential loss while buying. But when I am selling the future contract why again there is a margin amount ?

Could you please resolves these doubts. Thanks in advance.

1 Answer 1

  1. Yes, you need at least that amount in your account to take that trade but it is recommended you have more, because if the trade starts going against you your required margin may be more than the initial margin.

  2. If you start off with 100,000 and take a long trade (buy) you will be left with 50,046 available capital straight after the trade is executed. If you take a short trade (sell) you will be left with 50,245 available capital straight after the trade is executed.

  3. The Sell Margin is for when you short sell not for when you sell an open long position.

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