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Futures market

At the risk of repeating ourselves, it's important to note that futures trading is not for everyone. In finance, a futures market contract (more colloquially, futures) is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today (the futures price or strike price) with delivery and payment occurring at a specified future date, the delivery date. The contracts are negotiated at a futures market exchange, which acts as an intermediary between the two parties. The party agreeing to buy the underlying asset in the future, the "buyer" of the contract, is said to be "long", and the party agreeing to sell the asset in the future, the "seller" of the contract, is said to be "short". The terminology reflects the expectations of the parties - the buyer hopes or expects that the asset price is going to increase, while the seller hopes or expects that it will decrease in near future.

To minimize credit risk to the exchange, traders must post a margin or a performance bond, typically 5%-15% of the contract's value. To minimize counterparty risk to traders, trades executed on regulated futures market exchanges are guaranteed by a clearing house. The clearing house becomes the buyer to each seller, and the seller to each Buyer, so that in the event of a counterparty default the clearer assumes the risk of loss. This enables traders to transact without performing due diligence on their counterparty.

Margin requirements are waived or reduced in some cases for hedgers who have physical ownership of the covered commodity or spread traders who have offsetting contracts balancing the position.



  1. Clearing margin

    : Clearing margin are financial safeguards to ensure that companies or corporations perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers.
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  1. Customer margin

    : Within the futures market industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfillment of contract obligations. Futures Commission Merchants are responsible for overseeing customer margin accounts. Margins are determined on the basis of market risk and contract value. Also referred to as performance bond margin.
  2. Initial margin

    : Initial margin is the equity required to initiate a futures position. This is a type of performance bond. The maximum exposure is not limited to the amount of the initial margin, however the initial margin requirement is calculated based on the maximum estimated change in contract value within a trading day. Initial margin is set by the exchange.

    If a position involves an exchange-traded product, the amount or percentage of initial margin is set by the exchange concerned. In case of loss or if the value of the initial margin is being eroded, the broker will make a margin call in order to restore the amount of initial margin available. Often referred to as "variation margin", margin called for this reason is usually done on a daily basis, however, in times of high volatility a broker can make a margin call or calls intra-day.

    Calls for margin are usually expected to be paid and received on the same day. If not, the broker has the right to close sufficient positions to meet the amount called by way of margin. After the position is closed-out the client is liable for any resulting deficit in the client's account. Some U.S. exchanges also use the term "maintenance margin", which in effect defines by how much the value of the initial margin can reduce before a margin call is made. However, most non-US brokers only use the term "initial margin" and "variation margin".

  1. The Initial Margin requirement is established by the Futures exchange, in contrast to other securities' Initial Margin (which is set by the Federal Reserve in the U.S. Markets). A futures market account is marked to market daily. If the margin drops below the margin maintenance requirement established by the exchange listing the futures, a margin call will be issued to bring the account back up to the required level.
  2. Maintenance margin

    : A set minimum margin per outstanding futures contract that a customer must maintain in his margin account.
  3. Margin-equity ratio

    : Margin-equity ratio is a term used by speculators, representing the amount of their trading capital that is being held as margin at any particular time. The low margin requirements of futures results in substantial leverage of the investment. However, the exchanges require a minimum amount that varies depending on the contract and the trader. The broker may set the requirement higher, but may not set it lower. A trader, of course, can set it above that, if he does not want to be subject to margin calls.
  4. Performance bond margin

    : The amount of money deposited by both a buyer and seller of a futures market contract or an options seller to ensure performance of the term of the contract. Margin in commodities is not a payment of equity or down payment on the commodity itself, but rather it is a security deposit.
  5. Return on margin (ROM)

    : Return on margin is often used to judge performance because it represents the gain or loss compared to the exchange's perceived risk as reflected in required margin.

    ROM may be calculated: (realized return) / (initial margin).
    The Annualized ROM is equal to: (ROM+1)^(year/trade_duration) - 1.
    For example if a trader earns 10% on margin in two months, that would be about 77% annualized.


The daytrader

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MySpace and Facebook are both powerful marketing tools that aren't exploited at their full potential. Even they have hundreds of millions users, only a very small part of these users know they can earn thousands of dollars using MySpace or Facebook.

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Above 2 sections will take you through a detailed how-to article to explain how you can make money with MySpace. Sure, it's easy to get frustrated by the overblown bells and whistles that go along with a typical MySpace visit, but there are many reasons why it's still a useful tool for musicians looking for gigs, fans, and exposure.

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