Min. amount of contracts needed to reverse

[insomniac]

Hello,

I seem to be having trouble comprehending a response that was given to me by Amp Futures that to "reverse" a one contract position, I need to have enough margin available to cover 3 contracts. Here is the response:

"You hit reverse so a 2 lot goes to the market, since you had a position already there needed to be enough margin for 3 contracts. Call the trade desk if this needs more explanation."

I do not know if it matters, but I did not hit the reverse button. I was running a strategy that is set to exit a position and open a new position going the opposite direction if certain conditions are met.

I was going long one contract at the time and conditions were met in which an EnterShort() was set in action. As far as I am aware this flattens my current position and opens a new one going short. This is at most 2 contracts, but only for milliseconds, and then we are utilizing only 1 contract again, right?

Thanks,
insomniac

[NinjaTrader_Eamon]

Hello,

I seem to be having trouble comprehending a response that was given to me by Amp Futures that to "reverse" a one contract position, I need to have enough margin available to cover 3 contracts. Here is the response:

"You hit reverse so a 2 lot goes to the market, since you had a position already there needed to be enough margin for 3 contracts. Call the trade desk if this needs more explanation."

I do not know if it matters, but I did not hit the reverse button. I was running a strategy that is set to exit a position and open a new position going the opposite direction if certain conditions are met.

I was going long one contract at the time and conditions were met in which an EnterShort() was set in action. As far as I am aware this flattens my current position and opens a new one going short. This is at most 2 contracts, but only for milliseconds, and then we are utilizing only 1 contract again, right?

Thanks,
insomniac

Hello,

Thank you for your note.

You will still have three open contracts out. You will be long the orginal contract then a contract to flaten that position followed by another contract to go short. You will need to contact your broker regarding this issue as NinjaTrader is not a brokerage and we have no control over your margin requirements.

[insomniac]

Yes, I understand that you are not a broker and cannot answer questions pertaining to margin. I was simply trying to understand the amount of contrcts out there at the time of reverse.

However, I guess I still do not completely understand why there are three open positions at one time.

If I have 1 contract open, then I decide to reverse. This sends info to the market to close/flatten the currently open position, then sends an order to open another position going the other direction. If we are first going long, should it not be as follows:

1. Buy 1 contract(going long)
2. Decide to reverse
3. A market order goes out to close/flatten the open position
4. We are now flat and utilizing zero(0) contracts
5. Market order to open short position is filled and now we are utilizing 1 contract.

Please help me understand how 3 contracts are being utilized at the same exact time. If that were the case, then would we not be utilizing 3 contracts when sending a bracket order? Meaning 1 open position, 1 Target order, and 1 stop loss order.

But if that were the case, if a person had only enough margin in their acct. to cover 1 contract, then a bracket order would get rejected.

I am really not trying to argue, I just want to understand, so that I can recode my strategy to work right.

insomniac

[NinjaTrader_Ray]

As per your original post.

This is same as reversing since you were in a position (lets say long) and you now want to go short which means that NinjaScript sends two orders in. One to close the long, the other two open the short.

This requires enough margin for three contracts since you are long 1, and two new orders for 1 contract come into their risk system. They view this as two new 1 lot orders thus 1 open, plus 2 new orders = 3.

[insomniac]

Ok, so if I understand correctly. Would this not be the same for my comment on a Bracket Order?

1 Contract for open position
1 Contract for Target
1 Contract for Stop Loss

For a total of 3 running orders, and thus needing enough margin to cover 3 contracts?

insomniac

[NinjaTrader_Ray]

I suspect not since stop/targets are on opposite side of the market and are likely treated differently since broker knows that both orders are there to close a position and both are not intended to be filled.

Either way, you should get clarification from your broker.

[insomniac]

NT_Ray,

Maybe then you can help me fix this issue by reading the following post:

http://www.ninjatrader-support.com/vb/showthread.php?t=6687

Thanks again,
insomniac