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Futures Margin: Day Trading vs Overnight Trading

futures position overnight

When learning to trade futures, it is crucial for new traders to understand futures margin requirements and how these requirements can change depending on how long you hold or carry a position.

Specifically, the margin requirement for carrying a position between trading sessions is significantly greater than the margin required to hold a position only during regular trading hours. It is important for futures day traders to be aware of such margin requirements and their respective time cutoffs to exit positions prior to the close.

What is an Overnight Position?

An overnight position is a position, long or short, that is not flattened prior to the end of the trading day. To carry this position past the close, the initial margin requirement set by the applicable exchange must be met. If the trading account does not have enough funds to meet these requirements, the position may be liquidated by the broker and additional fees will likely be incurred.

If the position remains open, it is also possible the account will incur a margin call, or a request from the broker to bring margin deposits up to their required levels. The client then has 24 hours to wire funds into the trading account to meet the initial margin requirement.

In addition to margin requirements, it is important to understand the risk associated with holding a position overnight, such as exposure to potential adverse price movement occurring outside of regular trading hours.

Intraday Margin vs Initial Margin

  • Intraday margin is the per-contract minimum amount of money required in your account to hold a position during regular trading hours.
  • Initial margin is the per-contract minimum amount required in your account to maintain a position overnight. Initial margin is significantly larger than the intraday margin requirement.
  • Below is a diagram showing NinjaTrader Brokerage’s intraday and initial margin requirements for Micro E-mini S&P 500 futures (MES). As you can see based on the escalating margin requirements, it is extremely important to be aware of the account size needed to hold a position past the market close.

    When Is the “Close” in Round-the-Clock Futures Markets?

    Futures products trade nearly 24 hours a day, 6 days a week. This allows for more trading flexibility and the freedom to manage positions almost any time of day. However, this can also make it confusing to track the official “open” and “close.”

    To avoid accidentally carrying a position past the close, being aware of a futures contract’s trading hours is imperative for day traders. For NinjaTrader Brokerage clients, intraday positions must be closed 15 minutes prior to session close. This is 3:45 pm CT for the majority of the popular CME contracts which is 15 minutes before the official session close at 4:00 pm CT.

    Trading hours for futures contracts are determined by their respective exchanges. Each category, such as energy or equity index, has its own opening and closing times.

    • CME Group futures products trading hours can be found here.
    • ICE futures products trading hours can be found here.
    • Eurex futures trading hours can be found here.
    • CBOE futures trading hours can be found here.

    Monitor Margin to Avoid Violations

    It is important to remember that margin requirements are the minimum amount needed per contract to maintain a position. While position management is up to the individual trader, it is recommended to give a trade ample breathing room to best avoid margin violations.

    Financial leverage can result in losses greater than the initial margin and traders should be aware of the risks involved in trading futures. Risk management policies are strictly enforced and may result in execution fees as well as higher day-trading margins.

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