What is leverage, and how does TradeDay use leverage?

Leverage is the ability to control a large amount of a commodity or asset with a smaller amount of capital. In the futures market, that capital is called margin.

We don’t physically put $50,000 or $100,000 in a trading account for you to lose! (The maximum amount we allow you to lose is the Trailing Maximum Drawdown limit).

During the evaluation, we put a simulated balance in your account, this represents the buying power you receive when funded.

Then, when you are funded and live, we provide the margin capital to finance your trading. We place our cash with our broker -Tradovate, and make the leverage we are given available to our traders, so they can trade the required maximum position limit size. 

For example, in the 50K evaluation, we provide you with the ability to trade 5 mini contracts to start, but what are 5 contracts worth? 

Let’s look at an oil futures contract as an example.

Each oil contract traded represents 1000 barrels of oil. So, if you trade 5 contracts, you are trading 5000 barrels of oil. 

Here are some examples of futures contract sizes:

• Oil = 1000 barrels 
• Gold = 100 troy ounces 
• Corn = 5000 bushels of corn

If you want to know the value of each contract, simply multiply the amount of the asset by the price.

• If the Oil price is $71.10, then price x contract size = $71.10 x 1000 = $71,100. This is the value of each futures contract of oil you trade 
• If the Gold price is $1819 , then price x contract size = $1819 x 100 = $181,900. This is the value of each futures contract of Gold you trade.
• If the price of Corn is $5.54, then the value of each contract is $27,700 worth of corn.

How do I keep track of all this?

This all might seem a little confusing at first but don’t worry, we make understanding how much you can trade as simple and transparent as we can.

Regardless of the value of a contract, or the size of the contract, we fix the maximum position size you can hold according to the evaluation program you take out.

If you would like to know more about how much you can make trading 1 contract at a time please click here.