SSF Question regarding MTM

[#1]

Hi guys, I have just started trading SSF its not going too bad so far, but one thing i dont understand is MTM I traded Nsp the other day and it went up, I made a profit of around R1100 for the day it closed and the day after my profit showed R650 around R450 less after MTM. I have read up about it and it still doesnt make sense to me. Please can someone explain to me how it works?

[gareth01]

I also queried as I was also new to SSF. Simon, noted that generally after 6:30pm, SAFEX trades are updated (which determines the MTM values) for that day's trade. (Hence, your profits going down). I asked Simon if there was anyway that an "indicative MTM" value could be reflected, to give a much true indication of daily profits or loss, but this is not possible. So the answer in short is, if you up R1100 that day, take the profits (unless you are certain the trend you have selected is going to continue, hence your proftis are going to get bigger with MTM).

[suki]

which is better (a) open a new futures trading account or (b) enable futures trading on your existing account?

[#4]

So what you saying Gareth is to sell before close to avoid MTM deductions on your profits?

[gareth01]

100% correct Gregs..now if you are short, which I have recently tried, your profits (provided of course the underlying share went down) after MTM, your profits increase further....so in this case, I would not want to sell today, because I would only maximise my profits after MTM (hence I sell first thing the next morning)... Hope I make sense... Will get out of my short positions today (after US figures), then long into those beaten down quality shares!!!

[TOPIX]

Two things - MTM is generally the same as the Ruling price. It is used as a fair estimate of the value of the future to calculate the margin requirements. You cannot trade at the MTM value. You buy at the offer price and sell at the bid price. After the market close, the MTM is used to value the portfolio. The next day when the market opens, the bid price is used. The bid price in the morning may be higher/lower than the previous MTM. That explains the difference you see.

[#7]

Aaah makes sense, thanks for the reply Gareth, much appreciated.

[#8]

Thanks Topix, im going long with MTN today, its been hammered lately.

[SimonPB]

nah, loots of mis-undertanding here .. the SSF price tracks the underlying price perfectly during the day and we ppay/deduct cash as per profit/loss .. then aroudn 7 or 8 in the evening we get the MTM from SAFEX, this si the ruling PLUS their dividend assumption .. w the ruling may e a dirty price on less liquid stocks, and who knows what their div assumption is ?? we ahve priced on our assumotion during the day, now we have to use theres ..
point is that MTN is a meaningless price, if you 'loose' profit from MTM and share oopens where it closed, you will 'gain' the profit on first trade the next mroning .. the only issue is if MTM takes money out, you can't spend it to place new orders into the market over night ..

CFD's do not have this problem, as we manage the MTM and divs are paid, so easy and clean .. and slightly cheaper ..

[gareth01]

Thanks Simon once again for the clarity....and opinion on the cheaper CFD option. Will check out the educational powerpoint on CFD... Happy trading. Just banked my 29% for the week going short!!!!

[SimonPB]

CFD's cheaper in that they 0.35% comm vs. 0.40% comm .. also they don't expire, so no roll over costs ..
BUT they are not exchange traded, so you are taking counter party risk, in other words if SB goes bust you stand in the Q with others owed money ..

[#12]

FACT- 90% of people that trade SSF's lose money, so be very careful and don't go toooooo big.

[#13]

FACT- 90% of people that trade SSF's lose money, so be very careful and don't go toooooo big.

[suki]

where do u get this educational broucher? please share.

[SimonPB]

help and education ..