A question on Position size, margin, leverage...

P

PohPoh

I'm relatively new to the game. Been trading with $25,000 since January and have grown it steadily to about $35,000 since then. I trade mainly futures spreads.

For the most part, I hold about $5,000 in margined positions at all times and usually in about 3 different markets.

Right now I have 3 spreads in the grain markets where the total margin for the trades is $5,000. I am holding 2 positions of each spread for a net total of 6 total spreads.

My question is this:
am I UNDERutilizing my account size?
Is the other 30K just sitting there wasting away?
Should I be trading 4 or 6 or 10 spreads of each???
What amount can I comfortably margin without risking too much on each one position??

Sticking with what works is what I will do, but there has to be something i'm missing here.

Thanks in advance for your words
 
Quote from PohPoh:

I'm relatively new to the game. Been trading with $25,000 since January and have grown it steadily to about $35,000 since then. I trade mainly futures spreads.

For the most part, I hold about $5,000 in margined positions at all times and usually in about 3 different markets.

Right now I have 3 spreads in the grain markets where the total margin for the trades is $5,000. I am holding 2 positions of each spread for a net total of 6 total spreads.

My question is this:
am I UNDERutilizing my account size?
Is the other 30K just sitting there wasting away?
Should I be trading 4 or 6 or 10 spreads of each???
What amount can I comfortably margin without risking too much on each one position??

Sticking with what works is what I will do, but there has to be something i'm missing here.

Thanks in advance for your words
More...


What does your daily MTM equity curve look like. Are you trading these spreads, or investing in them. Trading, means you cycle them every couple of days, investing means you put them on and wait for reversion to some price.
 
Quote from PohPoh:

I'm relatively new to the game. Been trading with $25,000 since January and have grown it steadily to about $35,000 since then. I trade mainly futures spreads.

For the most part, I hold about $5,000 in margined positions at all times and usually in about 3 different markets.

Right now I have 3 spreads in the grain markets where the total margin for the trades is $5,000. I am holding 2 positions of each spread for a net total of 6 total spreads.

My question is this:
am I UNDERutilizing my account size?
Is the other 30K just sitting there wasting away?
Should I be trading 4 or 6 or 10 spreads of each???
What amount can I comfortably margin without risking too much on each one position??

Sticking with what works is what I will do, but there has to be something i'm missing here.

Thanks in advance for your words
More...
=================
Poh-poh;
No its not wasted any more than a savings account is wasted or insurance reserves.
Would suggest 3 things, ask several people in CME,BOT that trade spreads;
not asking for financial advice , just hints.

Sounds high ,would be for directional;
but the theory in spreads is its safer than directional. ?????

Something i noticed in myself and most other traders; actually it was AN AMAZING consistancy is;
new traders like you were honest enough to admit, new learners ALMOST always trade way too large & blow up.

Actually had to blow up an account or 2 before i became convinced


:p :cool:
 
Spread margins in grains are very low. I imagine you're holding 10-15 spreads at any time. (if you're trading stuff like (CN6-CZ6 ect). A 40% profit in several months of low volitility trading is outstanding! What's your worst DD? Are you ever new crop-old crop?
Quote from PohPoh:

I'm relatively new to the game. Been trading with $25,000 since January and have grown it steadily to about $35,000 since then. I trade mainly futures spreads.

For the most part, I hold about $5,000 in margined positions at all times and usually in about 3 different markets.

Right now I have 3 spreads in the grain markets where the total margin for the trades is $5,000. I am holding 2 positions of each spread for a net total of 6 total spreads.

My question is this:
am I UNDERutilizing my account size?
Is the other 30K just sitting there wasting away?
Should I be trading 4 or 6 or 10 spreads of each???
What amount can I comfortably margin without risking too much on each one position??

Sticking with what works is what I will do, but there has to be something i'm missing here.

Thanks in advance for your words
More...
 
Quote from mschey:

What does your daily MTM equity curve look like. Are you trading these spreads, or investing in them. Trading, means you cycle them every couple of days, investing means you put them on and wait for reversion to some price.
More...

Sorry, MTM curve??
Month to month??
I hold the spreads for around 2-3 weeks MAX...if I can get out in the first few days with 100% return on my margin including commissions and fees, then I bail at least half the position, and put a mental stop on the next day's close.
 
Quote from murray t turtle:

=================
Poh-poh;
No its not wasted any more than a savings account is wasted or insurance reserves.
Would suggest 3 things, ask several people in CME,BOT that trade spreads;
not asking for financial advice , just hints.

Sounds high ,would be for directional;
but the theory in spreads is its safer than directional. ?????

Something i noticed in myself and most other traders; actually it was AN AMAZING consistancy is;
new traders like you were honest enough to admit, new learners ALMOST always trade way too large & blow up.

Actually had to blow up an account or 2 before i became convinced


:p :cool:
More...

Yeah, I've learned from my own mistakes, overtrading Emini SP...I'm new at futures spreading...i've blown up an account before...:( though it was very small...

I don't think spreads are any safer than directional...a spread can go anyway it wants...as far as i know..

Thanks Murray..
 
Quote from Pabst:

Spread margins in grains are very low. I imagine you're holding 10-15 spreads at any time. (if you're trading stuff like (CN6-CZ6 ect). A 40% profit in several months of low volitility trading is outstanding! What's your worst DD? Are you ever new crop-old crop?
More...

I've been trading all different kinds of spreads, but now currently in the grains. in some intercommodity spreads now (oats-corn; wheat-corn; beans-corn)...I have 2 of each...and also some bean spreads which i put on late last week (new-crop/old crop)...

But I'm only using about $5000 of margin. shouldn't I be trading more, if I have 30K left in the account????

I don't want to overdo it, I guess I'm just looking for some kind of rule of thumb here.
If my account is worth X, my average position size should be Y, initial margin for all my positions should be Z..

My DD's have been pretty low, my biggest was about 800$ on a wheat trade....
 
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