I am starting to wonder this also or he might just be your run of the mill ET wiesel.
ES Journal - 2016
- Thread starter Buy1Sell2
- Start date
But for simplistic example's sake, let's assume contract value of 100k (it's slightly larger than that right now) and a trading account value of 10,000. That means that you would be able to trade 1 contract for 10 to 1 margin. Note---swing trades at 4 to 1 and position trades at 2 to 1 are not able to be made with 10k account size. You would only be able to trade SPY . --So 12.25 points with one contract equals 612.50 minus commissions. That is 6.125 percent of 10k account. --122.5 points is 6,125.00 and is 6.125 percent of 100k contract value. So it follows that earning 12.25 pts at 10 to 1 margin is percentage-wise equivalent to 122.5 pts at 1 to 1 margin (100k behind each contract)
It's not. It's 10 to 1 margin.
In order to trade 10 contracts at 10 to margin in the example, one would need 100k in the trading account.
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LOL... how is this simple? Listen, who cares about the value of 1 ES contract. All that matters is how much your broker says your intraday margin is and how many contracts you trade. All the other stuff you mention is I think pointless. Your account size doesn't matter, and the only margin that is important in this discussion is the margin set by your broker/CME so that you can trade a contract and maintain this position by having enough funds in your account to keep this contract open. (ie. not drop below the maintenance margin for intraday, or the overnight margin if you are holding overnight)
How is this relevant to trading futures contracts? Actually, don't answer because your answer will be far too complicated and still not make any sense.
Fortunately, for the most part, you at least post an entry, a stop, and then an eventual exit, and that is all that is necessary for making live calls.
What is your PNL for 2016 ytd for all ES trades?
This is incorrect. The margins established by the exchange and/or broker are far too liberal and if followed are not prudent undertakings. You must relate your trading account size to the value of the contract and disregard exchange/broker minimums. Do you agree in my example, that a contract worth 100k is traded at 10 to 1 margin when account size is 10k?
Like I said, in my opinion, it doesn't matter what the value of the contract is. All that matters is average stop, average profit, win rate, some reasonable buffer for consecutive losses, etc. A 10k account is plenty for a trader with an edge to trade 1 or 2 contracts.
This is exactly why most traders fail. They do not take into account the amount that they could lose. A trader with 10K account is leveraging 100k and so is trading at 10 to 1 margin in my example. So percentage-wise each point lost is much greater than if they were trading at 1 to 1 margin. It's all about the percentage of your Total Liquid Net Worth that you can lose that's important --