Futures Contract Risk Exposure

Quote from carltonp:

Gents

Still reading your comments...

At the moment, whenever I enter a trade always enter with a pre-defined stop-loss. However, with Richards example, a strategy to use while trading E-minis is not to hold over night.

Would you agree?
More...

There is no "one" way to trade. Some always use stops, others never. Most use at least a discretionary "yikes" stop. Futures do get stops "run on" so if you use too tight of a stop your going to miss a lot of good trades. If you always cover at the end of the day..... crazy (usually bad) things can happen...so many won't even bother to trade afternoons. If you hold every now and then disaster strikes. Learn volatility and how it affects the markets. Even if you never trade options understanding volatility helps.

ex. Last night I couldn't sleep...middle of the night I did an OCO trade...market was going up and I wanted to be short but wanted to go back to bed before my chart could confirm the toppie top. Order to sell ES @1358.75 with a stop at 60.25 if hit then sell at 49... needless to say missed by 2 tic's:( then this am went long:eek: :confused: in the 40's..sigh. I trade a mix of ES futures and options so I will hold an ES position longer than the typical "day" trader. You really do have to get over the ones that get away and just keep your head down and just keep trucking.... or come on ET to pass the time away since you aren't going to be trading the rest of the day!!!!

Again...you have to find your own style and comfort level.
 
Quote from RichardRimes:

Some always use stops, others never. If you always cover at the end of the day..... crazy (usually bad) things can happen...so many won't even bother to trade afternoons. If you hold every now and then disaster strikes. .
More...

Richard,

Thanks again for your feedback.

I always, always, always use stops.

I'm going to show how green I am with my next question .... What do you mean by 'cover at the end of the day?

If you use stops and bad things happen won't the stops ensure that the bad things don't turn into catastrophe's?

Cheers
 
Quote from carltonp:

If you use stops and bad things happen won't the stops ensure that the bad things don't turn into catastrophe's?

Cheers
More...

As long as your stop is hit at the level you have it at, then you'll be fine. And if daytrading futures, this is the normal pace of business.

HOWEVER, stops that are market orders, tell your broker, get me out at this price (or worse) at the market!

Look at a daily stock chart and find gaps. Now if you were long or short and were gapped against, your stop level could get blown by. Your broker will get you at the best available price but that could be significantly different than your planned exit.

Best thing for you to do is get on a demo and just put trades on and see what happens. Just play w/ it live and see. I use Open ECry and their demo is free for 2 weeks I think, which is plenty of time to just see how things operate.

Put a trade on, put a stop on and see what happens.
 
OP-
You can lose every penny you deposit into a futures margin account, plus more.

Despite its recent popularity, I would advise against using brokers' liberal "Day trading margins," which are often $500 to $1000 to trade one E-Mini S&P 500 future contract.

Initial margin is currently about $5,700, and I would advise you deposit AT LEAST this amount if you open a live trading account.

Additionally, I would advise you to USE STOPS EVERY TIME YOU PLACE A TRADE. Like religion. Preferably no more than 5 points, total. You need to practice great risk management.

PM me if you need to know more. GL
 
Brownsfan,

Thanks for responding.

I already actively trade equities with Esignal and IB. I will IB's simulation platform to paper trade Futures.....
 
Quote from Chicago_CTA:

OP-
USE STOPS EVERY TIME YOU PLACE A TRADE. Like religion. Preferably no more than 5 points, total.
More...

Thanks for responding, I will never enter a trade without a pre-determined stop.
When you say 'no more than 5 points, total', are you suggesting that you never risk more than $250 per trade, If trading E-minis? i.e. 50 x 5 x 1

Cheers
 
Quote from carltonp:

Thanks for responding, I will never enter a trade without a pre-determined stop.
When you say 'no more than 5 points, total', are you suggesting that you never risk more than $250 per trade, If trading E-minis? i.e. 50 x 5 x 1

Cheers
More...

Yes, correct. But that's on the high-side.

If you can become comfortable/effective with a strategy where you use about a 2.00-3.00 point stop, I'd say that's closer to ideal, IMO.

GL
 
you're entering a world of pain smokey

tumblr_le7mn8jZ8u1qaw48do1_500.jpg
 
Chicago CTA's advice to study and identify setups where you can safely place 2-3 point stops with ES is wise. If you can't identify setups that allow this, then you need to study chart patterns until you can. Every profitable ES trade I ever had included a stop loss of 3 points or less. Every time I traded with a larger stop loss (to give the trade "room to work"), the trade was a loser. Good with-trend setups combined with solid entries negates the need for wide stops.

With a $20K account, I suggest trading 1 contract. Trading 1 contract ensures you won't be tempted to average down, something you should NEVER do. Also, trading 1 contract means the chances of losing your entire account in a short period of time is slim, because the market would have to halt limit down more than once for that to occur.
 
You must log in or register to reply here.
Back
Top