Futures Trading Account Size?

[tiddlywinks]

you need a monthly max loss,12 months X 2 k is 24 k, will keep you alive for a year,

The problem with this is that the OP states 7 or 8 trades a day with a $200 max loss each.
That means 140-160 trades per month based on 20 trading days.
A MONTHLY max loss of 2k equates to better than a 90% NOMINAL NET win rate.
For most, not realistic.

 

[trader198]

for future trading, better wait for your account size at $50K. the bigger the better.

my recommandation is $100k+.

why?

first, you do not want to be in a scare mode. Mentally you are in good shape. just like walk on a 3meter wide cable, even hang in the air 100 feet high, you feel secure. so you will more likely focus on how to play well the game.

just like a baby, you donot want her to walk on the street to practice walking. let her learn walk under protection,like indoor carpet floor.

The no.1 reason people lose is people are under-funded!

second, you will have more room to be wrong. No one wants to lose money. please admit it. Before you start, donot think about cutting loss, trading properly, think about how to be in a winning mode. A winnind mind is "when you are in the game, you already win". what that means? it means you are ahead of the game first.

look at those runners at the contest, when the signal to run is fired, those who runs ahead first will almost win the game, but if start with lag, almost certain you will lose the game. you must understand the psychological effect of winning/losing, final fight rush carriries weight and resistance!

if you have 3k account, then trade ES. it is a suicide trading. Noone can exercise discipline and accuracy, only machines! since there is no room for you to be wrong either at timing or ideas, it is a losing game. but for 1 lot ES, if you have 50k account, it is no brain, you do not need manage trades too rigiously, or right timing, against you 100points, not big deal. the market will correct to where your entry(99.9999%) you just need patience. wait two weeks, even months, who cares. the only thing you need care is GAIN PROFIT, donot be an active loser!

NO one can predict short-term flunctions precisely, baby traders are even worse.

Trade under means. start with small lot, handlable. then risk house money to bet big.

That is a successful consistent profitable trader's suggestion.

 

[trader198]

that is why paper trading results are always excellent!

 

[MethylSeasons]

This is very good advise to force/enforce discipline.




Assume "pretty consistent" (demo trading) is misleading.
Assume failure.
8 trades per day x $200 loss each x 1 week (5 trading days) = $8000
Cushion for slippage, commissions, fast markets, infrastructure failure, etc = $2000
MAXIMUM INITIAL PLUNGE = $10000.

Trade On!

Ok...... So what do you advise?

 

[wrbtrader]

Ok...... So what do you advise?

This isn't complicated to determine your live trading position size.

I'm going to assume you didn't DEMO via a position size you knew it did not parallel your actual available capital. Therefore, whatever position size you were using that was going well for you on the DEMO, you should use the exact same position size when you "start" your real money trading sessions because this is the "trading routine" you've developed in your practicing.

Later (after several months), if you're consistently profitable and you're account has grown enough to accommodate another contract...add another contract.

My point, you've developed a "trading habit" that you said is working well for you on the DEMO and meeting your trading goals regardless to what others may think. Thus, stick with the trading plan to see if you can duplicate or similar like results when you move from DEMO to real money trading.

End of story.

 

[NoDoji]

second, you will have more room to be wrong. No one wants to lose money. please admit it.

look at those runners at the contest, when the signal to run is fired, those who runs ahead first will almost win the game, but if start with lag, almost certain you will lose the game. you must understand the psychological effect of winning/losing, final fight rush carriries weight and resistance!

I don't think "more room" to be wrong leads to long term success. 90% of the trades I gave more room to, failed and the reason I gave them more room was because they weren't working and I didn't want to cut the loss and be proved "wrong".

Losing trades are necessary for optimal results in a positive expectancy system. As the OP knows he will lose on average 35% of the time. If he tries to avoid those losses he will likely lose all his capital due to commissions and slippage alone because he's unlikely to attain a better result by trying to outsmart a winning system that is derived from a random distribution of wins and losses that define his edge.

http://www.cornixtrading.com/2012/07/rats-vs-yale-students-randomness-psychology/

Trading is not a sprint, it's a game that unfolds over time and involves far more than a straight run at the goal. Watch a game of professional soccer (football) and you'll notice that it takes a lot of backpassing to get to the goal.

 

[Visaria]

I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?

IMHO, i don't think it is. Rule of thumb for me would be having the resources equal to the nominal value of the contract(s).

Would advise looking at different instruments like shares or SPY or crude etf or forex.

Could say don't do daytrading, but people want to try their hand and will not know if they are any good until they have. Quit day trading after a few months if you can't make it.

 

[austinp]

Ok...... So what do you advise?

I advise to start out trading ES in real-time and don't even consider CL as a new trader. The speed at which it moves with your real money = real emotions on the line will cause you to break down discipline in a hurry.

That, and CL can be a real chop monster in violent fashion for a day or two straight, which if you don't monitor you P&L balance while blindly "trading your system" you will soon have a day where the end result causes you to ship your pants.

If you cannot intraday-trade ES with a maximum -2.5 point (-$125) initial stop, your approach needs more work. You cannot consistently target $400 per contract trades in ES because that is often the entire day's range... or more. I think you might have meant your ratio scale of profit to stop is relative to CL in that prior statement but if not, you'll never make consistent $400 per-contract trade profit exits in ES day trades over time.

If you cannot be net profitable in ES with $5,000 or $10,000 initial then you will fail with $50,000 or $100,000 or $1,000,000 balance. The idea that a large account = success is logical but wrong. You won't "figure things out" before you bust a large account... you will invariably start losing, place larger bet sizes to win it back, pull stops to avoid more losses, average down as trades are losing until you puke out one huge loss. Etc.

The fallacy that account size = success rate is wrong. Dead wrong, and lots of six and seven-figures blown accounts out there can attest to it. You either have all your ducks in a row or you do not, and account balance size has less than nothing to do with that fact.

*

Start with ES or NQ or TF. Monitor your daily P&L like a hawk. Have a daily max-loss shutdown limit and honor it. If you are down -$600 from four straight losses, either the market sucks that day or your execution sucks. And it doesn't matter which because something sucks and you are losing money. So stop trading, walk away from the screens, analyze the situation post-market when your head is cleared and objective.

Those are a few realities of day-trading.

 

[Sergio77]

I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?

It depends on how much you will be risking per trade and expected drawdown

Old formula

Account size = margin + worse case drawdown

 

[dbphoenix]

This "don't watch your P&L" business that I mentioned earlier apparently needs some clarification.

There is a deja-vu-what-difference-does-it-make aspect to simtrading, however unconscious it may be, that prompts detractors to claim that simtrading is useless. And, if it is not conducted properly, they are correct. The easiest way to determine whether or not they are correct is to simtrade for two weeks without looking at the P&L, then determine the true winrate. The anticipated winrate figure confirmation will likely disappear like hot donuts.

It is essential that the simtrader, in order to make a reasonably smooth transition to realtime trading, iron out the kinks in his system/method/approach/whatever beforehand. It is also essential that he characterize the market in which he is interested. Otherwise he is being driven out into the country, at night, blindfolded, and dropped off the side of the road with a penlite.

Naturally, once one has begun realtime trading, he must monitor his P&L, particularly if he is prone to lapses in discipline. Otherwise he can be out of the game before the starting whistle.

As to choice of market, the ES is attractive to amateurs, for what reason I've never been able to fathom. The best traders on the planet trade the ES. Is this really whom you want to trade with? Or is it more responsible to hone your skills in some backwater before hitting the big time? And how much does whatever decision is made have to do with rationality and how much to do with ego?