Futures Trading and Initial Capital

[goodgoing]

Quote from acerbits:

I highly recommend not holding futures overnight as a newbie to futures, it is highly leveraged and volatile compared to shares of major listed companies.

I disagree. On the contrary, shares can plunge 50% overnight easily. This is hardly an issue in futures. I think you are doing it the wrong way. The only problem with futures is limits. Some have and some don't.

 

[bone]

I've had several clients start out with $25K in a futures account - I typically have them stay in the very low vol spreads when they first start out in the live markets. By that point in time, they have already been paper or SIM trading the system for a few to several months while tracking the performance metrics - including max drawdowns. Swing trading low vol futures spreads is, IMO, one of the safest and most consistent trading strategies around anywhere. In fact, that is the way I generally trade my own personal accounts.

 

[shazam75]

oh my! I thought futures is less volatile than stocks!

 

[shazam75]

Quote from goodgoing:

Too vague of a question. What is your risk percent? Will you set a stop-loss? What kind of a drawdown do you expect?

40K may not be nearly enough depending on what you will be doing.

I'm trying to locate a paper for you that gives details. I know of a book but it is out of print.

If you can find that paper that will be wonderful to read. My risk percent depends on the commodity - but it is in the area of 4% per trade, yes all my trades have a stop loss which is set as soon as I am in the trade. I hope I do not get too much of a drawdown, but if I hit 20k I am out of the game.

 

[emg]

Quote from shazam75:

oh my! I thought futures is less volatile than stocks!

futures/commodity market is less volatile than stocks?????


Put this on fridge:

More than 90% of small traders lose. They just lose!!

 

[as678]

Quote from shazam75:

oh my! I thought futures is less volatile than stocks!

Careful there friend! Read up some futures trading basics before you go out and experiment!

 

[mikeenday]

if you have already lost 100k and gone through couple years of hard knock, you don't need 40k to trade future, 4000 will do the trick if you only swing 1 contract.

Quote from shazam75:

Hi All

I am thinking of trading the futures maket and was wondering what type of initial capital would be required in ones account? For example, if I wanted to trade Cotton and Cocoa, would $40,000 to start with be OK? I only want to trade 1 contact each.

Thanks

 

[fullautotrading]

Quote from shazam75:

Hi All

I am thinking of trading the futures maket and was wondering what type of initial capital would be required in ones account? For example, if I wanted to trade Cotton and Cocoa, would $40,000 to start with be OK? I only want to trade 1 contact each.

Thanks

It depends on many factors. Given the instrument volatility (present and historical), it's your strategy that will mainly dictate capital requirements.

The choice of the candidates instruments you indicate for trading doesn't seem to me the best one.

It's always better to choose a meaningful folio and carefully prepare to trade it.

Tom

 

[emg]

Quote from mikeenday:

if you have already lost 100k and gone through couple years of hard knock, you don't need 40k to trade future, 4000 will do the trick if you only swing 1 contract.

$4K to swing trade futures/commodity market???


More than 90% of small traders lose. They just lose!!!

 

[bone]

Quote from emg:

$4K to swing trade futures/commodity market???


More than 90% of small traders lose. They just lose!!!

Well, they are surely bound to lose if the plan is to throw money at a market without a viable and tested strategy, no doubt.