How many contracts should I trade using this method?

Quote from Chuck Krug:

How many contracts should I trade using this method?

Account size: 100k euro
Instrument: Eurostoxx 50 futures
Initial margin: 1347 euro
Maintenance margin: 1078 euro
10 euro per point

Method: stoploss 6- 8 pts
Max times of stop hits: 4 consecutive
Commission for a round trip: 6 euro/ contract.
Avg net profit per contract per month: 1091 euro
Percentage of winning trades: 58.97%
Nr of trades per day: 1.95
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Stop loss = 8 x 10 = 80 + rt commission = 92

What percentage of capital you want to risk per trade? I assume 2%

92/.02 = 4600 per contract. Round this to 5K

Thus, based on fixed risk percent you can afford to trade 20 contracts.

Next you ought to look at the leverage. This is something else. It is subjective. IMO should not be more than 2x.

Based on current prices, the value of the contract is about 29K

With 20 contracts you have

20 x 29K / 100K = ~ 6 x leverage.

To reduce this to 2 you need to trade

200/29 = ~ 7 contracts

The smaller leverage factor protects you in the case of a disaster.

Anyone I knew with leverage more than 3 x eventually got ruined.

Best of luck and watch out for your leverage.
 
You should ask yourself the following:

1) How much money Im willing to risk per trade
2) How much negative trades in a row I may have - in a worst case scenario, not an optimistic one
3) then, at how many wrong trades of blowing up the account I am..

after that you do the math.

In my opinion, at least 20-25 wrong trades in a row should be the minimum answer.
 
Quote from Chuck Krug:

How many contracts should I trade using this method?

Account size: 100k euro
Instrument: Eurostoxx 50 futures
Initial margin: 1347 euro
Maintenance margin: 1078 euro
10 euro per point

Method: stoploss 6- 8 pts
Max times of stop hits: 4 consecutive
Commission for a round trip: 6 euro/ contract.
Avg net profit per contract per month: 1091 euro
Percentage of winning trades: 58.97%
Nr of trades per day: 1.95
These are live trading results, trading 4 contracts with 3 profit targets. 2 are closed when/if T1 is hit, and 1 is closed at T2 and 1 at T3.

Let me know if I forgot anything.

Was planning on trading with 5 contracts, but I think this is not enough, and I should trade more to maximize gains.
Method is traded manually to start with.
All I can say is that entries, exits and stops are generated using proprietary algorithms.
Thanks.
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be sure to let everyone know how you get on:eek:

this is one instance where i think i can predict the future fairly accurately

you only ever have to make 2 choices when trading..you either trade correctly or incorrectly

trading correctly is always the hardest choice to make..but always the best choice

choose wisely!

TO
 
Quote from SnakeEYE:

depending on how much your instrument is offering and how quickly you can disappear not being fooked

:eek: :cool: :p :) :D
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i see the slithering snake is sneaking around the site..spitting out his venom as he meanders mindlessly in the desert of delinquents:D

time to shed your skin..sneaky snake:D

The Oracle
 
Quote from The Oracle:

be sure to let everyone know how you get on:eek:

this is one instance where i think i can predict the future fairly accurately

you only ever have to make 2 choices when trading..you either trade correctly or incorrectly

trading correctly is always the hardest choice to make..but always the best choice

choose wisely!

TO
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wow!what a great advise.your really oracle,indeed!!!!!!!!!!!!
 
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