How many contracts to trade?

[bone]

My inference from your OP was that you were asking how Proprietary Trading Firms start out new traders from a risk / sizing standpoint - and I tailored my thread responses accordingly.

Prop Firm Risk Managers and an independent trader account are two very different situations.

Kelly - it is b**hit - what if it says 25% of the account cause this is the case?

 

[Peblo]

That is correct - more on this: with 1 contract - what was your daily loss limit? What was this limit with 3,000 contracts?

 

[bone]

That is correct - more on this: with 1 contract - what was your daily loss limit? What was this limit with 3,000 contracts?

It varies from firm to firm - I will speak in generalizations. Proprietary Trading Firm Principals (the owners whose capital is at risk) will start every trader out with one lots - and if he’s down five or six hundred bucks in a day he’ll get a tap on his shoulder and get told to give up for the day. If a trader loses $30K without showing any promise of consistency he gets let go. Scalpers have an especially hard time with the consistency part from my experience.

As I mentioned before - if you show consistency, they will lever you up so fast it’s amazing. The more self discipline and personal accountability you show, the more confidence the firm principals have in you. I would give away a day, sometimes a week if I really got slammed - but never a month.

The only reason to trade at an exchange registered futures prop firm is to trade stupid ridiculous size and to gain access to products and trading systems that mere mortals simply cannot. Because you are splitting the profits with the firm, paying a desk fee, haircuts on commissions, and you are getting paid on a W-2 and getting taxed at normal rates. So to net $500K in a year you’d better make at least $2.5M trading.

 

[Peblo]

OK - so 1 lot = $600 loss limit; I guess with 10 lots it might be something like $3,000?

 

[bone]

OK - so 1 lot = $600 loss limit; I guess with 10 lots it might be something like $3,000?

It depends on the firm Risk Manager and the Firm Principals but I think your characterization is fair. As a new trader you don’t want to dig a big hole for yourself. You’re getting a draw salary and you have monthly expenses on top of that.

 

[Peblo]

Dear @bone
Is there any chance any of these firms might consider my application, considering I am a "point-and-click" trader with experience at a prop firm, trading on my own and now unfortunately dealing with all those "combines" with the following results:
- 11.6% net profit with a 0.5% initial drawdown over 27 sessions -> got a funded account -> made $5,000 -> blew up
- got another funded account -> made $4,700 -> blew up
- just finished another Combine making $9,200 in one day, trading 3 contracts, with initial drawdown of $1,200. This means I am guaranteed another funded account in about 3 weeks. Will I blow up again? We shall see.

It just seems to be impossible to really "lift off" using these funded accounts. I could trade 1 lot, getting virtually no drawdowns, but I know nobody would care and offer me any financial support because "you know, it is only 1 lot", "yeah, but past performance is not indicative of future results", etc.

Please send me PM if you can help.

 

[bone]

Dear @boneI could trade 1 lot, getting virtually no drawdowns, but I know nobody would care and offer me any financial support because "you know, it is only 1 lot"

That is a very mistaken assumption. They don't care about what size you're trading - they want to see consistency that they can lever the piss out of. That simple. If you blow out two small accounts, you'll blow out two giant accounts.

My advice for you is to take this upcoming opportunity to show consistency over a protracted period of time.

 

[Peblo]

OK, where do I send this? What firm would care? I have more stats like this - passing these "combines" is a cinch.
It was trading ZN only back in Sep-Oct 2019- max position 2 contracts. I traded like that because the less drawdown the better offer I got from the prop firm. My personal ambition is to regularly trade 1,000 lots in ZN and I just f*** now I will achieve it - even a day before I die

 

[bone]

OK, where do I send this? What firm would care? I have more stats like this - passing these "combines" is a cinch.
It was trading ZN only back in Sep-Oct 2019- max position 2 contracts. I traded like that because the less drawdown the better offer I got from the prop firm. My personal ambition is to regularly trade 1,000 lots in ZN and I just f*** now I will achieve it - even a day before I die

I'm not sure what the hell these "combines" are supposed to prove. Certainly not consistency over a protracted period of time.

If you are scalping manually with a mouse - that is not a very good look that real legit futures prop firms like DRW, Jump, Geneva, Peak 6, Belvidere, TransMarket are going to be interested in unless you have a substantial track record over an extended period of time. And even then - scalping manually is really an outmoded way of trading for these firms. Almost all of those types of traders got flushed out of the system by the early 2000's - it's just a very tough way to go about it.

Two month "combines" don't demonstrate much of anything quite frankly. But if you went through two combines over a period of four months and had 70% plus winning days and your losing days weren't markedly worse than your winning days I suppose that might get you an interview.

These guys are doing alot of automated trading and alot of spread trading these days. Manual scalping just hasn't held up the past 15 years or so.

 

[MarkBrown]

These guys are doing alot of automated trading and alot of spread trading these days. Manual scalping just hasn't held up the past 15 years or so.

i would say that in general your very correct about this but i would say the guys who makes the most risk vs reward (profit factor) are still doing it manually.

i have spent all my life in automated trading but i have never seen anything match the power of a human when it comes to trading. including ren as badass as they are there are traders i know who smoke them.

there are some things that just can't be explained, but in general yes bot's will out do a human every day.