MES starter question.

Ivano · Feb 23, 2023

* Motivation
I am scared to trade futures and get margin called, but i did my homework and studied market structure finding that are less manipulated than stocks and back testing them manually find more respondent to my technical analysis intuitions. When market is not bullish and want a small capital exposition to day trade long and short side MES looks ideal on paper. Small exposition = I would buy just 1 MES contract per time till I am not profitable in all the market conditions, I have the modesty to consider myself as fresh meat while i see you have also nicknames based on futures as @Overnight

, I really would be pleased to play this game long time #surviving

** 2 Questions
Although i did some paper trading, I miss the years of experience you have in observing this market.

*** Is stop loss safe?
if I have a stop loss reasonably tight on the right daytrading setup ( I would reckon something between let's say 5-10 ticks) will be the SL have considerable slippage in period of black swan volatility?

*** how much can be a bad loss on average in a day without SL?
In your experience in the worst day of the year how much can i lose for a single MES contract if hypothetically do not have SL? I see in paper trading IBKR that 1 contract is considered 4k, that is 2000% more than my average calculated loss.

Thank you and hope i do not bother you too much while you are busy with today trading journal post in elitetrader. Hope to see you ...in the future.

hilmy83 · Feb 23, 2023

Ivano said:
* Motivation
I am scared to trade futures and get margin called, but i did my homework and studied market structure finding that are less manipulated than stocks and back testing them manually find more respondent to my technical analysis intuitions. When market is not bullish and want a small capital exposition to day trade long and short side MES looks ideal on paper. Small exposition = I would buy just 1 MES contract per time till I am not profitable in all the market conditions, I have the modesty to consider myself as fresh meat while i see you have also nicknames based on futures as @Overnight, I really would be pleased to play this game long time #surviving

** 2 Questions
Although i did some paper trading, I miss the years of experience you have in observing this market.

*** Is stop loss safe?
if I have a stop loss reasonably tight on the right daytrading setup ( I would reckon something between let's say 5-10 ticks) will be the SL have considerable slippage in period of black swan volatility?

*** how much can be a bad loss on average in a day without SL?
In your experience in the worst day of the year how much can i lose for a single MES contract if hypothetically do not have SL? I see in paper trading IBKR that 1 contract is considered 4k, that is 2000% more than my average calculated loss.

Thank you and hope i do not bother you too much while you are busy with today trading journal post in elitetrader. Hope to see you ...in the future.

1. Stop loss is just market orders when triggered. Yes you will see some slippage on market entries/exits sometimes. Unless you use a stop limit order, which will guarantee fill at that price, but why would you take on higher risk than few ticks slips.
2. 4k is not your risk. I think you're confusing margin requirement with contract size. 1 mes = $1.25 per tick (pip). So you can take a look back at how much negative OTE you need to endure for your market if you dind't have stop loss.

I don't know what IBKR margin call requirement is, but their margins is like the worst of brokers, even higher than CME's I think.

Scataphagos · Feb 23, 2023

Ivano said:
* Motivation
I am scared to trade futures and get margin called, but i did my homework and studied market structure finding that are less manipulated than stocks and back testing them manually find more respondent to my technical analysis intuitions. When market is not bullish and want a small capital exposition to day trade long and short side MES looks ideal on paper. Small exposition = I would buy just 1 MES contract per time till I am not profitable in all the market conditions, I have the modesty to consider myself as fresh meat while i see you have also nicknames based on futures as @Overnight, I really would be pleased to play this game long time #surviving

** 2 Questions
Although i did some paper trading, I miss the years of experience you have in observing this market.

*** Is stop loss safe?
if I have a stop loss reasonably tight on the right daytrading setup ( I would reckon something between let's say 5-10 ticks) will be the SL have considerable slippage in period of black swan volatility?

*** how much can be a bad loss on average in a day without SL?
In your experience in the worst day of the year how much can i lose for a single MES contract if hypothetically do not have SL? I see in paper trading IBKR that 1 contract is considered 4k, that is 2000% more than my average calculated loss.

Thank you and hope i do not bother you too much while you are busy with today trading journal post in elitetrader. Hope to see you ...in the future.

1. Doubt you can get by with SL of "5-10 tics"... market is too volatile/noisy for that.. should be more like 5-10 POINTS!

2. Will "stop loss order" be good enough in black swan market? Likely, NO. Recently the ES dropped 120 points in 4 seconds in reaction to news. No stop could have protected you. And that wasn't even any kind of "black swan" event. (Fortunately that kind of thing doesn't happen often.)

A 1-lot in the MES puts you in play for $20,000 notional. Size accordingly.

Ivano · Feb 23, 2023

Scataphagos said:
1. Doubt you can get by with SL of "5-10 tics"... market is too volatile/noisy for that.. should be more like 5-10 POINTS!

how much would be 5-10 points in dollars for MES not ES?

Scataphagos said:
2. Will "stop loss order" be good enough in black swan market? Likely, NO. Recently the ES dropped 120 points in 4 seconds in reaction to news.

how much would be 120 points in $? I really need to understand what is my maximum risk to understand if I can afford

Scataphagos said:
A 1-lot in the MES puts you in play for $20,000 notional. Size accordingly.

What a ****! really for 1 MES i risk all this stuff? I can barely imagine people that risk 200k with one single ES then

I have opened 1 MES paper trade in IBKR just 1 hour ago, and is delta 20 dollars up and down, maybe is safe to play when there are not news and the hours the market is less volatile!!

Scataphagos · Feb 23, 2023

Ivano said:
What a ****! really for 1 MES i risk all this stuff? I can barely imagine people that risk 200k with one single ES then

Yes, that's exactly correct! When you "put in play" a 1-lot in the MES, you've committed to potentially $20,000 at risk.

The MES trades at $5/point... so 10 points would be $50/contract.

Nobody is going to lose $20,000 on one contract unless it trades to zero... but you can get crazy or loose about your stops and lose more money than you expected in short order.

rb7 · Feb 23, 2023

Ivano said:
how much would be 5-10 points in dollars for MES not ES?

how much would be 120 points in $? I really need to understand what is my maximum risk to understand if I can afford

What a ****! really for 1 MES i risk all this stuff? I can barely imagine people that risk 200k with one single ES then

I have opened 1 MES paper trade in IBKR just 1 hour ago, and is delta 20 dollars up and down, maybe is safe to play when there are not news and the hours the market is less volatile!!

With all due respect, I think you should start here before asking any question:
https://www.cmegroup.com/markets/equities/sp/micro-e-mini-sandp-500.contractSpecs.html

Ivano · Feb 23, 2023

hilmy83 said:
2. 4k is not your risk. I think you're confusing margin requirement with contract size. 1 mes = $1.25 per tick (pip).
So you can take a look back at how much negative OTE you need to endure for your market if you dind't have stop loss.

could you please monetize how much would be a bad intraday loss based on 1 MES, and if i can take some precaution as playing when there are not calendar events, in hours statistically with low volatility?

Ivano · Feb 23, 2023

rb7 said:
With all due respect, I think you should start here before asking any question:
https://www.cmegroup.com/markets/equities/sp/micro-e-mini-sandp-500.contractSpecs.html

OK thanks to point me out to some resource and even more for your time.

Snuskpelle · Feb 23, 2023

The market can gap even intraday, e.g. because Powell said something. Price is discontinuous and nobody has an obligation to offer you a price that lets you exit with a limited loss. If you need that, look into e.g. options.

hilmy83 · Feb 23, 2023

Ivano said:
could you please monetize how much would be a bad intraday loss based on 1 MES, and if i can take some precaution as playing when there are not calendar events, in hours statistically with low volatility?

Take a look at contract specs that @rb7 gave . It's no different than calculating your open loss in stocks/forex, assuming you traded those.

Unless you're a pure market virgin. In that case...how you doin (in Joey's voice)