Need help trading "size" in the NQ's

Pabst & Peter

Thank you both, and I am back-testing the data (to the degree that I can) see your PM I answered both of you...I won't be posting here anymore on the system.

Thanks again for your help....

J-
 
One way to go about figuring out your maximum allowable position is to calculate your Margin to Equity Ratio or MER...take your largest anticipated position and then divide that into your equity...I forget what the different percentages reflect in the money management world, but you can easily look this stuff up on any websites that have info about CTA's...At the very least, it is something objective that is more conservative than doing something as potentially lethal as trading 300-500 lots...
 
Another method to consider is to figure out what you believe your acceptable maximum drawdown can be (i.e. 10%). Then assume at least a 1 and perhaps a 3 Standard Deviation move and then back into your size.
 
I agree.....NO reason whatsoever to trade more than 5 NQM's at a time, especially in this volatile market. If I can take 2.5 points twice a day on 5 contracts that is $10,000 a month or $120,000 a year. That is a return of over 100% per month since you only need $1850 performance bond/contract. Why would you even think of trading more than 10 at a time? Where do these people get these GRANDIOUS ideas? If you can trade well for 3 months without blowing up, then you increase size. NOBODY on this board trades 300-500 contracts.
 
Quote from jester:

..thanks I am trying to learn money management and proper "bet sizing"....I was afraid when I posted this question,.. my naivette' in this matter would be apparent...but I am determined enough to go ahead and place my head on the block to "learn" from some very bright people that are on these boards....I appreciate your latest posting and I just pm'd you a private question hoping you might be wiling to help another trader (albeit new at "this" particular form of trading larger account size)....learn something new.

I am simply trying to learn how to calculate proper risk -management for a pre-determined account size and how I best should go about that? Any books, other threads on ET or ideas are all welcome...

J-
More...

I would risk 10% of the account size!(if you know the NQ)
 
."..if someone was going to trade a very large account and focus strictly on the NQ's, what is an appropriate lot size that can be moved quickly without a lot of slippage or am I being very naive here?"
Specifically diefine quickly.
 
Many CTA's use an excepted industry standard of 1% of the equity under management compared to the stop used. For example:

$500,000.00*1%=$5,000.00=total loss risked against stop loss being executed.

So that would mean $5,000.00/$20.00=250 points. So if you trade with a stop of 10 points then you could trade 25 lots. I suggest that you scale in with 2 or 3 entries and scale out with 2 or 3 exits.

Also there will be excess funds in your Commodities account which should be held in quarterly t-bills.

Michael B.
 
Quote from Ebo:

I agree.....NO reason whatsoever to trade more than 5 NQM's at a time, especially in this volatile market. If I can take 2.5 points twice a day on 5 contracts that is $10,000 a month or $120,000 a year. That is a return of over 100% per month since you only need $1850 performance bond/contract. Why would you even think of trading more than 10 at a time? Where do these people get these GRANDIOUS ideas? If you can trade well for 3 months without blowing up, then you increase size. NOBODY on this board trades 300-500 contracts.
More...

That depends on the size of your account. If you have half a million dollars then trading 5 contracts (daytrade) is just as stupid as trying to trade 10 contracts with $10,000. Its just another kind of stupid.

Brandon
 
Quote from jester:

All,

I am developing a system to trade the NQ that already shows some promise..not much ..but better that my discretionary trading style.

I have been using 100 tick bar chart using a 20 and 60 MA crossover for a entry signal. Now I have other rules as well (don't want to give away the "holy grail" here..lol) But since this system already is designed to catch larger moves I need a indicator, oscillators etc...to "filter" out the choppy times or to prevent my system from sending a buy/sell signal.

Does anyone have any idea's or should I have provided more information?

Regards,

J-
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Oh Yeah, you need to trade size.
 
Start out by trading 1 lots and if you're consistently successful for 90 days and your equity grows significantly, trade 2 lots... etc.

consistent results, good risk-to-reward, acceptable drawdowns, and self-confident trading will help you meet the goals that you want to reach. :D
 
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