# of contracts in regards to capital/profit target?

Quote from Pekelo:

the math goes like this:

(X-Z)/50 >= max. DD in ES points

X: Your capital
Z: broker's minimum margin

So if you have 5K in the account with 1 K min. margin, you can have an 80 points DD before you have to stop trading...
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You can trade up to 25 lots of ES, YM NQ at global futures in a $300 margin account. You'll face a a margin call and be liquidated almost immediately when you place an order for 25 in a $300 account.... Chump change for global as they will surely be the counterparty to the trade.

Add Z*Q to your formula... Q is lot size.
 
Quote from PocketChange:

You can trade up to 25 lots of ES, YM NQ at global futures in a $300 margin account. You'll face a a margin call and be liquidated almost immediately when you place an order for 25 in a $300 account.... Chump change for global as they will surely be the counterparty to the trade.

Add Z*Q to your formula... Q is lot size.
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I never understood that $300 margin deal at Global - who in their right mind would consider using it? Is there some advantage that I'm not seeing?
 
Quote from JerryAdler:

I never understood that $300 margin deal at Global - who in their right mind would consider using it? Is there some advantage that I'm not seeing?
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Definitely. You can blow your account much faster and return to doing more meaningful things than trading.:D
 
Quote from JerryAdler:

I never understood that $300 margin deal at Global - who in their right mind would consider using it? Is there some advantage that I'm not seeing?
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Samething happens to newbies who buy in on the 400-1 forex margins. The forex broker is counter party to the trades and control the data feed and order execution... Smell any conflicts?
 
Quote from PocketChange:

You can trade up to 25 lots of ES, YM NQ at global futures in a $300 margin account.
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Supposed, you have $7500 on your account, at least that is how I understand it. The minimum margin is per contract, otherwise a 2 ticks movement would take the account in the red.
So in the case of global futures, if you only have 1K in your account the max. number of tradable contracts is 3....
 
Quote from Pekelo:

Supposed, you have $7500 on your account, at least that is how I understand it. The minimum margin is per contract, otherwise a 2 ticks movement would take the account in the red.
So in the case of global futures, if you only have 1K in your account the max. number of tradable contracts is 3....
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To open a new position you need $300 per contract. The danger is autoliquidation of open positions when the market dips... If you buy 25 ES contracts with all of your 7500. Every tick down is -$312 which may trigger an autoliquidate to reduce your position to 24 etc.
 
Quote from PocketChange:

To open a new position you need $300 per contract.
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That's exactly what I said and thought, so we are on the same page....
 
Quote from Fast_Trader:

If you're day trading / scalping, I don't see why you would need $15K/contract. It all really depends on your risk management. If you're using 3-5 PT hard stops, that means the most you can lose on 1 contract is $150-250. Personally, I'd be comfortable with $4-5K/contract for day trading. So in your case, trading 2 ES with an $11K account seems reasonable to me. But again, it's a personal decision.
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I agree. Here are several ways you can come up with a realistic number of contracts per capital:

1) it is better not to bet more than 2% of your capital on any trade. For a stop loss of 2 ES-point you need (2*$50)/0.02=5k per contract.

2) another way is by using a daily risk limit of e.g. 6%. This means that you must stop trading when you have 3 max losses in a row (3*2%). This gives you the same value as above (3*$100)/0.06=5k

3) alternatively, if you know the hit ratio of your setup, i.e. percentage of successful trades, and the risk-reward ratio (win size to stop loss) based on your track record. You can use Kelly's criteria as follows:

Margin To Equity (MTE) = P - (1-P) / RR
P: is the hit ratio
RR: is the reward to risk ratio.

For example if your system has 60% winners (P=0.6) and your win size is twice as your stop loss (RR=2),
MTE=0.6-0.4/2=0.4,

If your broker requires a margin of 3k/contract, you need a capital of 3k/(MTE)=3k/.4=7.5k

I hope this helps to make your decision systematically.

Best.
 
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