Starting from scratch
- Thread starter dtrader85
- Start date
No disadvantage for one contract. Heck, second level possibly does not scale up a lot. You may be / are at a disadvantage due to location etc. (order submit time) and if you do that manually due to your reactions (automate it), but smaller size is actually better.
Note that fee reductions at brokers and due to exchange membership depend on monthly rount trip, not single order size. Futures are not stocks - you pay per contract.
I get less to pay at Mirus when I do more than 500 per month etc, but then again it is a per contract fee.
I personally do not like second level scalping - and that is me, fully automating my setups, so I dont have a problem with reaction time and concentration. It just is not good from a risk / reward side. Too many things can go too terribly wrong.
Note that fee reductions at brokers and due to exchange membership depend on monthly rount trip, not single order size. Futures are not stocks - you pay per contract.
I get less to pay at Mirus when I do more than 500 per month etc, but then again it is a per contract fee.
I personally do not like second level scalping - and that is me, fully automating my setups, so I dont have a problem with reaction time and concentration. It just is not good from a risk / reward side. Too many things can go too terribly wrong.
Plenty of people daytrade 5-minute bars. I don't. And I personally wouldn't know how to make the small stop size you are considering work on a 5-min timeframe. The ATR on 5-minutes is too big.
I'm probably stating the obvious here, but let's say that you went long based on looking at a daily chart using a 3 tick stop. And then you get stopped out 10 seconds later. Were you wrong? Not necessarily - but there was nothing to be learned from that trade. Was it a bad trade? You bet your ass. That's an extreme example . . . point being, you need to find the right balance. Higher time frames denote wider stops typically. The opposite holds true for smaller timeframes. I"m sure you already know this, just pointing it out for the other people following along at home
Note: if you like the 5-minute timeframe, check out Al Brooks' stuff . . . it's good, but can be a little dense and willy-nilly imo, but it's all based on 5min price action.
You are going to have to evaluate your entry and exit method on your own. Most people would say that you are disadvantaged, yes, but that's due to psychology considerations more than anything. Nothing I'd worry about if I were you.
I uploaded the attachment below to another thread this morning, but is applicable here as well. It's one way of evaluating all-in/all-out, scale-in/scale-out approaches. It assumes that you have some data work with, but it can give you a good idea how they compare.
Regardless, contract size is the least of your worries right now. You can easily trade one contract as if you were trading in multiples of two. Just move your stop as a theoretical 1st target gets hit. This will give you more focus on the trade having to do this, plus your goal should be to prove out a positive expectancy with one contract starting out. Cheaper to learn that way.
Keep trading.
js
Due to Reg T, a trader with under 25k in the account can only daytrade futures or forex.
This 25k requirement is forcing many under-capitalized traders to take much bigger risk than those with bigger accounts.
It is bigger risk to hold overnight or to trade futures or forex.
This 25k requirement is forcing many under-capitalized traders to take much bigger risk than those with bigger accounts.
It is bigger risk to hold overnight or to trade futures or forex.
Hehe
To tell you the truth, I am testing a variant now of my ym setup that has a stop down to 4 ticks...
....for about 8sth trades.
I found in the vast majority of "down to the stop" cases, i get an immediate breakdown under the bar before my entry trigger. Once this initial period is survived, chances for a stop hit are low, though it may pullback
Naturally this is not human tradable. As in: this stop is handled automatically.
I love my trades fully automatic, even when trading discretionary
To tell you the truth, I am testing a variant now of my ym setup that has a stop down to 4 ticks...
....for about 8sth trades.
I found in the vast majority of "down to the stop" cases, i get an immediate breakdown under the bar before my entry trigger. Once this initial period is survived, chances for a stop hit are low, though it may pullback
Naturally this is not human tradable. As in: this stop is handled automatically.
I love my trades fully automatic, even when trading discretionary