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# ES Journal - 2017/2018

Discussion in 'Journals' started by Buy1Sell2, Dec 23, 2016.

1. ### Handle123

Morrow be a tight range day?

#431     Jan 24, 2017
beginner66 likes this.

Reader---I'll show an example of margin usage here. It will be generic, but you'll get the idea. For this example, we'll use an ES contract size of \$100,000. (it's a little more than that currently). We'll also assume a trading account size of \$100,000
-----So, for a trade with 10 X margin, you would need to trade enough contracts to control \$1,000,000 worth of ES. That would be 10 contracts (10 time 100k equals 1 mil).
----A trade with 4 X margin, you would need to trade enough contracts to control \$400,000 worth of ES. That would be 4 contracts (4 times 100k equals 400k)

#432     Jan 25, 2017

Therefore a trade at 10 X times margin that makes 5 points, would be a total of 50 points and a trade at 4 X margin that makes 5 points would be a total of 20 points.
-It therefore follows that the same is true for trades that lose those same points.
--So the 10X margin trades carry 2.5 times more weight than 4 X margin trades.

#433     Jan 25, 2017

It can be seen then that a 4X trade losing 30.25 points using our established generic numbers earlier, would be a loss of 121 points. ---and a 10X trade would only need 12.1 points to make up the difference and breakeven.--exclusive of commissions of course.

#434     Jan 25, 2017

This is why even though trades on a per contract basis show a loss for the year, the margin usage actually results in a positive result so far in 2017.

#435     Jan 25, 2017

We are 32 points higher from the buy signal I called out on Monday. If I had traded that signal with 4X margin, I would still be in, but would just now be getting to the gains I achieved by pulling the plug yesterday on the 10X margin trade.--Of course I could have just stayed in with the 10X and really done well, but over the long haul, rules told me that the positive move was to pull trade.

#436     Jan 25, 2017

In other words, normally we would have some pullback and I could re-enter with the 10X trade. If I had been in the 4X trade, I could have just held and let it pullback and rode it higher due to less risk. This time we really didn't have the pullback except overnight and I don't sit up all night watching charts.

#437     Jan 25, 2017
8. ### nonlinear5

My system uses similar calculations when deciding on the position size. I think a more correct term to use in this case is "leverage", not "margin".

So, in your example of account size of \$100K and the ES contract size of \$100K, the position of 10 ES contracts would mean 10:1 leverage.

#438     Jan 25, 2017
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