It means I would have 12,250 roughly behind each contract. Total value of one contract being roughly 122,500. For example,at 2 X leverage, I would have roughly 61,250 backing up each contract. --based upon today's pricing.
What it does basically is allows me to bring my stop in much closer and when right reap a much larger benefit. For example if I were to lose say 12 pts ($600) it would represent about 5% of the cash allotted to the trade. However since trading acct are at or less than 20% of TLNW, then the loss on the big picture is only about 1 percent or a little less.----and I advocate not losing more than 2 percent of TLNW on any one trade/idea. Now, if the acct is the entirety of TLNW and your balance was 12,250, then the max stop loss would have to be say 4 or 4.5 pts. The acct would not be able to sustain a 12 pt loss.
Hmm, you lost me there. 12,250 behind a single contract valued at 122,500 is 10X leverage. At that same leverage ratio, having 61,250 behind a contract means the contract value would be 612,500 for 10X leverage? Not sure where margin comes into play there at some 2X number... I THINK what you meant is that 61,250 behind the contract value of 122,250 is 2X leverage, not margin.
If I put 61250 behind a contract value is at 122,500, I am trading at 2X leverage. If I have 61250 in trading acct and I want to trade at 10 X leverage, I can trade 5 contracts instead of 1. This necessarily forces me to bring my stop in closer---not 60 or 90 points.
I occasionally speak about leverage and use the term margin. Sorry. I edited my earlier posting to leverage.
I believe people are most interested in the intraday trades so I will focus on getting those in the journal at least for a while. My longer term trades can last weeks and months.