I will start by trading 50 shares of SPY (and trade 50, 100, 200, 300, 400 then 1 contract of ES futures, etc). How would I increase my position size gradually until I max out (1 contract per 5-10k)? Given I trade the first two hours and I do about 1-3 trades per day, how many (net profitable) trades should I do per size? 10? 20? Thanks! PS Alexander Elder recommends you increase your size by one unit every time you have two profitable weeks in a row, and cut down your size by one unit after every losing week - but I feel that would be too slow since a single losing week can set me back a whole month.
A slower position size increase schedule is preferable to blowing up. Always think defense first. If you play defensively, time starts to work in your favor.
As of this moment, SPY is priced at $279.40 per share. So I'm assuming you have $13,970 to flip 50 shares of SPY. So let's assume you have $12,500.. ES is $12.50 per tick, and you want to trade 1 contract. With 1 contract you will have 1000 ticks to risk before you lose all your money ($12,500/12.50). With 1 contract, if you can net 1000 ticks, then you will turn your $12500 into $25,000, suggest now you trade 2 contracts. With 2 contracts, do the same thing you did with 1 contract, net another 1000 ticks, and you will have $50,000, suggest then you trade 4 contracts. With 4 contracts, do the same thing you did with 2, net another 1000 ticks, and you will have $100,000, now trade 8 contracts. Repeat this until you reach your personal comfort level. If you have never traded, perhaps day trade ES in a demo account until your system (3 trades per day) produces 1000 ticks of profit.. then get started with your money. I don't know who Alex Elder is, but I don't think his advice is meant for Futures contracts. This is all just one man's suggestion. Many other ways to proceed. Good luck.
Won't you need $25k account equity to day trade SPY? So I am assuming this is not a case of some newbie wanting to max out their trade size. I have a lot of time for Alex Elder. That said, I am not sure I follow the concept of adding "units." You are doubling your trade size, which seems like a lot. Of course, it depends on your account size. If you are a newbie, I would try to book several months of profit before increasing size at all. I would probably advise you to limit it to one trade a day as well.
Elder’s sizing plan is a very wise one. Getting from SPY to ES is the wrong mindset IMO - you’re asking the best route from Paris to Lisbon whilst ignoring your mode of transport. Finding consistency is your only concern. And it’s a much bigger and more immediate challenge for you than daydreaming about jumping from stocks to futures. Which means very good trade management and uncommon self discipline. I wish you good fortune!