Initial Capital

Discussion in 'Index Futures' started by mark_mm, Feb 19, 2011.

  1. mark_mm


    Hi folks,

    I am looking into trading index futs, the main reason is I want a bit of leverage and start of with a smaller account. I plan to use a semi automated method with a few strategies running.

    What is a minimum starting amount you would say to keep you in the game for a while and allow for trading costs?

    Also I am in the UK, can anyone suggest a decent broker?

    Finally, to run backtests etc would 1 minute data be ok or should I try and source tick data?

  2. nLepwa


    Minimum starting amount: should be defined by your strategy.
    Decent broker: IB
    Backtest granularity: should be defined by your strategy.

    Looking at the questions you ask I would advise to paper trade for a few months first...

  3. mark_mm


    Thanks Ninna,

    I will be paper trading until I make profit for a few months continuously, that might take 3 months or 12.

    Of course you are correct on the other questions.

  4. Lucias


    I feel I need a minimum of around 7k-8k for day trading ES only and this is near the absolute minimum.

    Realistically, one needs around 15k to trade the ES and hold overnight. A contract represents 60k thus at 15k you are using 4:1 leverage. These estimates are assuming you are already very strong and know what you are doing. You probably stand a better chance with 25k which would give you 2:1 leverage. (Of course, one can try to leverage more and nothing wrong with that.)

    Another way to look at this is how much do you want to risk on a given trade?

    Trading the ES mini future, you will be hard pressed to risk less then about $500 per trade. I know some vendor/promoter/hucksters claim that you can but I haven't seen anyone demonstrate it.

    At $500 per trade with a 7k that is 7% risk per trade and again I think $500 is optimistic. If you swing trade and you want to win then you'll be risking more.

    So, here is how it breaks down:

    If you are a Pro and very skilled:
    Day Trading Only: 7k
    Swing trading: 12-15k

    Otherwise: 25k minimum

    Sense you are in the UK you could look into CFD's and spread betting if you don't have enough to trade the futures. Paper trading can be invaluable. However, with CFD's and spreads available you could just start there and see how it works for you.

    Learning to develop worthwhile trading systems will likely require 6 months to 2 years of study and effort and would benefit from some real trading experiences.

  5. Since you are new and in the UK I would check into spread betting in the ES. There are some posters in the ES journal who do this. They can put you in touch with a decent broker. This will let you trade while risking very little money and let you get a feel of risking real money. I am not that familiar with it but I think you can bet as little as $1 per point versus the standard $50 that the contract trades at. I think either candles or i c fed people in that journal trades that way. If you want to day trade the real mini then I think $5000 is a good starting point once you have sim traded profitably for 3 to 6 months. 2 to 3 point stops will give 33 - 50 losing trades before you can't trade anymore. If you go live and lose 20% of the account, I would go back to sim and retest your methods/system and keep tweaking until you find an edge that works for you.
  6. mark_mm



    Thanks for that, I have an account with etx capital which is a spread betting firm. I guess that is the best bet until I see my systems have a positive expectancy.

  7. hey the best amount to be invested when you are just starting in this business is $5000. It is enough for putting it on. It is not sure that you will get it back, but if you are consistent and patient you can earn even more.