Min account balance

Discussion in 'Index Futures' started by naz9403, Apr 26, 2005.

  1. naz9403


    Trying to get a concensus here, what would be the wisest account min. to trade the mini dow. Is $2500 to little?
    I know 2500 is not enough to hold a contract overnight, so the begininng you could pretty much only day trade.

    I've heard 5k and 2500, what is the best choice?
  2. If you are a system trader, I use fixed fractional risk guidelines using maximum historical drawdown, 10-consecutive-losing-trades etc. to withstand two times those risks. If you are a discretionary trader, you better be damn sure you have backtested your short-term method to be 70% profitable and take small profits if you are going with $2500 because that kind of account size will be hard to trade trend correctly (larger drawdown/high reward). If you plan to sit on a trend then maybe you need to double that depending on the systems. All in all make sure you test at least a "weak" form of your trading style to make sure it is indeed profitable and see how it behaves over time (right for your stomach?).

    If you have not done any testing correctly yourself... prepare to lose it all to the people who have done the testing.

    BTW I am being very aggressive here... It would be wise to back off a bit.
  3. wOg


    If you've got the $5K to trade, then I'd go with that rather than the $2.5K.

    Think about how you'd feel if you lost half in a couple of bad trades (maybe some bad execution or order entry mistakes thrown in).

    Falling to $2.5K, you'd still probably not be too freaked out. But falling to $1.5K or so could easily put the fear of g-d into you, and ruin your focus.

    Good luck.
  4. John47


    yah it all depends on how you are going to trade.

    How many trades/day and what will your risk:reward be? If you are planning, maybe 1 point stops, 3 point targets, w/ maybe 3 signals/day, w/ a 40% hit rate....then at the beginning, expect a drawdown of perhaps 2-3 failed trades/day....so this could be $100-$150 / contract/day before you get some wins to offset it.

    basically, you want an amount that will insure you against worst case scenerio (i.e. most probable outcome) during the start.

    When you have the worst case drawdown prepared, you will be able to trade with much more confidence.
  5. naz9403


    I have $2500, 5k would entail me to take out a loan which is not a good idea. Eventually i plan to trade the trend and pyramid in but as of now i would only have enough to take a day trade. I plan to only trade 1 time per day, i get the general direction of the market and trade that way. I wait for entries and if there are none that day then i will not trade.

    I traded forex for two years, i have my trading style down. Just mini dow is new territory for me.
  6. empee


    hehe john he says he wants to trade the ym, i was looking at youre response with 1 pt stops and 3 pt wins and was like wtf then realized u were talking about es
  7. Don't trade undercapitalized, don't overtrade and don't day-trade!!!!!!
  8. skzz


    I'd say build a stake.

    2500 isn't gonna do anything but frustrate you.

    If you have a solid game plan, I'd get the 5k and work it with 1 contract.
  9. I'd say take the $2500 and make yourself a reservation to 'Vegas and have a good time. Or maybe some other vacation spot.
    A LOT more happier memories than you'll soon have.
    This is not the kind of market to spend your $2500
    The only thing you'll soon have is frustrastration and a loss.
  10. John47


    I'm a damn ES idiot savant. Or perhaps just an idiot....

    Def. do not take out a loan. Think about it like this...when you trade managing your risk is top priority....do the same w/ the 2500 which appears to be your only liquid assets.

    my sincere advice is to give yourself a fighting chance build up a bigger stake and do what i mentioned above....be prepared for a worst case scenerio and the power to survive it.
    #10     Apr 26, 2005