Number of contracts per $$

Discussion in 'Risk Management' started by bathrobe, Dec 7, 2007.

  1. bathrobe


    I was hoping to receive some advice based on how many contracts experienced traders trade per $30,000 in market. I primarily trade the YM.

    Thank you. Your help is greatly appreciated.
  2. How much exp. do you have? I would say no less than 3k per contract, but without knowing more I would suggest 5k per contract.

    A wise trader told me ( who has been trading 20 years ) you have to earn the right to trade multiple contracts by demonstrating you can make money consistently with one.
  3. If your capital is 30k, trade no less but no more than 2.

    This will allow you to practice scaling in and scaling out.

  4. bathrobe


    I have 5 years of experience and 90k Capital, I have never traded more than 6 contracts.
  5. There is not enough information here to know the answer, such as how much are you willing to risk per contract, how good is your method(s)/system(s), and how long do you plan on holding.

    For instance, if you are willing to risk 20 points on a trade, for 2 contracts, that's $200 bucks a trade. 5 nasty losses in a row, and you're down $1000 (on a 30k account). 10 and you're down 2K. 15 and you have a 10% drawdown. 15 is probably not that likely, I hope, but it happens.

    If you trade longer term, you'd almost certainly have to risk more than 20 points. Adjust accordingly.

    Can you live with that? Can you live with a 20% draw? Then trade 4, not 2. If you cannot live with a 10% drawdown, then go to 1.

    See risk of ruin for more.

    PS--I trade with much less leverage than most here, for sure. It is misnomer to think that professionals trade with high leverage. Those who are professionals long enough know about those who are no longer professionals because they used too much leverage. You cannot gain experience in this business if you cannot play anymore. Rome wasn't built in a day.
  6. cd23


    Trade with the minimum number of contracts possible. Approximately 1 maximum. Paper is best in your case.
  7. How many contracts do you currently trade?

    And what are the results you are getting?

    The question has too wide a range to have any meaningful answer without some more detail.
  8. tortoise


    Trade 50% of full margin for the cash balance in your account -- i.e., if your margin/contract is $500, trade $1000 per contract, etc. Why leave unused cash sitting in a futures account? It's inventory, dammit! Turn it over!
  9. timbo


    The more risk is defined, the less ridged the allocation.
  10. LOL, don't do this! ... :)

    #10     Dec 7, 2007