# of contracts in regards to capital/profit target?

Discussion in 'Risk Management' started by pclark, Sep 23, 2008.

  1. pclark



    Thanks for the help on my previous post about stops. I have pretty much decided to use mental stops while trading the ES due to volatility but will put a stop in way down the line in case of disaster. Now I have another question.

    My account is 11K using Ninja Trader and Mirrus/Zen Fire. The way I paper traded the ES is 4 contracts at a time and my profit target is 2.25 points and then I am out. The reasoning is the longer I am in the market the more risk I take on. I average about 6-8 trades a day and I hve been around 76% for accuracy.

    So, using the above information. When I start trading w/my funded account. I thought I would do a trade or two w/one contract to see how the response is but then I wanted to start using 4 contracts. Using 4 contracts I think I can get the profit I am wanting and hoping to keep the same success rate. I know things tend to change when you start trading for real but assuming I keep the same mindset am I going to die a slow death? The way I have it figured w/commisions and slippage I should be able to do about $800 minimum. Also before anyone starts killing me about lofty idea's I know there will be day's where I don't do nearly that much.

    Are there any suggestions? Thanks....

  2. Depends on risk but as a general rule:

    5k capital per 1 NQ

    15k capital per 1 ES

  3. pclark


    Whoa! Looks like I am seriously under capitalized. Hmmmmm... Thanks for the response.
  4. Yes, remember that futures are also meant as hedging instruments, if you use it for speculation you better be properly capitalized.

    Consider this, 1 ES is aprox 500 shares of SPY, yet to daytrade only 100 shares you still need to meet the pattern daytrader minimum balance of $25k.

    For this reason, people go to futures, so they can trade with lesser capital, unfortunately for most, this is a massive mistake.

  5. If you're day trading / scalping, I don't see why you would need $15K/contract. It all really depends on your risk management. If you're using 3-5 PT hard stops, that means the most you can lose on 1 contract is $150-250. Personally, I'd be comfortable with $4-5K/contract for day trading. So in your case, trading 2 ES with an $11K account seems reasonable to me. But again, it's a personal decision.
  6. A 5 point stop using 5k per car is a 5% hit on just one trade, a little over the top.

    And that's not even taking comm and slippage into the equation.

  7. Like I said, it's a personal decision. I don't think there's really any solid formula for it. I'm currently trading @ around $10K/contract. $15K seems excessive to ME; but like I said, it's a personal decision. I'm comfortable with $5K/contract as well.

  8. Just some stats for you to chew on... the past few days have seen some incredible swings.

    Profit target 9 ticks. 9/16 - 9/23 data RTH

    161 - 9 tick movements.

    One contract had $19,500 of trading opportunities...

    Just watch out for the runaways... A limit up started fridays session... a few gaps that would have wiped you out if you were in with 4.
  9. pclark


    Thanks... That is something to think about. Wish I could hit all of those opportunities!
  10. No matter how "well" you did on the simulator, start off doing one-lots.
    #10     Sep 24, 2008