# of contracts in regards to capital/profit target?

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

  1. Have you sim traded? I recommend you paper trade until you can build a track record of success. I see people all the time who are too anxious to make money and end up losing big time.

    Once you go live, trade with just 1 contract to get a feel for real fills. Do a couple weeks until you're consitent with that, then go 2, 4, 8, 10, 14, 18, 20.

    Also, don't set targets based on points or $. Once you start thinking about MONEY, you're done. Set targets based on technicals (fib extensions, retracements, ect).

    Feel free to visit my blog. Could help you out...

    http://chrisdunn.typepad.com/blog/

    Chris Dunn
     
    #31     Oct 13, 2008
  2. MGB

    MGB

    Using the formulas above, once you've calculated your MTE, you can calculate how many contracts you can trade based on the size of your capital.

    Contracts to trade = ( MTE * Capital ) / Contract Margin

    For example:
    1) MTE = 40%
    2) Capital = $20,000
    3) Contract Margin = $5,000

    1.6 = ( 40% * 20,000 ) / 5,000

    In this case, I round down to 1.0 contract to trade.
     
    #32     Oct 14, 2008