Bob Volman - Price Action Scalping | Currency Futures


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Bob Volman - Price Action Scalping

  #78 (permalink)

Newcastle, Australia
 
Trading Experience: Intermediate
Platform: Multicharts 8 - Full Version
Broker/Data: IB
Favorite Futures: SPI,FTSE100, 6E, 6A
 
Posts: 285 since Oct 2010
Thanks: 108 given, 182 received


WilleeMac View Post
Although I have not read the entire book.......

The only thing that I question is why not futures instead of cash?

Perhaps you should read chapter 16. Here he gives an in site into a reason to use cash as opposed to futures.
In a brief nutshell, for a new person to the markets, and trading futures, it can be quite difficult to decide from a proper money management perspective, when to change from trading 1 contract, to 2 or 3 or 4 etc.
Say 1 futures contract = $10 per pip, and 1 cash contract (100,000) = $10 per pip and you are using a 10 pip stop.
At risk is $100. With a 2% risk rule your account size should be > $5000.

Now the futures trader is getting better and decides that they would like to increase their position size, the only option they have is to double their position size ie from 1 too 2 contracts, with a 10 pip stop, your account size should be > $10,000. So before you can move up in position size, you need to double your account size.
Some traders would argue that the account size needs to be >$15,000 before moving from 1 to 2 contracts.

By using the cash forex, as your account grows, you can slowly increase your position size to reflect this.
As an example, after two months trading you are now up 10% and have an account size of $5500.
Keeping with the 2% risk rule, your at risk using above examples would be $110 and therefore your position size would be 110,000.
Same applies in the other direction In futures you can't trade < 1 contract but you could trade a cash forex size of 90,000.


Chapter 16 is a good read.

Neil.

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