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Futures Trading Account Size?


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Futures Trading Account Size?

  #1 (permalink)
 
MethylSeasons's Avatar
 MethylSeasons 
Toronto, Canada
 
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I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?

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  #3 (permalink)
 ABCTG   is a Vendor
 
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MethylSeasons,

it depends on how many contracts you are trading at the same time. Of course there are brokers that allow you to trade the ES with $500 daytrading margin, but that would be ludicrous especially for someone starting out.

So how many contracts could/should you trade with 25k? Although the answer comes down to personal preference one thing that is very imporant in answering this question in my opinion: How much do you need to risk per trade with your method? Let's stick with the ES and assume your method uses 3 points stops on an average entry. Trading a single contract this would be 0.6 % risk on your account capital. With two contracts this would be 1.2%. This seems acceptable in terms of risk, but you'd be limited to two contracts (unless you risk more) which also limits you on the methods for exits to a maximum of two targets. Which probably makes it harder for you to be profitable.

The above is just my personal opinion and when it comes to risk I like to keep it small. So I am not saying you shouldn't start now, but I think you either have to take too much risk or make it harder in other ways and this doesn't help in shifting the odds in your favour.

Regards,
ABCTG



MethylSeasons View Post
I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?


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  #4 (permalink)
 
mattz's Avatar
 mattz   is a Vendor
 
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@MethylSeasons

excellent points by @ABCTG

The only thing I may add is also looking at the notional value of the contract.
for example, if ES is at 1800 or 1400 could make a difference on the potential size moves in the market.
For example, as the value goes higher, the same point value fluctuations will be considered less in percentage,
yet the same value and affect on your account. I think this should also affect your decision of size.

Matt

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  #5 (permalink)
 
MethylSeasons's Avatar
 MethylSeasons 
Toronto, Canada
 
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ABCTG View Post
MethylSeasons,

it depends on how many contracts you are trading at the same time. Of course there are brokers that allow you to trade the ES with $500 daytrading margin, but that would be ludicrous especially for someone starting out.

So how many contracts could/should you trade with 25k? Although the answer comes down to personal preference one thing that is very imporant in answering this question in my opinion: How much do you need to risk per trade with your method? Let's stick with the ES and assume your method uses 3 points stops on an average entry. Trading a single contract this would be 0.6 % risk on your account capital. With two contracts this would be 1.2%. This seems acceptable in terms of risk, but you'd be limited to two contracts (unless you risk more) which also limits you on the methods for exits to a maximum of two targets. Which probably makes it harder for you to be profitable.

The above is just my personal opinion and when it comes to risk I like to keep it small. So I am not saying you shouldn't start now, but I think you either have to take too much risk or make it harder in other ways and this doesn't help in shifting the odds in your favour.

Regards,
ABCTG

Thanks ABC.

So Im assuming you dont recommend CL right now considering what you said about ES? Perhaps I could look at a Forex pair in addition to ES so I could keep my % risk lower than it would be trading CL.

I plan on starting with 1 contract. No its not ideal, but it is suitable for my strategy.

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  #6 (permalink)
 Itchymoku 
Philadelphia
 
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MethylSeasons View Post
I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?

This is a popular question I've seen many times on the forum and the best advice is to just start trading live with the smallest size possible. Trade that way for a month and see how you did. Document your trades.

If you can even stick to X amount of losing trades a day or less based on valid entries in your beginning stages you're already far more successful than most people even if you lose money initially. Most people who fail at trading over trade either when they're excited after making money or pissed off that they lost money.

I couldn't put it more simply

Good luck

Also, you probably already know this but - try not to trade two instruments simultaneously due to their correlation otherwise you're taking on double the risk unless that is somehow factored into your edge. At times ES and Cl will move in tandem.

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
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  #7 (permalink)
 ABCTG   is a Vendor
 
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MethylSeasons,

Forex might be an option or take a look at one of the micro-FX contracts on CME - M6E for example. This can help you getting a feel for things when trading live, but at the same time limit the risk.
Another thing you probably know already, only trade with money you can lose without the loss having an impact on your financial situation i.e. never trade with money you need for paying bills, loans or what ever.

Regards,
ABCTG


MethylSeasons View Post
Thanks ABC.

So Im assuming you dont recommend CL right now considering what you said about ES? Perhaps I could look at a Forex pair in addition to ES so I could keep my % risk lower than it would be trading CL.

I plan on starting with 1 contract. No its not ideal, but it is suitable for my strategy.


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  #8 (permalink)
 Yukoner 
Vancouver Island, Canada
 
Experience: Advanced
Platform: T4, IB, TD Ameritrade
Broker: Stage5
Trading: ES CL RTY Stocks
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MethylSeasons View Post
I have been demo trading ES and CL for a few months now and am going to take the plunge and open a live account.

I'm planning on starting with 25k. Is this sufficient capital for daytrading these 2 instruments or should I wait until I can afford to put in 40-50k?

My first thought is, you should all ready know the answer to this question based on your demo trading. If you aren't sure, I would suggest continuing to demo trade, or trying a combine which really shows your daytrading stats.
Failing that, I would suggest a $2000 account with Oanda and trade WTI (CL) and the spx. If you can make money with the $2000 account, then move up to a larger account. The key isn't the money you make, it's the process of trading correctly... That is what you need to learn at the beginning.

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  #9 (permalink)
 
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 lolu 
Lagos, Nigeria
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Yukoner View Post
My first thought is, you should all ready know the answer to this question based on your demo trading. If you aren't sure, I would suggest continuing to demo trade, or trying a combine which really shows your daytrading stats.
Failing that, I would suggest a $2000 account with Oanda and trade WTI (CL) and the spx. If you can make money with the $2000 account, then move up to a larger account. The key isn't the money you make, it's the process of trading correctly... That is what you need to learn at the beginning.

Trading WTI (CL) with Oanda ? Could you please provide the link to this WTI (CL) resource. I thought Oanda provides for only Forex, Precious Metals (Gold and Silver) trading.

Lolu

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  #10 (permalink)
 
CFuture's Avatar
 CFuture 
cologne, europe
 
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If you start out trading live you have to prove yourself to be consistantly profitable with a small 4 digits account.

Like the posters above already said, use micro futures or those with small ticksize like NQ, YM, 6B or an ecn forexbroker/trustworthy cfd-broker. Oanda besides others might be a good choice.

Nobody is bulletproof in this business and the first years need educated training how to minimize risk! I witnessed enough ppl going financially broke with the trading dream..

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