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Account Size Related Question
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Created: by jsk123 Attachments:0

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Account Size Related Question

  #1 (permalink)
Trading for Fun
Hyderabad,India
 
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Platform: ATAS
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Account Size Related Question

Hey all...

I was thinking about how traders put on more than 100 contracts on ES!! It just baffles me!!!! :/ may be because I am new to trading... but anyway, I wish to become a two figure lot trader some day.... say 50.... How much should my account size be to trade 50 contracts ? Just intraday trading. No holding position overnight...

Please let me know.

I forgot to mention the instrument!!! I want to trade ES.


Last edited by jsk123; September 25th, 2014 at 03:59 PM. Reason: instrument.
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  #2 (permalink)
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  #3 (permalink)
Site Administrator
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jsk123 View Post
Hey all...

I was thinking about how traders put on more than 100 contracts on ES!! It just baffles me!!!! :/ may be because I am new to trading... but anyway, I wish to become a two figure lot trader some day.... say 50.... How much should my account size be to trade 50 contracts ? Just intraday trading. No holding position overnight...

Please let me know.

I forgot to mention the instrument!!! I want to trade ES.

It's based on risk. You didn't specify your risk.

But a good ball park for 50 lot scalping would be roughly 8 ticks @ 12.50 = $100 per lot risk x 50 lots = $5,000 risk. So conservatively using 2% you need 250k account or roughly $5,000 per contract.

Mike

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  #4 (permalink)
Trading for Fun
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Thanks Big Mike.

My max risk is about 8 ticks in ES. So whatever you explained fits in well.

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  #5 (permalink)
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WOW! quarter million dollars! for you Big Mike

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  #6 (permalink)
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jsk123 View Post
WOW! quarter million dollars! for you Big Mike

I was providing a conservative estimate since you didn't give enough information to answer properly.

But I assume most people will just go and find the cheapest margin brokerage possible with stupid $400 margins, then blow up in a few weeks, and ultimately say that trading is rigged and <poof> never to be heard from again. Hopefully you prove me wrong.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
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  #7 (permalink)
Trading for Fun
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Big Mike View Post
Hopefully you prove me wrong.

Mike

Time will answer that question... Thank you.

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  #8 (permalink)
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I would actually say you need more then that.

If you have 250k and 50 contracts and you have 1 losing trade (-5000) you would have 245k ( actually less because of commissions) do you then scale down and only trade 49 contracts on that 2nd trade? And if you lose that do you scale down again? Then when you get a winner your winners are not as big as your losers because you have less contracts on your winners then on your losers.

I dont have near the experience that Mike does and I certainly trade a much smaller account as well.

But in my experience before I scale up (and I have only done scaling on my forex trades not futures and my TST combine) I want to be able to trade that size regardless of whether I win or lose my first trades - ie: if i trade a new larger size I want to be able to take a number of unsuccessful trades without feeling like I need to scale down.

When you start trading with size I believe you should have already have your system tested and proven. You should know that there is a chance of you having X number of losers in a row and be able to keep trading.

At the end of the day risk tolerance is something that comes down to each individual person. Atleast on Oil futures for me it is between 25-33k / contract.

The ES has a smaller average range then Oil but I think you would still want more then 5k / contract.

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  #9 (permalink)
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How do people put on 100 contracts at once? Well there are a lot of wealthy people in the world who have millions at their disposal. A 10 million dollar account would consider a $50,000 trade a mere .5% loss or gain. To some people 100 contracts is less than a penny to them.


Last edited by Itchymoku; September 26th, 2014 at 11:29 AM.
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  #10 (permalink)
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quick and dirty method...

100 contracts @ ES px 1965 = Notional Size of 9.825 million

A stock fund with a value of 98.25 million can choose to hedge 10% of his portfolio with 100 contracts depending on the amount of exposure needed and the portfolio volatility measures.

A very aggressive speculator with a 2.8 million account can choose to risk 2% intraday (based on 9% annualized vola ~ 0.57% daily risk against notional). He would need approximately 550k in standby for margin requirements which would be close to 19.6% of his total equity if intending to carry them overnight.

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