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First of all if you don't have a lot of experience your nuts trading 200 lots....give your money to charity instead.
Secondly even w/experience 200 lots is way to much to put on for one trade with your account size. As a rule of thumb most people say put no more than 5% on the line at a time(especially if you have little experience which I'm taking as a given being that your asking this question). There are a lot of resources here and other sites for that matter which discuss in nausiating detail all aspects of trading. I would suggest research and trading small untill you can demonstrate than you can consistantly make a profit, then consider trading more lots. As a side note perhaps you should look at the YM or TF, they might be easier to trade. And I will finish off by saying that among other things like anxiousness and fear, GREED can/will destroy your account.
Regards, Kbit
Interestingly, nothing is mentioned about HOW MUCH IS AT RISK when trading 200 lots. That would be a function of stop placement. For example, it would be possible to risk just 2.5% on a 100k account trading a 200 lot. BUT, that would be using a 1 tick stop. Trading with a 1 tick stop is nearly impossible, but 2-3 ticks is. In this case we are looking at 5% or 7.5% at risk.
You need to be thinking in terms of how much of your account you risk per trade, not just how many lots you use. This leads me to believe you are not using a stop loss at all!
You can get a feel for how much leverage to use based on your historical drawdowns. I'm sure there are ways to use your Sharpe ratio to determine optimal size. Some on this forum would probably be very qualified to comment.
Having said that, you sound like someone with very little experience and a lot of money. That is a formula for disaster. Now, being underfunded is a problem, too... Of the two, I'm not sure which is worse.
I think 5% is very aggressive for a newbie. I would trade 1/2% for the next three months, to see if you can hold your edge. (Do you have one? Have you tried paper-trading before?) If you are using a 3 tick stop, that would be $500/(3*$12.50)=13 contracts. If you need a 6 tick stop, that would be 7 contracts, etc.
If you are holding your edge and feeling comfortable, double your leverage for another three months. If you are still holding your edge, you could go as high as 2%. Interestingly, I have heard that many money managers use LESS leverage the more cash they are in charge of.
While I don't agree on trading 5%, I do concur that you may find easier things to trade than ES. It's a real chess game.
If you always go for the same stop size and profit target you can use the kelly criterion to figure out the max bet size that betting above is actually harmful to your account no matter what the expectation of each trade.
If your trades do not have positive expectation it really matters not at all what size you are betting though. Only betting .25 % of the account per trade will keep you in the game longer but death by a million cuts vs decapitation is still death either way.
I traded a $50k account, went max contract more than once. I was up $25k at one point. Should have turned it off...
The $75k was reduced back to $50k, then to $30k...
The revenge trade section of my brain kicked in. I thought leverage would bring back my money faster. My broker shut me off when the account reached under $500.00.
If you have a $100k account, protect it. That is more important than increasing it. Opportunity will always be there.
If you have not traded in simulation, start there. If you can't be consistently profitable in simulation mode, not just for a few days but for many months, then trading "live" is going to take your money.
I lost millions recently in real estate, and that experience has shown me a lot about myself. I have learned that when anything is removed from your life quickly it creates a vacuum effect. That is why addictions are had to break, why rebound relationships are commonplace, and why we revenge trade. Be careful not to put yourself into that position.
Trade from a defensive approach. Understand your risk/reward and probabilities before you enter the market. Make sure you understand your charts and setups inside and out, forwards and backwards. Be patient.
One more thing Steve. Your thread title combines the terms "Money Management" with "Aggressively Daytrading". Those are at opposite ends of the spectrum.
doubt he has a 100k acct to start of with,got a all caps issue. Only a fool would trade the ES as a newbie with that kind of money to start of with, without a plan. Go buy some real estate,its dirt cheap right now...thats if you got the 100k.
