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Upsizing buy in and transitioning from micros to big guys?


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Upsizing buy in and transitioning from micros to big guys?

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  #1 (permalink)
San Antonio, TX
 
 
Posts: 73 since May 2019
Thanks: 32 given, 40 received

Hello all,
As i digest my first week trading with NT and professional data. I知 starting to think about upsizing my buy in from 2 contracts to 5 in MES. But, then I started thinking about commissions, and such, and was wondering when people transitioned from the Micros.

So I have some basics questions for those that have gone before me:

1) At what point did you start to scale up your contract size?

2) At what point did you transition away from the micros?

Right now I have a small account, which I知 actually enjoying building, and I知 more focused on trade execution versus capital growth.

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  #2 (permalink)
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Sarasota FL
 
Experience: Advanced
Platform: Sierra Chart
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jmp470 View Post
Hello all,
As i digest my first week trading with NT and professional data. I知 starting to think about upsizing my buy in from 2 contracts to 5 in MES. But, then I started thinking about commissions, and such, and was wondering when people transitioned from the Micros.

So I have some basics questions for those that have gone before me:

1) At what point did you start to scale up your contract size?

2) At what point did you transition away from the micros?

Right now I have a small account, which I知 actually enjoying building, and I知 more focused on trade execution versus capital growth.

Good questions. I would say that commissions may be important, but risk of loss is more so. The principle advantage of micros is that it is harder to lose large amounts quickly, which gives you a chance to learn and to grow the account. A disadvantage of the minis is that it is easier to lose large amounts, very quickly.

So I would suggest thinking more in terms of the risk exposure, and graduate to the bigger contracts only when the potential for loss with the minis seems as easy to take as it is -- given your account size and your experience -- with the micros. And I would give it some time to be sure. So, if you have a small account and are OK with the risks with the micros, consider that the minis have 10 times the leverage. Would you be comfortable with your losses being 10 times as large? Consider what would happen if you had even a short string of losses that are 10 times the size, contract by contract, as with the micros.

It is really easy to blow up an account trading the larger mini contracts.

Since you describe this as a small account and you are getting started, I would be cautious and let your account grow gradually. Let the size of the potential losses in comparison to your account size (and taking into consideration your experience and skill level) be your guide.

As you have laid out the situation, it may be early for that decision yet.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #3 (permalink)
San Antonio, TX
 
 
Posts: 73 since May 2019
Thanks: 32 given, 40 received


Bob,
I'm only trading a $1k account, and realize what you said is very true. When looking at the analysis profiles on NT, I see that my max draw down was $25.

I was thinking that if I kept the same stops in place, and I increased my risk to $50, I could do either 1 of two things:
1) up my contract size from 2 to 4
2) potentially go ES, which I don't think I'm ready for.

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  #4 (permalink)
Boise, Idaho/USA
 
Experience: Advanced
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Trading: ES
 
Posts: 179 since Sep 2014
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$25 is two stinking ticks on the ES. The average noise channel has got to be around 12.

Bob West is very polite. I am more of a Dutch Uncle. I do not mean this to be rude so do not take it that way. You said you are new to this game so I ask where are you on the Dunning Krueger curve? You could potentially be on the left edge which means you are in grave danger from yourself (financially).

Here are a couple of time tested rules from two guys who have been helping new traders for decades. "Mack" at PriceActionTradingSystems.com (well respected around here)says take a $100,000 SIM ES account and increase it by $10,000 to $15,000 dollars before you go live on the MES.

FuturesTrader71 (who has a bunch on hour long webinars in the vaults here) says net three points a day for several weeks, as in prove you can consistently make money. He is the one who pushed the exchange to offer micros so new traders could hang on long enough to become consistently profitable.

Finally Dr. Van Tharp the famous performance coach with a bunch of books on trading that are decent. He wants you to do a minimum of 30 trades, preferably 100 so you have a statistically valid sample. Then you will have the data to plug into the risk models.

Ask again when you have some basic stats on your system and you will get the sort of answers you were probably expecting.

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