It is a trend follower, so it would be a series of losers when chopped out, there's a large holding time of days or weeks per trade. Do you use any leverage with your broker for trading futures? Do you recommend leverage in an account for trading futures? What is your take on leverage for future contracts?
As good "money mgt" rule, you should not risk more then 2% of your account.
Example, if you trade CL with target 15/SL10, 10 ticks being 100$, with 10K$ in an account
you should not trade more then 2 contracts. Ounce your account reaches 15L$, you can do
3 contracts, etc... If it goes down, you scale down
Another rule is that you should not loose more then 6%, if you go above, you should stop
trading. My question is for your system, if you go down like 25%, is the trend still valid ?
and was the entry with a good signal.
I have been in system development, with 20% draw-down, but that was an unlucky
series/concatenation of (shorter) bad trades.
A system that creates drawdown, in a single trade of 25% is probably not very good,
you must be able to tweak that.
The following user says Thank You to rleplae for this post:
Sure we can extract as many Stats as we want from our system or equity curves. But the most important characteristics i look for are robustness related. Stability of near by parameters, in sample vs out of sample deviation rate, performance on similar products in the same sector, performance on a large diverse investment universe and monte carlo results. These types of results are much more important to me than any specific stat from the backtest report. Because i am more intrested in the probability that the system will perform similarly in the future rather than focus purely on the past results.
That said. when looking at reports the top 5 most important things for me are
1 average trade expectancy
2 Max DD
3 profit factor
4 Return efficiency
5 duration statistics
Great 2% rule, you are totally right if you want to survive in this game.
I believe a good option for me would be to trade Futures ETF's, despite that they are tax inefficient.
I have come up with good swing strategies but I believe I am way over-leveraged in futures to start with $15k... ?
I think the only way not to be over-leveraged trading futures is to have a very good intraday strategy with little PF. Intraday is one noisy bastard and since one is undercapitalized, you can only look for little targets to avoid getting hurt. Even the Mini's can hurt if you are undercapitalized.