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You can trade different products with smaller or larger tickers and varying volatility, you can trade more or less contracts, or you can spread and hedge. These will all vary your risk
While it is possible to trade highly leveraged, you will find reference to a kind of 'rule of thumb',
where for any position you should not risk more than 2% of your account..
Example :
If you have 10K in your account, 2% = 200$
if your stop is 10 ticks and the tick value of the instrument is 10$
you would trade maximum 2 contracts
While the same 10K might easily give you the possibility to leverage up to 10 contracts and more
it is not a good idea to do ...
@rleplae thanks for clarifying. Could I ask one more follow up question please.
With regards to margin calls, If you had the following:
Account balance: $10k
Initial margin to open one position : $1k
Maintenance Margin: $500
Is the $500 dependant on your $1k position only, or do they take into account your total account balance?
Ie
1)10k at start
2) long 1 contract for 1k.
3) contract drops to $500 (Margin Call?)
Or
Is it triggered once my total account value drop to $500? (So I can loose $9.5k)
If it's the 1st then I'm assuming my stop should b between the initial entry point and the $500 point otherwise its guaramteed that i would need to top up that position before it reached my stop.
