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College, I'm studying computer engineering. Thankfully I don't have class until 1 most days so I get a little bit of trading in. I miss summer when trading was my life.
However, the finance club here is awesome. We have a couple full time traders coming in to speak with us today. We have a Bloomberg terminal also��
That's awesome! I too don't have class till later in the afternoon everyday. I made sure that I could trade :P
@bobwest and I had a conversation about this very topic. He was very wise with his words. If he doesn't mind, I would love if he gave you the same advice he gave me.
That will never work in the real world. Realize that when you pull the trigger on a 15 lot you are already down $700-1000 in that moment- this is a hard reality to face but it's true. The idea of margin ability vs account size is ridiculous IMO for those who attempt to exploit it
I don't want to pile on here, but I agree with @Inletcap.
I take @rocksolid68's point as simply: keep your risk of blowing out your account to a minimum by taking the largest available account, and then use way, way fewer contracts than you're allowed. You're just using the higher loss limits of the larger account to give you more leeway, but don'tload up on leverage. Use something like 2 contracts. (Which I think he says somewhere is about the size he used.) That lets you stay calm and trade without excessive risk, and succeed slowly.
Otherwise, the math will destroy you. At 15 contracts, 1 point in ES is worth $750. This is a fair amount of money to see evaporate due to nothing more than little twitches in price that don't mean anything. As an extreme example, we do see brokers who advertise less than $500 per contract day trade margin. That would let you have an account with less than $7500 in margin for 15 contracts. But a 1-point loss (-$750) would be 10% of the account; a 4-point loss would be $3,000, 40% of the account.
Even taking the max Combine size of 150,000, your 4-point loss of $3,000 is a big chunk of change. But with 2 contracts, it's $400. Much better.
There are practicality issues involved with using very large size, compared to your loss tolerance. Keep the size down. Leverage cuts two ways.
Thanks for the replies and everything is taken on board.
I currently trade a small account so I am learning how damaging big swings can be.
I was not suggesting that someone should trade this way
More assessing if the combine will work for me. I have been reading reviews recently and quite a few reviews have mentioned that the possibility of extra size is not worth the effort. A few different reasons are given but include that with the max draw down you should not be trading 15 contracts anyway.
If I take the $150k combine so I can trade 2 or 3 contracts I am not sure I see much value. I will have to achieve $9k profit in sim mode which would be much better in my own account without the fees and rules. That $9k profit will give me enough bankroll to add another contract to my current size.
I was just giving my opinion since I have been down that same road.
You are looking at the 150k combine as a means of having future leverage. Don't. Do not worry about the 150k = 15 contracts. That shouldn't matter. Only the drawdown.
If you are able to churn out $9,000 in profit guaranteed, why are we having this conversation? The reason we are is because you CAN'T. Nobody can make $9,000 in profit guaranteed. So, since you can't do that for sure, you need to protect your downside. That is where the wiggle room of a $3,000 draw down comes into play.
I would be very interested in watching you do a $30k combine! Or watch you make $9,000 easily. Start a journal so we can follow your decision and see how it plays out!
What I am trying to say is that you are worrying about the upside potential. If that is what you are worried about, you already made it. Forget the combine and start a hedge fund. However, you are realistic and know that you will lose (and lose a lot if you have no edge), you want to give yourself the best odds of beating the combine, which is giving yourself enough room to lose and win without blowing it.
