# Contracts vs. account size and margin



## Twiddle (6 June 2010)

Hi all,

Over the past few weeks I have been building a trade management system for trading 4 CL contracts. Essentially along the lines of, 2 quick offloads to cover brokerage and move up stop at their trigger, from then any price movement is either positive or makes no difference; if it goes the wrong way I have not lost anything but if it does continue up it gets my other contracts prof targets and starts trailing a good few ticks up. Stop is kept tight so on wrong calls the loss is minimal.

I would just like to ask a few questions about how big your account size should be for trading like this.

For example if I look at IB, it appears I would need 2,500 margin for each contract just to enter the position. 4 * $2,500 = $10,000. Then $1,900 to maintain the position: 4 * $1,900 = $7,600.

Generally I like to have 2 trades running at the same time. I have been trading DAX index futures also in sim at the same time as my CL trades. What a shock i got when I saw the margin reqs for that...

I am planning on starting off with a $25k account, which I thought was reasonable for part time evening trading, I am now starting to think it may not be enough...

What are your thoughts on account size and margin with futures? Is a 4 contract CL trade reasonable with a 25k account, or is that too many contracts for what is really a small account? Technically is it doable, but is it really a good idea to have so much of your account tied up in margin?

Also, I notice other places like Mirus futures offer CL for $500 margin, which seems attractive, what are the pitfalls to these brokers?

Any help would be appreciated.


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## Trembling Hand (6 June 2010)

*Re: Contracts vs account size and margin.*

account size has nothing to do with margin required. Concentrate on DD and risk of ruin.


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## Twiddle (6 June 2010)

*Re: Contracts vs account size and margin.*



Trembling Hand said:


> account size has nothing to do with margin required. Concentrate on DD and risk of ruin.




Cheers T/H.

I think I am on track to get those sorted, as my max DD with each trade is only ever going to be a smallish pre specified amount, per trade with the trade management system I am using. 

Basically I am getting very encouraging results trading in sim, so I really need to understand the logistics of trading as I do in sim, but with real money. I am working on figuring this all out in various ways, but I find getting direct replies from people with experience is usually the best/quickest way.


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## Trembling Hand (6 June 2010)

*Re: Contracts vs account size and margin.*



Twiddle said:


> Cheers T/H.
> 
> I think I am on track to get those sorted, as my max DD with each trade is only ever going to be a smallish pre specified amount, per trade with the trade management system I am using.




No you are on the wrong track. Max DD is not a one trade metric. you need to know what it will look like over the life of your system.


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## Twiddle (6 June 2010)

*Re: Contracts vs account size and margin.*



Trembling Hand said:


> No you are on the wrong track. Max DD is not a one trade metric. you need to know what it will look like over the life of your system.




Aaah, OK, I will take a further look into definitions etc, as I am clearly missing something. 

I am guessing this is where backtesting comes in handy.


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