Consistency

[willoneau]

If undercapitalized we tend to risk too much per trade,
example- trading one or more SPI contracts with less than $30,000 to $50,000.
( knowing this from experience.)
If your Capital runs out before your expected (back tested) losing streak finishes is an example.

 

[cb3d]

Yep, I've fallen into that trap myself. Hence my very regimented routine for entry nowadays.

I've not traded futures, but I don't understand the issue with trading less than $30k. As I understand it each contract is about $6700 and each pip is about $25.

So with other expenses aside, $30k * 0.02 (risk tolerance) = $600

$600 / 25 = 24

So I could enter a trade with one contract and have a stop loss within 24 pips of entry and be within my defined risk tolerance.

Have I got this correct?

 

[willoneau]

I haven't touched the SPI in a few years now, I think 30k would be minimum IMHO. You can trade with much lower if you close position before end of day (no carry through).
I think off memory daily moves were about 40 pips and the night session spread could easy get to 24 pips and more.

 

[willoneau]

Yep, I've fallen into that trap myself. Hence my very regimented routine for entry nowadays.

I've not traded futures, but I don't understand the issue with trading less than $30k. As I understand it each contract is about $6700 and each pip is about $25.

So with other expenses aside, $30k * 0.02 (risk tolerance) = $600

$600 / 25 = 24

So I could enter a trade with one contract and have a stop loss within 24 pips of entry and be within my defined risk tolerance.

Have I got this correct?

I think the biggest problem with the SPI is the pip size being $25

 

[jjbinks]

I think commitment and consistency go hand in hand for me.

I remember starting of trading with small account which I could have lost all of it and not cared (too much). I was using a mix of systematic and discretionary methods but wasn't following my strategy.
Of course it wasn't going to work.

I know have much bigger proportion of my savings that I use for trading and you can bet that I don't want to lose more than %x. I am know purely trading systematically so that I can back test in many different settings and be confident about the likely profit and risks. I now follow my system almost to the dot. One system has underperformed the index last 6-9months by quite a bit but when I look at my backtest results I can see that there is at least a 25% chance of such results and other aspects of trade match backtest results so I keep trading and remain confident about my system.

Ultimately you need to data to convince yourself that your strategy works that can be either through backtesting or paper trading and then you need enough potential risk/gain that you care enough to make sure you follow you system as close to perfect as possible.

Thats my 2cents.
Hope it helps

 

[cb3d]

I haven't touched the SPI in a few years now, I think 30k would be minimum IMHO. You can trade with much lower if you close position before end of day (no carry through).
I think off memory daily moves were about 40 pips and the night session spread could easy get to 24 pips and more.

wow, yeah OK that's a lot to work with that could easily burn through capital without some very stringent risk management. Thanks for the banter willoneau!