Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
For 2014 I would like to wish all of you discipline and patience in your trading!
Today I want to touch briefly on a very important subject of “position size”.
Many traders spend hours and hours on trading signals, studies, reviewing the charts and patterns yet dedicate very little time to the subject of money management and one of it’s important aspects – position size.
If you have the ability, risk capital and desire to trade more than one contract, then position size is an important aspect.
How do you decide if you going to enter a trade with 2 or 10 contracts?
Are you the type of trader that gets in and out with ALL contracts or perhaps you enter and exit in layers?
Do you have certain set ups/ signals you feel stronger about and you enter with larger trade quantity? or do you enter all trades with a predefined number of contracts?
How do you calculate the number of contracts you will enter per trade? is it based on your account value? the market you trade?
does it changes with out regards to the account size?
As I mentioned in the beginning of this very short blog which meant to wake up that part in you as a trader, this subject is much deeper than a quick blog post but the questions/ thoughts above should encourage you to put more time and research into this matter.
To finish I will share just a few tips that I found useful and like to use:
1. Lower trade size when volatility increases as normally you will need to give your trade more room.
2. If you feel uneasy when in a trade, more than normal, that means you are probably trading larger quantity than you should be.
3. Try to do some math based on your trading performance, worst draw-down, amount of maximum losing trades etc. to determine the amount of contracts per $ equity in the account. Example, “I will trade 1 contract of mini SP 500 per trade signal per $5,000 of equity in the account.”
4. Evaluate periodically as your account value fluctuates and as the market fluctuates.
GOOD TRADING !
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not indicative to future results.
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Futures Trading Levels
|Contract Sept. 2014||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||December Gold||Sept.Silver||Sept. Crude Oil||September Bonds||Sept. Euro|
|Resistance 3||1330.4||20.4||99.03||139 29/32||1.3443|
|Resistance 2||1324.8||20.3||98.48||139 23/32||1.3415|
|Resistance 1||1317.9||20.1||97.90||139 9/32||1.3393|
|Support 1||1305.4||19.8||96.77||138 21/32||1.3343|
|Support 2||1299.8||19.7||96.22||138 15/32||1.3315|
|Support 3||1292.9||19.6||95.64||138 1/32||1.3293|
|Contract||Dec Corn||Sept. Wheat||Nov. Beans||Dec. SoyMeal||Dec. bean Oil|
|WedAug 13||1:30am||CNY||Industrial Production y/y||9.1%||9.2%|
|CNY||Fixed Asset Investment ytd/y||17.4%||17.3%|
|CNY||Retail Sales y/y||12.5%||12.4%|
|2:00am||EUR||German Final CPI m/m||0.3%||0.3%|
|EUR||German WPI m/m||0.3%||-0.1%|
|2:45am||EUR||French CPI m/m||-0.2%||0.0%|
|13th-14th||CNY||M2 Money Supply y/y||14.5%||14.7%|
|4:30am||GBP||Average Earnings Index 3m/y||-0.1%||0.3%|
|GBP||Claimant Count Change||-29.7K||-36.3K|
|5:00am||CHF||ZEW Economic Expectations||0.1|
|EUR||Industrial Production m/m||0.5%||-1.1%|
|Tentative||EUR||German 10-y Bond Auction||1.20|1.6|
|5:30am||GBP||BOE Gov Carney Speaks|
|GBP||BOE Inflation Report|
|8:30am||USD||Core Retail Sales m/m||0.4%||0.4%|
|USD||Retail Sales m/m||0.2%||0.2%|
|9:05am||USD||FOMC Member Dudley Speaks|
|10:00am||USD||Business Inventories m/m||0.4%||0.5%|
|10:30am||USD||Crude Oil Inventories||-0.8M||-1.8M|
|1:01pm||USD||10-y Bond Auction||2.60|2.6|
|6:30pm||NZD||Business NZ Manufacturing Index||53.3|
|6:45pm||NZD||Retail Sales q/q||1.0%||0.7%|
|NZD||Core Retail Sales q/q||1.1%||0.8%|
|7:01pm||GBP||RICS House Price Balance||51%||53%|
|7:50pm||JPY||Core Machinery Orders m/m||15.5%||-19.5%|
|9:00pm||AUD||MI Inflation Expectations||3.8%|
This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading.