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So if I understand this correctly, translated to stocks if one risks a
maximum of 3% on each trade (using a hard stop) and trades 11 trades at a
time then the maximum exposure it 33%. Is this comparable?
Mark
> Mark,
>
> This is a futures thing. To minimize our risk of ruin, we only invest
> one-third or our capital (or less) when determining our initial margin or
> how many contracts we can afford to trade.
>
> For example, the initial margin required to trade an e-mini S&P future is
> $4,688. This means that we require cash (or bonds) of $14,064 in our
> account for every e-mini we trade. Once we get to sufficient size, we
scale
> up to full size S&P futures contracts, which are 5 times larger. When
> figuring out our positions, I, personally, always calculate on the basis
of
> e-mini contracts. Right now, my brother and I have the equivalent of 17
> contracts in play. When calculating the number of contracts to buy or
sell,
> we always round down to whole numbers. If our calculations say we can buy
> 6.9 contracts, we default to 6, rather than squeeze to get to 7.
>
> Guy
>
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