Hello all. I'm considering branching out into the Futures Market and as such the capital requirement are very different than the retail Foreign Exchange that we mostly discuss here.
I have done the math and some reading on this subject and calculate that, in order to trade as I have become accustomed to and for which I am profitable, I would incur a margin to equity ratio of 20%. That's 20% of my capital tied up as margin. My reading suggests numbers between 10% and 40% as a good buffer but would appreciate any comments from those of you who are trading futures.
To shed a little light on the subject I have two strategies that I engage in. A day trading strategy and also a long term strategy that can hold trades for up to 5 weeks at a time. When I put all the positions together with their margin requirements (some are larger because they are held overnight), I come up with the above 20% figure...this will obviously change as my capital waxes and wanes but I am hoping to hear some wisdom from those more experienced.
How about it? Any of you trade futures on margin? What do you try to maintain as a good balance between capital growth and risk control?
I have done the math and some reading on this subject and calculate that, in order to trade as I have become accustomed to and for which I am profitable, I would incur a margin to equity ratio of 20%. That's 20% of my capital tied up as margin. My reading suggests numbers between 10% and 40% as a good buffer but would appreciate any comments from those of you who are trading futures.
To shed a little light on the subject I have two strategies that I engage in. A day trading strategy and also a long term strategy that can hold trades for up to 5 weeks at a time. When I put all the positions together with their margin requirements (some are larger because they are held overnight), I come up with the above 20% figure...this will obviously change as my capital waxes and wanes but I am hoping to hear some wisdom from those more experienced.
How about it? Any of you trade futures on margin? What do you try to maintain as a good balance between capital growth and risk control?