Arriving at an Aggressive Suggested Account Size 

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Arriving at an Aggressive Suggested Account Size

Once you have constructed a portfolio of markets and have calculated the suggested amounts to trade one contract of each on a market-by-market basis, it is a simple step to arrive at a suggested amount for the entire portfolio. Simply add up the individual amounts calculated in the previous step for each contract. Say you plan to trade the Japanese Yen, T-Bonds, Soybeans and Natural Gas and the suggested capital requirement for each using the formulas just discussed are $5,506 for the Yen, $5,982 for T-Bonds, $5,076 for Soybeans and $4,241 for Natural Gas. By adding these values together we find that in order to trade one contract of each market you should have at least $20,805 in your trading account. This should be a considered a minimum account size for trading this portfolio. Adding more money to the account beyond this amount will reduce your percentage rate of return. However, it will also reduce your drawdowns as a percentage of trading capital and will give you more staying power when the inevitable drawdowns occur.

Categories in Trading Mistakes

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Failure to control Risk
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Lack of Discipline
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