ES Emini Futures Strategy: Daily Loss Limit and Leverage











 




TRANSCRIPT:

Okay let's talk about trading futures contracts. On the SNP. In regards to your daily loss limit and your leverage how do those things relate? Well we need to know three things I need to know your daily loss limit. How many trades you're willing to take as a loss. And what is your stop loss? Those are the three things. You need to know. In fact let me make a little note here. Three things you must know. This is what is your daily loss limit…That's. for everybody. What's your stop loss…And the home mini. Trades are you willing…to lose with these three numbers We can determine exactly how you should trade. And we're going to talk about three scenarios with number three My favorite. So let's say you were willing to take a 300. Dollar daily loss limit. You're willing to take three losing trades and you have a strict six point stop-loss. Now all we have to do with some math. Well one MES. If we're going to lose six points, you're going to lose $5 a points You're gonna lose 30 bucks. That's what it comes out to is 30 bucks. If we're willing to lose a hundred, that would mean we could trade three MES contracts. Y three contracts times $30 loss equals a $90 loss. That keeps us within the parameters of losing no more than $300 on the day. And if we take three losing trades we're out. What's scenario two. Scenario two is let's say you did that with five trades. Well you start doing the math and you discover you can trade two MES contracts. Because what is um, two times 30 bucks? That's $60 And if we're willing to lose five of those $60 times five is 300. So we just simply do some math and discover with five trades I can only treat two MES as. But here's my third way. My favorite way. It's a scaling method…And come on I…click this one Here we go. So if you're willing to lose $300 in three trades. Well I have a high probability system. So I do not expire. to take a loss. But I do want to give myself the cushion of three trades. So I'm going to front run my risk…On the first trade. I'm gonna allow myself to treat up to five MES contracts. And lose the six points, which would put me at $150 loss. If I take this loss I have to scale down, which is super smart. Do not scale up after a loss. Do not do that…So we're scaling down. And I. have to stay at the scaled down level until I make back the profit I'm until I make back the loss on the previous level. And then I can scale up. Back to five contracts. So let's say first grade you lose your six points. No big deal. That happens. Well I'm going to scale down and I can trade three MES. I have to stick with three MES until I can make back everything I lost. Then I can go back to five contracts. What if I lose lose and I'm down to two contracts Oh well. Stick with two contracts until you make back your 90 then go to three. Until you make back your one 50 and then you can go to five contracts. The scaling approaches My favorite. And you need three things to do this math What does my daily loss limit? What is my stop loss. Also which contract am I going to trade? Because if this is a $3,000 number, Then these are going to become MES I mean these are going to become E S contracts. Most likely…So at this low level, The 300 you are stuck with MES. No question about it. You do not need to try. the E S E-mini futures contract. Trade the MES…Because you can trade fractions of the E S. You can fine tune your entries. You can scale out of trades is just such a smarter way to trade. Okay, so this is the E S futures contract, leverage talk, and…the MES. Futures contract. Leverage talk…



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