Account Sizes
The FX and Majik systems are traded as a true day-trade, no contracts are held overnight, therefore most brokers will allow you to trade without needing to meet the minimum overnight margins. (If interested, we can set direct you to a broker who will go as low as 30% of overnight margin daytrading our system. They also give executions in as little as 4-5 sec on e-mini and SP. Email us at Broker) It is up to each individual brokerage house what they require. Some brokers give a set figure, like 1/2 the overnight minimum margin, others will allow you to trade with even less than this.
What we, as the trader, are concerned with is to start out trading with enough in our trading account to withstand the drawdowns. Drawdown is the worse the account has lost at any one period (accumulative). We have to have enough in the account that if we started trading just as the account hit it's worse drawdown, taking loss after loss, we can sustain the losses and keep trading. But, as the markets increase in size (SP was only trading around 200 points 15 yrs ago, it has gone above 1500 points in recent times), drawdowns also can increase proportionately (as well as potential profits). And there can always be a first-time ever larger than ever drawdown. Therefore, we should not begin trading unless we have enough to meet the minimum trading account size + 1.5 to 2x the largest previous drawdown.
This actually goes further then just the numbers of being able to stay in the game. You have to have enough funding so that you can have the PEACE of Mind to trade. The psychology of trading. Never, as in NEVER - EVER, trade with an under-funded account. Especially never trade with too little money if your next trade will determine whether you can pay your bills this month or not. Talk about being pressed into making stupid mistakes. It happens when there is too much at stake. It can break you. You should also have some other source of income, other investments, business or work which all help give you the peace of mind of knowing that you can withstand an above average series of losses, yet still have enough to keep trading, and if need be add to the account from your other sources, so when the winners come you are still in the race. You will still be there to get the winning trades to pull you through.
Here is what typically happens when you are too under-funded. When you are under-funded it only takes a 4 or 5 losing trades and your out. You go in, your first 2 trades are loosers. Alright, you stomach it, it is expected. So you go in again. Bummer, 3rd one is a loss. You feel a hole in your gut. You only have enough for one or two more trades. You worked for that money, and it is gone. You loose sleep, you sweat. The trade signal comes, and you freeze. You got the signal, the next day you pick up the phone, but, you just can't do it. Fear sets in. What did they say on the news, the markets are uncertain. No, fear rules, your mind tells you that this could be it, if you loose, you could be out. Your mind comforts you by telling that you really don't have that much confidence in the system you are trading (but, really, that is just a bluff, the real fact is, the fear of losing has got you all tied up in a knot). You sit it out. The trade would have won big time. You would have made up for all the losses IF - if only you woulda - coulda - shoulda. What happened? Well, now you are not really certain what to do. The next signal comes. Your mind tells you, look, is this really a good system? You think you lack confidence, but what you really lack is the money to just take the trades as they come. You decide to wait and see, you sit it out again. Again, you missed out big time. Out of 5 trades 2 were big winners, and if you had taken all 5 your account would have been up by thousands. But, instead, due to Fear, which was amplified by having too little account size, you blew it and only took the losing trades, not the winners.
That's it, your mind tells you, yes, this really is a good system, all right, I'm in next trade. You take it, bam, another looser. Your gut is in knots again. You sit out the next 2 winning trades because this time you are way under funded. So far there have been 8 trades, 4 winners, but you only took the 4 losers. ? You take the next trade, and that is it, a loss, you are out of the game.
It wasn't because of a bad system, it was due to FEAR, which was amplified by a way under funded account size. Don't let that happen to you. Don't try trading if you are way under-funded.
Trading is war. If we don't have enough ammunition we will get wiped out real fast.
Futures trading is risky, trade only with risk funds that if lost will not alter your or your family's lifestyle.