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Does Contract Size Matter in Futures Trading?

Matt Z Trading Workshop

The size of your trades dictates your psychology, success or lack of success of your method and your staying power in any given transaction.

Please share your opinion and experience with the size of the trades you take.

  1. Do you take different sizes for different trades?

  2. How does the size of your trades affects your trading?

Share anything that you think matters when it comes to size and your individual experience.

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  1. Yes (but… at the end)

as a new trader

I only trade 1 contract I need to hit a certain level of accuracy before I scale up. But when I do I will stick to the same # of contracts on all trades.

… The but…
I suck at counter trend trading, when working on this I tend to trade micro and with the same number of contract(s).

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I’m not good enough to trade more than one contract. I’ve been losing money trading 3 micro lots.

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Matt, thanks for the excellent webinar.

  1. I trade the same size on every trade–and keep it small. If I am getting easy winners, I will start adding to winning trades–jumping on moves. If I lose on a bigger trade, I quit adding and trade my unit size.
  2. Adding to trades makes the profits pile up quickly. When the market is not delivering on this kind of trade, I accept it and just trade units to keep my toe in the water. Then when things pick up and bigger move show up, then I jump on them.
  3. What I just described keeps my losers small and allows me to have bigger winners.
    Mike
2 Likes
  1. Do you take different sizes for different trades?
    Yes. I trade 2 main methods. One is based on specific risk amount and the other requires scaling-in (aka averaging down with stops ala Steve K.) which requires knowing my risk along the way and making adjustments as needed. When I trade a specific risk value, I’ll enter one time with multiple contracts. When I scale-in, I’ll trade a ratio of 1-1-2 generally depending on strength of the trend.

  2. How does the size of your trades affects your trading?
    When I enter one time, I’m more relaxed because my risk level is low, relative to scaling-in where I’m generally scalping because the price initially went against me. When it moves my way, I’ll trail my stop to breakeven at which point any concerns I have go away.

2 Likes

Good session, Matt. Thank you for taking the time to train newer traders, it helps. There is so much misinformation out there and sometimes it’s hard to know who is sharing unpracticed ideas.

  1. Do you take different sizes for different trades?
    No, I try to only trade within my risk comfort level.

  2. How does the size of your trades affects your trading?
    I try to remove it as a factor and trade the same size every time. My theory thus far, has been that I should feel equally confident in all of my trades, not just certain set ups. I don’t know if that’s right, but I want to focus on my entry and exit - once I feel more confident at that, I think the next step will be seeing if I should adjust size.

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In listening to your presentation, I discovered that I am trying to trade a $ level that I am just not comfortable with. I generally trade the same size.

I realized that the size was affecting my desire to enter a trade and was making me nervous just like you mentioned.

Thanks for the great webinar!

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Size depends on risk parameters. That should be worked out in your process. Your process is much more important. You will be able to scale up and in and out as you refine your process. Spend time on it… always have it up… always follow it.

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Different sizes: Yes, though its all on micro e-minis, depends on the target i’m looking for, the direction of the market, and my risk tolerance for that day. The market is a fickle beast…

Size of Trades affecting trading: Oh yeah. Early on I went in small, then I thought I knew wth I was doing, so I scaled up… and got stopped out, lost a decent amount of money, because i was in TOO BIG and the market went against me. Now i’m down to 10-15 contracts, and even that is probably too much, so I’m scaling back to 5. I’ve made a decent amount and given that amount back, so yeah.

Size of trading also affects emotion, right? Because every tick down you see a freaking red number that is larger than when you take a small position, and it WILL trigger a flight-or-flight response, and no one makes good decisions in that headspace. I was a cop for 12 years and trained on decision-making during fear responses, but that LITTLE RED NUMBER getting bigger STILL triggers a response like a dark-building-with-an-unknown-badguy never could.
Starting small also helps with fills… overnight getting 20 micro e-minis will not run as smoothly as 1 contract. Those fills WILL slip. Slippage sucks. Slippage costs money. Bitten me several times, and I haven’t been trading that long.

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Yes, futures are inherently highly leveraged, so you must pick something in your comfort zone, or you will never be able to follow your plan.

The most important lesson I learned from reading Mark Douglas’ books, was the usefulness of scaling out. We are always faced we the dilemmas of:

  1. Getting out too soon.
  2. Letting a winner come back against you.
    You will kick yourself for coulda woulda shoulda all the time. So now I take some off fairly quickly, some at a reasonable target, and try to let one run.
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Thank you Matt and Jake for the webinar.

1)Do i trade differente sizes for different trades? Yes, it depens on the market. The ES and the NQ are under certain market condition different in volatility. Your stops are getting hit earlier.I want to be sure that we are in a trending day and when i am in profit, i will increase in size. When i am in profit, i put then my stop on Break Even Point if the markets runs against me.

  1. How does the size effect your trading? Depens which market we have that day. i am asking myself more and more: is this the market i want to trade today or am i gambling? I am getting more and more aware that this is a probability game.
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Simple. Don’t trade counter-trend
Stick to what you defined as a trend (Based on the time frame you trade).
Your goal is to be good at one thing not try to “squeeze” every single trend and move.

Matt Z
Optimus Futures

.

Get backing to one would give you the ability to try different methods, risk/reward, and see what sticks.
But don’t try a method for a day. A short sample does not indicate much in my opinion.

Matt Z
Optimus Futures

There is substantial risk of loss in futures trading. Past performance is not indicative of future results.

@Grasshopper You welcome.
If this system works for you stick with it. Maybe you share some screenshots of your entries and under what circumstances you do it. A picture is worth a thousand words and it’s a visual business.

Matt Z
Optimus Futures

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Very interesting. How did you develop two method? Are the based on different volatilities, different time frames, or both?

Matt Z
Optimus Futures

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You are welcome. Yes, there is an enormous amount of misinformation.
A trader who has his capital at risk needs to filter who he listens to and what methods he adopts.
It takes time, but you will understand overtime what should stay on paper and what should be applied.

Matt Z
Optimus Futures

Glad to help!

Matt Z
Optimus Futures

Size also depends on your risk capital available.

Matt Z
Optimus Futures

First, Thank you for your service! Every profession that requires discipline would help a trader, but trading also has its own rules and procedures that you would have to adapt to.
Isolating the $$ factor is the hardest part of developing a procedure where you trade the markets not the gains and losses.

Matt Z
Optimus Futures

Agreed. But you should measure success over what happened to capital over time and many trades.
There will be situations that a win will turn to loss, a loss to a win, but the key is not to make conclusions over one trade which sometimes sends traders to change methods like daily socks.
Uncertainty is part of the challenge and those who are good traders get rewarded for working with this variable. My Opinion.

Matt Z
Optimus Futures