Help me with my strategy
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  1. #1
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    Default Help me with my strategy

    Hey guys, I'm trading the S&P 500 on a long term investment, my trading balance is at $2 000 and I'm trading 10 lots per position, I'm pretty happy of the result but I'm worried not to have sufficient margin in case of price correction or temporary market crash that would blow my account out. So do you guys have any idea how I could survive or at less maintain my account or position safe in case of a market crash or small drop from the market ? Maybe with a hedging strategy ?

  2. #2
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    Quote Originally Posted by aketo25 View Post
    I'm trading the S&P 500 on a long term investment, my trading balance is at $2 000 and I'm trading 10 lots per position

    Something doesn't add up, here: how can you trade 10 lots of the S&P with $2,000? For myself, I'd want an absolute minimum of $12,500 to trade even one lot of the e-mini S&P.

    (I'm asking because your post has been here for a week without attracting a reply at all, though I know there are S&P traders here, and I'm wondering if confusion stemming from the fact that the numbers don't seem to "add up" at all is the reason?).

  3. #3
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    In my opinion first of all it depends on what does it mean 1 lot for you. There are certain platforms where 1 lot = 1 contract and I think that is the only possibility in your case as the price of S&P500 is around 2300... I think that the leverage that you are using for your position is a very big one as a movement of 2-3% means 20-30% of your account...But again this is my opinion

  4. #4
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    You may be right, Andrew ... I was even wondering whether perhaps the OP was referring to spreadbetting, rather than actually to "trading the S&P". Something's "not quite right", anyway ...

  5. #5
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    Quote Originally Posted by Andrew89 View Post
    In my opinion first of all it depends on what does it mean 1 lot for you. There are certain platforms where 1 lot = 1 contract and I think that is the only possibility in your case as the price of S&P500 is around 2300... I think that the leverage that you are using for your position is a very big one as a movement of 2-3% means 20-30% of your account...But again this is my opinion
    You're right, I have a leverage of 1:500 and 2-3% means 20-30% that's why I need a protection strategy to get rid of any margin call

  6. #6
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    The leverage does not have anything to do here, it will only help you use less margin for a position and be able to trade more ( which in my opinion is very risky). But what is the size of 1 lot in your case? Is it 1 contract? Because a good strategy in your case would be trading with a lower volume just to be able to average down if needed...

  7. #7
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    Quote Originally Posted by Andrew89 View Post
    The leverage does not have anything to do here, it will only help you use less margin for a position and be able to trade more ( which in my opinion is very risky). But what is the size of 1 lot in your case? Is it 1 contract? Because a good strategy in your case would be trading with a lower volume just to be able to average down if needed...
    But if I reduce my volume my profits will be too poor, I just want a trick or a strategy to avoid getting screwed up by margin calls

  8. #8
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    Quote Originally Posted by aketo25 View Post
    But if I reduce my volume my profits will be too poor, I just want a trick or a strategy to avoid getting screwed up by margin calls
    Then you need more capital to trade with or just go to a casino and put your full trading capital on black.

  9. #9
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    Quote Originally Posted by aketo25 View Post
    But if I reduce my volume my profits will be too poor

    The aim of trading with a $2,000 account can't be to make a living from it, surely? A tiny minority of traders manage to make a steadyish 5% per month ($100, on a $2,000 account). This is a good thread: http://forums.babypips.com/newbie-is...ectations.html

    It may be possible to offset your risk with some kind of option, but it's going to cost something to do (and I think your account-size might even preclude this), but it's a terribly complicated and difficult way of trading and unlikely to benefit you in the long run.

    Margin calls can't be an issue unless your risk management parameters are seriously defective. The essential point is that your position-sizing, here, is currently way out of proportion to your account size. Sorry - not what you wanted people to say, I know, but this doesn't detract from its validity.

  10. #10
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    Quote Originally Posted by aketo25 View Post
    But if I reduce my volume my profits will be too poor, I just want a trick or a strategy to avoid getting screwed up by margin calls
    Deary, deary, deary bro. You're in for a world of pain. What you're actually asking here is for some lubrication for that pain. Do you honestly expect there is an answer that will be shared opening here. Yet you willing put yourself in a position where you know what will happen next.

    Return is directly proportional to risk. You bet nothing you win nothing. You bet it all then you risk losing it all. Simple as that. This is a risk it all strategy and it will payout well until the day it looses.

    Simple as that. You want help with your strategy then abandon it now. You want more money go get a job.

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