Margin on futures vs. notional sizing – am I overcomplicating this?

asked by u/wei_adams · 9d · 3 answers

Been looking into futures for diversifying beyond just equities, specifically micro contracts ($MES, $MNQ) for the capital efficiency. The margin requirements are obviously appealing, but I'm getting a bit hung up on how to properly size positions for risk. Is everyone just using a percentage of their account based on the notional value of the contract, or are you factoring in the actual margin used? Seems like the latter would lead to much larger positions for the same perceived risk, which feels wrong. How are you guys approaching risk sizing on futures without getting into trouble?

Join the full discussion

Top answers

  • u/pim.sukprasert· 20 pts· 9d

    Most people seem to size based on a percentage of their account's total value, rather than fixating solely on the margin amount. The margin is just collateral, not the actual risk exposure. How are you thinking about your max loss per trade?

  • u/nattapong.kittisak· 5 pts· 9d

    ผมว่าไม่โอเวอร์คอมพลิเคทเลยครับ การคิดเรื่องไซซิ่งนี่สำคัญมาก ถ้าจะเทรดฟิวเจอร์ ผมใช้ทั้งสองแบบเลยนะ คือดู Notional Value สำหรับภาพรวม แล้วก็ดู Margin Requirement เพื่อดูว่าแต่ละสัญญาใช้เงินเท่าไหร่ครับ

  • u/liam86· 0 pts· 9d

    It sounds like you're heading down the right path by thinking about notional value for sizing. Focusing solely on margin can be a trap, as it's just a collateral requirement, not a true measure of the exposure you're taking on. How are you thinking about volatility in your sizing calculations?

Related questions