Scaling into commodity futures – how do you manage initial sizing?
Hey everyone, been lurking for a bit and learning a ton from the posts here. I'm starting to get my feet wet with a smaller account in commodity futures, specifically looking at crude and natural gas ($CL_F, $NG_F) as I feel I have a decent grasp on the macro drivers.
My question is around initial position sizing when you're trying to scale into a trade. I've read about fixed fractional sizing, but it feels a bit rigid when you're not sure if the initial move is going to be a false breakout or a genuine trend. For those of you who scale into commodity trades, especially in volatile markets, how do you determine that very first entry size? Do you aim for a smaller percentage of your typical full position, or is there a dynamic approach you use based on the setup's perceived conviction?
For scaling into commodities, I've found it effective to start with a very small base size, perhaps 0.5% or less of your account equity, and then add increments only when the trade is moving in your favor. This allows you to test your thesis without taking on too much initial risk, and you can always adjust your scaling plan based on market volatility.