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Margin on futures vs. notional sizing – am I overcomplicating this?
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?
3 comments · 2 points
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?