Question of the Week: 4/23/2008

How much leverage do you suggest for trading your futures recommendations?


Futures contracts are highly leveraged instruments (e.g., Gold futures require only about $5000 to control $90,000 of value), so no additional leverage is required or recommended. When following NEoWave recommendations, your focus should be on keeping risk-per-trade in the 1-2% range based on total capital.

For example, if you have $100,000 to invest, your per trade risk should be no more than $2,000. When I say "Go 50% Long," what I mean is risk 1% of capital on that particular trade. Being 100% Long means risking 2% of capital.

You have no control over what a market will do, you only have control of how much risk you will take on each trade. It is your ability to control risk, and what you do with it, that alone decides whether you will be a successful trader or not.

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