Number of Futures Contracts




Hi guys :slight_smile: You’ve helped me before so I thought this would be the first place to come for my question. I’m just looking for a little advice and maybe some statistics from the back testing I’m sure someone has done. I’ve done a lot myself but there are random days that don’t load that well on ninjatrader for me, so I’m not 100% confident in my findings especially the farther back I go. (I do rollover contract months appropriately and load >125 days when necessary)

QUESTION: I use NTB for my futures account. How many contracts is safe to trade on NQ using IZSS per $ amount trend and chop trading from 9am-3pm consistantly. (I personally don’t do swings only because I haven’t back tested sufficiently)

ASSUMPTION 1: Using the 5% rule for when to stop for the day and how many contracts to trade wouldn’t amount to doubling capital every month but every 5 months. Using NQ it would be 1 contract for every 25k in account when max loss is around 36 ticks and average loss is around 20 ticks.

ASSUMPTION 2: Average week is +50 points (200 ticks) which would mean an account size of 1 contract per $4,000 in account would be ideal. However, the biggest draw down streak I found was -80 points between two big 20+ point trends. Margin is $500 + 80 points draw down = $2,100 minimum to trade 1 contract safely.

REAL QUESTION: Does the back testing from IZSS (or your personal experience) dictate that I have a high probability of staying safe trading 1 contract on NQ for every 3k in my account for 3 months until I reach my goal and start trading 1 contract for every 5k in my account and eventually 1 contract for every 10k in my account which is where I would like to stay at.

Let me know if I can clarify anything.


I’m sure Darrell or John will answer you but I thought I would throw in my 2 cents as well. I trade the e-mini NQ and YM usually. I have found its important to have the account size to be able to take 6 stabs at the market at $5 a tick and observe the 5% rule. Therefore 20,000 per contract is ideal. Worst case scenario you can have 6 losses at nearly full loss in a row and only lose 5%. I tried to trade NQ with only 3 or 4 full losses available and got killed. Then again I wasn’t well versed on the chop trading at the time and just tried trend trades. Having the proper account size is important as well as knowing how to trade chop as well as the swing trades. In my opinion. :slight_smile:


What a quick response! Thanks @ronin50! Follow up question: Isn’t stopping after 5% similar to cherry picking? I’ve never been able to tell the distinction (I’m sure there’s a logical one). IZSS is a great system and definitely an odds type of game. I always keep trading when I’m down because I know if I wait until the next day I could just as easily be down then too, but I would have missed the big trend that always happens right after you stop :wink: If the system is right 80% of the time and you always stop after the 20% that’s wrong wouldn’t that be less profitable than banking on the fact that odds are a trend is coming

I definitely fall into the category of traders who want EVERYTHING and want it NOW. It’s hard to image that on the worst day I’ve seen, the market went against IZSS 80 points (multiple trades) just to come back and still have a successful week of +50 pts. Double that worst day plus the margin and 4k would still allow to continue trading. It’d be scary but definitely possible. Nerves aside, I want my capital to work for me in the most efficient way possible, but first it has to WORK for me. Margin call = no fun. 20k per contract is safe and relatively stress free but it’s currently hard for me to come to grasp with the fact I’ll need to close my futures account until I’m worth that much. Then, there’s that 15k per contract in my account I feel like I’d never dip into and wouldn’t be earning any interest. I’m here to learn from the pros until I get my feet on the ground. So your post really was helpful :slight_smile: I’ve been spending a lot of time on this on my own, and I know the people on this forum are a much better way to learn. Thanks for taking the time!


I’m not sure why you say stopping at 5% is cherry picking? The 5% number is meant to keep you in the game and not blow your account. Trading is about survival. If you can trade 6 trades in a row and should they all lose you only lose 5% of your account then you will have to do that 20 days in a row to blow your whole account. Being able to trade 6 trades in a row and not worry about blowing your account allows the Sharpshooter to play out its statistical edge and keep you in the game as well. It is unlikely to lose 6 in a row with IZ sharpshooter but the point is you are prepared for worst case scenario. It is unusual to lose more than 3 in a row unless you are caught up in some nasty chop and don’t realize it (its happened to me). Stopping at 5% also gives you reasonable goals and levels to stop for the day and regroup if it is a “losing day”. We trade to live, not live to trade. stopping at +5% allows us to step away from the computers, control greed and enjoy the rest of our day and actually have a life.


TRADE TO LIVE. beautifully put. By cherry picking I only meant that you get a statistical edge if you keep trading when you’re down. When there have been six trades that go against IZSS the probability of a trend coming up is a lot higher. Normally NQ will gain some traction while being range bound so it can really move afterwards. (By ranges I don’t mean ICE or deviation just a string of valid entries that didn’t work) If you quit and wait for the next day you probably skipped over the trend and you’re back to having the same chance of hitting chop as hitting a trend.

– I’ll concede that goes against the idea that the probability of winning on a valid entry is completely random because the market doesn’t know if your last trade won or lost so you can’t predict if your next trade will win or lose. I see something to that effect on the forum all the time, but it’s not something I personally agree with.

– I’ll go over some more charts and see if quitting after ±5% would be better for the bank account than trading 9am-3pm as I have been doing currently :smile:


One more thought about the 5% rule. Yes it helps us to protect our account when we enter a period of really bad chop and the market isn’t cooperating with us. But another very valuable benefit of the 5% rule is it stops us trading when we are having a bad day mentally. All traders will once in a while have a day where you are not at your best, perhaps you are sick or have other serious distractions in your personal life. If you keep on trading on such a day you could lose much more than 5%! So the rule helps to protect us from ourselves.


absolutely! Spot on! I had a day like that where I was fighting a bad sinus infection and I made some bonehead moves that I wouldn’t have if I wasn’t sick. The 5% rule reinforced to me that its okay to stop and not revenge trade and just reset the next day.


One thing I think I failed to point out is that the “6 trades in a row” are only 6 valid trades according to the rules. not just trades back to back. The system provides your statistical edge where hopefully you never lose 6 valid trades back to back and lose 5%. however your risk is structured this way to keep you in the game and give you confidence to keep taking a trade.


You could even lose 6 in a row if you won 3 in a row before that you would still only be down a net 3.


What you are seeking is for someone to tell you its okay to take on more risk that laid out. Your not going to get that that is a decision you are going to have to make you have 3 choices. A few tips for you.

The rule is 5% of your account size / 6

This rule defines your SIZE

Meaning take your account size multiply it times 5% and divide that number by 6

This is the max risk that should be on any trade you take

This does NOT DEFINE where your stop loss should be (This is not a choice)

Your stop loss is defined by the chart based on the sytem. The markets could care less what your account size is. Trade based on the chart not your account size.

So what do you do if 5% / 6 is not enough to put the stop in the proper location?

Do you tighten up the stop to equal the 5%/6? NO this is not an option as you will then not be following the system (this is not a choice)

Do you just do enough trades like 2 or 3 net losses till you hit the 5% and keep the stop on the chart? NO this will ruin the statistics fo allowing you to have the opportunity to grind profits out of the market. (This is not a choice)

Well if you can’t take less trades and you can’t set a tighter stop what do you do?

3 Choices You Have To Keep The System in Tact and Allow the Stats to Work Out

  1. Trade a small tick value instrument like a Nadex Spread or micro spot forex

  2. Save money until you have the proper account size for proper risk management

  3. Be willing to risk a large overall % of your account knowing that you are overall lowering you probabilities of success with more risk (sometimes it works sometimes it does not). As your account grows do not increase your size until you can keep the 5%/6 rule in check.