Example Money Management Strategy

Remember these are just examples of a Money Management strategy, and it's up to you to decide how many contracts you trade on each trade. While Mirus will allow you to start with $12,000 per contract traded, we recommend $15,000, and thus why these examples use $15,000. Your broker rep at Mirus will be able to explain overnight margin requirements set by the exchanges, and further guide you with Money Management and Mirus's policies. It's recommended that you do not trade more contracts than suggested above for your account balance. There's of course nothing wrong with being even more conservative too, or doing no compounding of contracts at all. Mirus cannot follow this strategy or any other Money Management strategy for you on your behalf in their Trade Assist program. You need to alert them to make the changes in contract size if/when appropriate.

While anything can happen in trading, the worst drawdown with our system we ever 'expect' is 5 losses in a row at $1,500 risk per contract (or the equivalent) thus creating a 50% drawdown with the starting account size of $15,000. Potential for 50% drawdown (and also high profits) is based on highly leveraged trading. To reduce the potential drawdown percentage, you can reduce your leverage by starting with a larger account size.

Always look at how many contracts it's suggested you be trading after each trade for the balance in your account. Reduce contracts traded if at any time account balance falls below a previous balance needed to increase. For example using the less aggressive chart above, your account reaches $30,000 and your next trade you trade 2 contracts. If you have a loss bringing your account back down below $30,000, reduce back to 1 contract for the next trade. It's not a good idea to go back and forth between the charts. If using the less aggressive, stick with it for awhile. If using the aggressive, stick with it for awhile. Using the less aggressive for awhile and then suddenly jumping to the more aggressive when feeling confident, and then back again when feeling less confident can end up creating a form of whip-saw.

Another example: Your account reaches $100,000 and you begin trading 6 contracts. There is a loss on the next trade and your account balance falls to $91,000. You would be below the balance required ($100,000) to increase to 6 contracts, so you would reduce your contracts traded on the next trade to 5. If there is another loss on the next trade and your account balance falls to $83,000, you would stay at 5 contracts for the next trade because $83,000 is still above the account balance needed to trade 5 contracts. ($80,000)

You must e-mail your broker rep at Mirus Futures if you want to increase or decrease your number of contracts traded on the next trade before the cut off time for each new trade. Mirus Futures cannot do this for you automatically. You must also get confirmation back from them that your request has been processed. Do not assume that since you sent an e-mail that your contracts traded will be increased or decreased for the next trade until you receive confirmation from them.

It's a good idea to monitor your balance when you get your account statement from the clearing house each night when you know your account balance is close to an amount that would make it necessary with a loss on a trade to reduce your number of contracts traded according to the suggested strategy above. This way you will know asap when to e-mail your broker rep and request a reduction in # of contracts for the next trade. This applies to increasing the # of contracts traded also.

Final thoughts... It's always better to be more conservative with your number of contracts traded than aggressive. Stay smart. Getting rich overnight and keeping those gains long term rarely if ever happens in trading. Steady above average gains are the way to go. There is a saying in trading that is very true...

Always protect your downside, and the upside will take care of itself.