Multiple Contracts
First: What is a contract?
A contract is an agreement between two traders that one trader believes a particular trade will go up and the other trader believes the same trade will go down, vice versa. Simply put, if I place a trade at the start of the trading day, 8:30am for $100 long, I am saying I expect that trade to go up $100 before it goes down $100. The Chicago Mercantile Exchange matches me with another trader that say that same trade will do the opposite, go down (short) $100 before it goes up $100. That is a contract. Whichever trader is right, profits by $100 the other loses $100.
Second: how we use multiple contracts to earn more income.
We can trade as many contracts as we want. I can place that same trade 2 times at 8:30am for $100 each trade and either win $200 or lose $200. But keep in mind the more contracts you trade the more you can potentially profit or lose.
Third: We use a strict "base rule":
We use strict rules to control losses by having enough base per contract to absorb any losses. Keep in mind we are making profits by winning more trades than we lose. We strive for a 60%-to-65%-win rate.
But there will be losses, so we make sure we can weather them by using a strict "base rule" For every contract we trade we have at least $5000 in our brokerage account:
1 contract - $5000
2 contracts - $10,000
3 contracts - $15,000
and so on.
Text "trade" to 512-845-3192 to learn more about Follow the Leader Trading
