Sorry - I trade futures. The emini contracts cost $500, and you earn $50 per point. That's standard - 10% per point (then commission of course).
Guys,
I think there is difference in perception here
example x(method of calculation by MMT)
account size 5000
Margin for S&P 500
min movement 12.5( 1 tick)
tp 50(1 point)
sl 50(1 point)
= 10% risk(1 point) (50 is 10% of 500)
= 10% gain(1 point) (50 is 10% of 500)
WHY? because he calculate ROI on capital employed i.e margin required for 1 S&P contract i.e USD 500.
Others here(I think) calculate the returns on funds in the account, so in the case of the example above..
example y(USUAL? method of calculation)
account size 5000
Margin for S&P 500
min movement 12.5(1 tick)
tp 50(1 point)
sl 50(1 point)
= 1% risk(1 point) (50 is 1% of 5000)
= 1% gain(1 point) (50 is 1% of 5000)
WHY because most(ALL?) here calculate returns on account size
I am not saying MMT is wrong, just saying that we are NOT comparing apples to apples here. So his 10% claims if seen in the light of a more widely used accounting method, don't sound false.
MMT and others, please correct If I am wrong.
Happy trading!