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What Size of Account Should You Use?

Commodity Account Size

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Each brokerage firm sets their minimum starting size for accounts. Normally, it starts at $5,000, but I have seen them as low as $1,000. It is common for first-time traders to start trading with a $5,000 to $10,000 account.

I have always felt it is better to start with an account size of at least $10,000, but there are pros and cons to starting small or starting big.

$2,000 to $5,000 – Account Size
This size of account is normally not recommended. The futures markets are volatile and you will not make money on every trade. If you risk $500 per trade and have 4 bad trades in a row, your account is in serious trouble. Plus, every trade will have a significant impact on this size of account, which normally causes trader’s emotions to overtake their logic when trading.

I don’t recommend an account size in this range. However, if you do start here, I would suggest limiting yourself to trading one market and stick with the less volatile commodities. Sugar, oats and eurodollars might be some markets to consider.

$5,000 - $10,000 – Account Size
This is a popular range for new retail traders who are testing the waters. This is still considered a small account, but you give yourself more chances for success. You should still limit yourself to less volatile markets and not risk too much on any trade. Try to trade no more than 2 contracts at any time.

$10,000 - $25,000 – Account Size
This is where I feel most new traders should start with an account size. You can diversify your account much more and trade a wider variety of markets. A $1,000 loss on a trade will not have a large impact on a $25,000 account and you can probably sleep well at night.

$25,000 Plus - Account Size
This will give you a solid foundation for trading commodities. You will be able to trade practically any market you want. You can also diversify your portfolio very well by trading several markets at the same time. If you run into a bad streak, this size of account should be able to withstand it. The downside to this size of account includes the possibility of over-trading and trading too many positions at one time. I would rather lose a $5,000 account than a $50,000 account to learn a lesson.

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