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QU ( mini RBOB ) & QH ( mini Heating Oil ) Position Size Calculations??


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QU ( mini RBOB ) & QH ( mini Heating Oil ) Position Size Calculations??

  #1 (permalink)
vpd1952
memphis
 
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I need some help please in making sure that I have both the - QU ( mini RBOB ) & QH ( mini Heating Oil ) Position Size Calculations correct??

Here is what I currently have for the both of them:

QU ( mini RBOB ) calculation -

1 full Point = $21,000
1 Tick = $2.10
There are 10,000 Ticks in 1 Point

Account Size = $20,000
Percent of Account risked per trade = 2%
Amount to Risk per trade = $400

Long Trade:
Stop = 1.1795
Entry = 1.1768
Risk on trade = 17 Ticks

$400 divided by ( 17 ticks x $2.10 = $37.50 ) = 11 Contracts

So by this calculation ( if correct, I could trade 11 Contracts on the mini RBOB ) ?

And do I have the Tick "count" correct - is it 17 Ticks, or is it roughly 2 Ticks ( 1.7 ticks, rounding up to 2 Ticks )




QH ( mini Heating Oil ) calculation -

1 full Point = $21,000
1 Tick = $21.00
There are 1,000 Ticks in 1 Point

Account Size = $20,000
Percent of Account risked per trade = 2%
Amount to Risk per trade = $400

Long Trade:
Stop = 1.170
Entry = 1.166
Risk on trade = 4 Ticks

$400 divided by ( 4 ticks x $21.00 = $84 ) = 4 Contracts ( Actually 4.7 contracts, but Rounding down to 4 Contracts )

So by this calculation ( if correct, I could trade 4 Contracts on mini Heating Oil ) ?

And do I have the Tick "count" correct - is it 4 Ticks ?


Thanks so much for all of the help and the clarification on if I have everything correct
I greatly appreciate it

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  #2 (permalink)
 
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 SMCJB 
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Crude Oil "CL" is a 1000 Barrel contract, quoted in $/barrel, with tick size $0.01 which equates to $10
The eMini "QM" is a 500 Barrel contract, quoted in $/barrel, with tick size $0.025 which equates to $12.50

Heating Oil/Ultra Low Sulphur Diesel "HO" is a 42000 Gallon Contract (~1000 Barrels), quoted in $/Gallon, with tick size $0.0001 which is $4.20
The eMini "QH" is a 21000 Gallon Contract (~500 Barrels), quoted in $/Gallon, with tick size $0.001 which is $21 not $2.10

Reformulated Blendstock for Oxygenate Blending (aka RBOB Gasoline) "RB" is a 42000 Gallon Contract (~1000 Barrels), quoted in $/Gallon, with tick size $0.0001 which is $4.20
The eMini "QU" is a 21000 Gallon Contract (~500 Barrels), quoted in $/Gallon, with tick size $0.001 which is $21 not $2.10

So all your calculations are of by a factor of 10.

Please note that while QM does trade liquidly, QH and QU DO NOT TRADE. I would strongly advise against trying to trade these contracts.

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  #3 (permalink)
vpd1952
memphis
 
Posts: 77 since Mar 2020
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SMCJB,
Thank you so much for explaining and breaking these down for me

I was definitely off on the Price per Tick, boy was I ever


Does my Position size Formula for the two Markets seem correct ( the Number of Ticks at risk, based on the Entry and stop loss for each trade )?

And thank you for advising against trading these two markets due to a lack of Liquidity - I will definitely consider not trading them due to the low Liquidity that you mentioned

My main reasoning for wanting to understand these two markets is solely due to me trying to make sure I understand all of the Future's Energy markets

Thank so much again for all of your help

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 SMCJB 
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Mathematically yes
  • Position Size = Account Size * 0.02 / (max loss in ticks * Dollars per tick)
is how many contracts you can trade and limit trade risk to 2%. This of course ignores, slippage and brokerage.

If you want to trade energy can I suggest the following NYMEX futures...
  • Crude "CL" or it's mini "QM"
  • Brent "BZ" (but this is far more liquid on ICE than NYMEX) [no mimi]
  • Natural Gas "NQ" or it's mini "QG"
  • Heating Oil (actually Ultra Low Sulfur Diesel) "HO" [but not its mini]
  • RBOB Blendstock (almost) but not not quite Gasoline) "RB" [but not its mini]
ICE also has a Low Sulfur Gasoil contract. (Unlike all the above which are 1000 barrel volumetric contracts, ICE Gasoil is a 100 Metric Tonne weight contract so the price and contract conversion to barrels or Gallons is more complicated. It's also an NW Europe barge based contract while the NYMEX HO and RB are both New York Harbor contracts).

Potential additional spread contracts are
  • WTI-Brent, trades on NYMEX or ICE as an implied spread.
  • Brent-Gasoil Crack, trades on ICE as an implied spread.
  • WTI-Heating Oil/Diesel Crack, trades on NYMEX as an implied spread.
  • WTI-RBOB Crack, trades on NYMEX as an implied spread.
  • Brent-Heating Oil/Diesel Crack, trades on NYMEX or ICE as an implied spread.
  • Brent-RBOB Crack, trades on NYMEX or ICE as an implied spread.
  • Gasoil-Heating Oil/Diesel Spread, trades on ICE as an implied spread.
ICE also has a bunch of products that trade on their "S2F" exchange that is actually difficult to get access to and probably out of the scope of this conversation.

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  #5 (permalink)
vpd1952
memphis
 
Posts: 77 since Mar 2020
Thanks Given: 211
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SMCJB,
your depth of knowledge in the Energy markets is amazing
Thank you so much for sharing your knowledge and insight

I completely see what you mean regarding the low to pretty much non-existent volume for the mini Heating Oil and mini RBOB contracts

I've honed in on the mini Crude Oil and mini Natural Gas


Not sure where I ever got that the mini RBOB was $2.10 per Tick

Both the mini Heating Oil and mini RBOB are the same, as far as Tick value( $21 )
and that they are both - .001
I initially had mini RBOB at .0001 ( another opps ) on my part

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Last Updated on October 20, 2020


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