Let's assume you are trading a system with a proven edge and an overall positive
expectancy. Under the current market conditions, you can expect to earn anywhere from 2-3
points (8-12 ticks) on the ES with this system. You trade using the 2-min chart, you take no more than 1-2 trades per day, and you are trading with 4
contracts on each trade.
Eventually, the market is going to become less volatile.
You
backtest your strategy during a year where volatility was dramatically lower. You can identify your same patterns and your same edge, but the market is now only expected to move 1-1.5 points (4-6 ticks) in your favor based on your system.
During this period of lower volatility, would a trader simply increase their
contract size in order to make a similar amount of money per trade? Would this trader trade with say, 8-12 contracts per trade, rather than 4?
With futures, do you reach a point where trading with more contracts actually does more harm than good simply because the volatility is lower, and you can’t get filled as efficiently with more contracts? Or is entering with a large amount of contracts not an issue with the ES market?
Or would this trader simply need to learn to trade their strategy on a higher timeframe in order to keep their daily profit goals consistent?