There are a variety of answers to this question, but the simplest answer is to never risk more than 5-10% of your account on a given trade. I enjoy watching YouTube videos where the traders are trading hundreds of contracts at a time, and the videos always show them making a great return on a one or two point move. Oddly enough, the videos of these high rollers never show them getting blown out of the bottom side of a trade. I have to assume that they ALWAYS pick winning trades since those are the one type of trades they publish.

And that is the silly thing about videos showing traders making $10000 a trade. In my world, you would need about a 2 million dollar account to risk that sort of capital on a single trade. Now there are plenty of traders out there with far more capital than two million, but they aren’t posting their trades on YouTube. Why would they?

For the average trader, you can make a great living on the ES emini contract only trading one contract. I sometimes trade as high as ten, but generally I trade one or two contract and feel I am managing my money efficiently. I suppose I am more of a singles hitter than one to try to hit a home run. I am very content to consistently make 500-1000 dollars a day with relatively little drawdown. In fact, I generally only risk 2% or so of my capital on a given trade, especially during volatile sessions.

And that is a funny thing about paper trading on a demo account. I see paper traders entering order of ten or fifteen contracts and being amazed at the amount of money they can earn trading at that level. It is my belief that you should paper trade just about the way you plan to trade a real account. One or two contracts is a nice place to start on the ES Emini contract, and 2 or 3 contracts is a nice place to start on the YM contract. Why influence your thinking on paper when correct money management technique dictates you trade lower amounts in a live trading account?

So practice sound money management and don’t overtrade and don’t overload your risk tolerance with excessive numbers of contracts. Paper trade the way you plan to actually plan to trade. Practice doesn’t make perfect, perfect practice makes perfect.