Richard Dennis's System for ES and NQ Futures: A Practical Application

System Parameters

For trading ES and NQ futures, a good starting point would be to use a 50-period breakout for entry and a 20-period low for exit. The period can be anything from a few minutes to a day, depending on your trading style. For this example, we will use a 60-minute chart.

Position Sizing

Position sizing is important when trading futures. A simple approach is to risk a fixed percentage of your account on each trade. For example, you might decide to risk 1% of your account on each trade. If you have a $100,000 account, this means that you would risk $1,000 on each trade.

Example Trade

Let's say that the 50-period high on the 60-minute chart of ES is 4500. You would place a buy stop order at 4500. Let's also say that the 20-period low is 4450. Your stop-loss would be placed at 4450. If the trade is triggered, you would be long ES from 4500 with a stop-loss at 4450. Your risk on the trade would be 50 points, or $2,500 per contract.