Crude ranks very high in the HOT-CRAZY girlfriend index. She is very hot but equally crazy. And she is a ACE stoploss hunter. No matter where you place your stoploss, she will gun it down with a a headshot.
My thumb rule is... I need 100K of capital for every 1 lot of crude. So for trading 4 lots of crude, I need 400K. I always trade in pairs. Those who have a capital of 100K, should ideally trade 10 mini lots. I place a pay out order of the profit at the end of the day, that way i have no buffer when i trade the next day. If my day ends in a loss, then the next day is needed to bring the capital back to 400k. What ever amount goes above that, is again transferred end of the day.
I have a loss limit of 10K per day. That's about 2.5% of my capital. With 1 lot, i need 100 point hit to take me out of the game for rest of the trading day. With 2 lots, i have a buffer of 50 points. With 4 lots, all i need is a 25 point hit to close my trading day with a sad face. Market can move 100 point in my direction after that, i would not be part of that move. It has happened to me many times, where i got limited out and market moved wonderfully. But this rule is there to protect me from myself. I am my worst enemy and I need safeguards to limit myself from ME.
That's why its very important for me to protect myself through out the day. Every time i initiate a trade, i always exit half at a point where the trade becomes free. This helps me stay in the game for the rest of the day. Once i am assured that even if my SL hits, I still have room to trade, I add and exit. This ensures that the day going to end well. No matter what, As long as I am able to transfer some amount end of day, I call it a win.
Now coming to system and backtesting those system and the confidence it gives you to trade with bare margin. That's like maa ka ashirwad that a soldier takes before going to war. If he is going to come back alive, its because he has learnt to protect himself.
Every good system will have few winners that make the system profitable. Take away those top 5% winners and the system will barely manage to survive. On real trading sessions, we wont be able to ride those winners. Mentally we are not strong enough. But those big losers, we will catch every one of them.
Trading is all about protecting the capital. Live to trade another day....