That's true, the market is only simple when you don't understand the nuances. It's complicated, often stressful and with prolonged difficult periods (drawdowns). There are people who enjoy this atmosphere on some level however. Traditional businesses are an order of magnitude simpler and that's why trading isn't more popular.
One of the best comments I have seen. I have gone thru this and many of us do to get Consistency, which is the only thing needed to stay in trading
Maybe this example shows how difficult it is to be consistent. Try to trade the ES (Emini) with a capital of 2.500$, with a margin of 1.200$ per contract, with a maximal position of 250 contracts and try to make net 1 point (4 ticks) every day. So the first day you trade 2 contracts and make 100$ net profit. You continue this till you have 1.200$ profit so that you can trade 3 contracts. In this way you continue by reinvesting all the profits in more contracts until you reach 250 contracts. At that point you trade 250 contracts a day. What would be the result? After 260 trading days (we take 4 weeks holiday!) with 1 point net a day the capital will reach almost 2 million $. At day 65 you will reach already the maximum of 250 contracts a day limit. What is 1 point every day? Seems almost nothing and very easy to achieve. So who made 2 million out of 2.500$ in 1 year, so multiplying his capital about 800 times in 1 year? Probably everybody on ET can do this. But if nobody could achieve it, it means that nobody can make net 1 point a day????? 2 points a day will result in over 5 million$. 3 points a day will result in over 8 million$. So trading is very simple: just make 1 louzy point a day, that's all!
Wow, I guess it depends on the business! (See below.) Man, I really must've been in the wrong business, or have sucked at managing it. For me, having been an entrepreneur in a services sector, I couldn't grow to the point of "mostly supervising" and remained stuck in the front line with fairly long hours and a linear income scale, and that was a decade into it. Too much staff turnover and difficulty finding affordable talent. With trading, not only am I only accountable to myself which I find very relaxing (phone doesn't ring, no progress reports to send out, etc.) but I can also make up pretty much any schedule I want and adjust my system around it, with the hopes of having increasing revenue per hour invested as time goes on. As for consistency, there are "drawdowns" in business as well. Around 2003 we had one client bailing out on a very large project which, in order for our small firm to get in the first place, we had already invested considerable work into. So placing a bet that doesn't pay off is quite easy outside of trading as well. In trading, at least there's a chance your drawdown didn't cost you 1000 man-hours. Interesting, another case of trading and poker mixing well... I know you were being sarcastic but holy cow! Talk about zero margin for error! And here I am crapping my pants whenever I think of exceeding 5:1 leverage. :eek:
Please point out one successful at home daytrader who started with modest means and has no other source of income. If they exist. They are rarer than lottery winners by far. Dont get me wrong, day Trading is a great hobby and a blast. But its no way to earn a living outside of being inside a fund, good prop shop or institution It is a myth perpetrated by brokers and others who get paid when you trade. There's one on this thread who likes it when trading makes people horny. LMFAO!!! Classic That's going in THE book! surf
Let's see how this goes... http://www.elitetrader.com/et/index...of-income-who-began-with-modest-means.289363/
Thanks for the compliment, surf. I started with around 30k, not even my own funds. Starting small means you have to be extremely frugal, abnormally so as every cent counts. Prepare to be frugal for years.
I used to know one back in 2003, although I don't know how modest his means may have been earlier on. He liked scalping near the opens for $3-5K most mornings. Sometimes he'd be done before 10:00 (Eastern). I think he played golf in the afternoons. I agree with most comments here that successful at-home traders must have better things to do than to attract public attention. The flaunters tend to be those selling "courses" and "coaching" rather than actually trading all that much; I ignore those. (Yes, even Elder. It was a nice introduction for beginners though.) Exactly, and obviously, having a solid trading plan with low leverage and which limits the scope of drawdowns. (i.e. my trading size goes down by fairly steep increments when things go South.) It's a marathon, not a sprint!
I trade intraday with this margin. But that is the only part in my example that corresponds with my real trading. For the last 10 years never a margin call, never a drawdown bigger than 25%. But I use only a small part of my capital. So if I would wipe out my account I can start immediatelly again without any problem. My margin is also calculated based on the performance and risks of my system. How quickly do you get out of a losing trade, that's important. Do you lose 1,2,3 or 15 points? You should see the whole picture. But even with a margin of 2.400$, so double of what I use, the capital after 1 year will still be 300.000$ with 1 point profit, 3.4 million with 2 points profit and 6.6 million with 3 points profit.
Since the whole CHF thing, I've been re-evaluating my risk tolerance personally. For example, yes normally there's no big surprise and you can plan on, say, being at worst screwed by 1-2% of the underlying instrument on unexpected news. Sure an index is less vulnerable than a single stock or commodity, but what if a "never gonna happen" event occurs? Something really wild which causes a 20% or heck, 50% drop? That $2500 account could end up becoming negative 5 digits in the blink of an eye, and depending on the broker you might not be at liberty to wait for a better exit price. I used to plan only for "normal" risk, but I'm reconsidering this year. High leverage is neat for profiting from mundane moves, even essential for small traders to have a chance of living from it in a decent timeframe, but it leaves one unprotected against a force majeure arriving at exactly the wrong time. Now, with options or a CFD account some place where your account can't go below zero? That's completely different of course. But on the CME I'm getting cold feet.