Just to clarify something here, in your description, briefly stated above, indicate that 1% day on average while in the poll question was 1% a day consistently, no down weeks: possible? In my opinion, yes it's possible to realise in 1) but not the one shown in the poll question. The question asked us about making 1% a day consistently, that's look like there is no drawdown possible but only gains, meaning that we must be always right, not possible for that. Jesse Livermore once said if a man is always right, he will own the planet in just two months. It is very interesting to know that almost 50% of people believe that it is possible despite the question state clearly. Very good poll.
I am having some difficulty with your response. The implication, based on earning 4 or 5% per day is that a trader can earn about 10 to 12 times his original trading capital per annum even without any compounding whatsoever. To be able to do so with any consistency is completely mind boggling to me. To do so with minimal drawdown enters the realm of fantasy from my perspective. Perhaps I am merely projecting my own limitations here. But I don't think so. [/QUOTE] Thank you for your patience and considerations. There is a great contrast between the subject of this thread (an initial experiment with some computer work on market data) and your focused questions on the potential of the market that I stated as a consequence of real trading with real money. You asked four good questions to scope and bound connecting the market to the trader and to the potential I stated. I attached an Initial Analysis Sheet for a stcok and suggested that at any time there are about 150 similar sheets for stocks available by running a Universe that is limited, for convenience, to a group of 150 stocks. The average daily change in price value of this universe of stocks is very high because the universe was selected, in part, to have this common characteristic. This trading universe is used to EXCLUDE ALL OTHER STOCKS. And it provides a setting where a lot of money is AVAILABLE and it is AVAILABLE all the time. My capital letters are not chiding you or criticising you in any way. They simply represent me emphasizing the matter at hand and as I see it. These stocks cycle. It is a money velocity issue that is shunned by the thread starter. Their cycling money velocity is above a 3 beta level. It is always running many times the 1% per day which is the focus of this thread. 1%per day is not a high money velocity for this highly selective universe. I suggested to the thread starter that the maximum money making opportunity occurs as the stock price approaches and leaves the MLR line which is where stocks regress to and over shoot as they retrace from their extreme values of the channel in which they are contained. This facet of making money is very important. If a person enters late and leaves early, he is doing a trade when the most money per unit time can be made. It is the near term of highest money velocity just before, during and after the MLR line is crossed. By making the test for entry a competive one with respect to application of capital, a very high rate of making profits occurs. The portfolio of owned stocks may be ranked continually by the rate of profit being generated as the day is passing. This reveals that there are stocks at the bottom of the list. In parallel to this, another list (HOT list) is similarly ranked for the express purpose of using the highest ranking stock (not owned at present) as a replacement for the worst performing OWNED stock in the portfolio. In effect, this is an add/delete program for removing (deleting) the worst stock in a portfolio and adding the best available stock from the HOT list. As the starter of the thread says, I keep mentioning money velocity all the time and it is repugnant to him to see the repitition of the words. Were a person to merge all the price rates of change movements of all the stocks revolving in the portfolio, he would see an overlay of stock percentage gain graphs. I do this during market hours as a matter of fact. What I notice is that the lines are all to one side of the zero line and that there are no stocks in the negative (drawdown) portion of the graph below the zero axis. Where the person to do the same for the HOT list, he would see the same results. Where do these lines flow on the real time chart? This is the subject of your questions. The answer is that they coninually lay above zero by many % and he 1% line if drawn in would not be anywheres near the portfolio nor the HOT list lines being formed. I posted the Initial Analysis Sheet for GWRX. GWRX came up on my HOT list as shown on the attached hand done graph. You are looking at the second portrait sheet. Several are gluesticked together. You can see I track it in Dry Up and I make little effort. When DU ends (a volume signal to enter because price is going to be going up fast soon) I work to keep my chart up to date (meaning hours and minute of the day, actually). I own it by then. One the attachment, you see that it goes flat in price. You also see I have pasted two clippings from the news there. At this time the street is now aware of the stock I have owned for a few days. IT IS AT THE TOP OF THE LIST OF THE TOP 15 STOCKS. What is the list for? It is the list of the top 15 money velocity stocks for yesterday. When GWRX made the list, I was owning it to make money as it rose in value after the volume signalled to buy it. When it makes the top 15 list, it attracts the attention of the contrarians like the thread starter. It also attracts the herd which is very large. What I do is hold and run stops and I determine when the VOLUME is peaking and I, then at peaking volume time leave. I know that you understand that the ranked lists discussion is very much in effect and works as direct imposing collateral with the volume signals that are just collateral. When a trader composes a universe that is the one that precedes the making the news lists, he is in a groove for making money. In textbooks this is called front running the markets. I have a 5 drawer architectual drawing horizontal file. It can handle E size drawings. Near it in the other half of my office where I monitor (five screens and a TV in a 68CM radius arch (Same as the focal length of my glasses) is a drawing setup as well. Naturally, I have services from the web and I annotate charts on my displays. Their prints go into folders and three ring binders. I run about 2 inches a month on equities in binders. Commodities are much more active. The 1% a day is underachieving. The practical matter of this thread and it's owner is another matter. We both know he is not going to get anything off the ground. One of the hard lessons to learn in gaining knowledge, skills and experience, is knowing how to know. Especially in knowing when you are learning something wrong. Two meetings ago counting from the beginning of the year, some members of the Tucson IBD MeetUp group completed their first doubling this year. I think we are on track, as you say, without compounding, to do 10 to 12 times initial capital a year. It just happens to be happening with practitioners of this stuff to be making the kind of money you calculated. I am posting back to you as a matter of my respect for you and your concerns. You are really on the ball and I feel that you contribute a great deal to others by your posts.
Thanks for the thoughts, I wont going completely live yet, but live paper-trading, and after that goes well for a few weeks then live with real money ( small ) and then really start increasing the size.
1% a day consistently, no down weeks: possible? IMHO anybody who really believes this is possible will blowup or is ripe to be exploited by those who hawk products promising dreams of instant riches and the life of leisure.
To be profitable at 95% probability for any given day using a method with a profit factor of 1.5 you'd need to do 90 trades per-day.
High frequency trading this 'powerterm' came up a couple of times in this thead. What does it stand for? 5 RT's per day? 10 RT's per day? 15-20 RT's per day? 20+ RT's per day? Just curious.
I think it really depends a lot on what type of HF system is employed. But some of the inter-listed stock arb based system might do upwards of 500+ RTs a day, but that would be spread across a number of stocks. As far as RTs per product (security) that is tougher...for some I would still think that close to 100 RTs could be possible for some type of market making type HF, quite possibly even more. For the stat arb ones i really have no idea...others on here would know waaay more...i am still trying to learn about the HF stuff as well.
Err, maybe I am just weird, but I would say at least 100+ RTs per day, or more. For me, the concept of high frequency automated trading means that it would far exceed what a manual trader can do, and I have seen some incredibly agile manual traders doing no less than 10+ RTs in a minute.