Join a prop firm and keep most of your cash in reserve. Use the prop leverage to develop your ideas and to learn how to execute trades correctly with minimal slippage losses. You will need the cash reserve and prop leverage to survive. Trust me, you will not make money right away, no matter how good you think your system is. As a matter of fact, you will lose most of your money before you either: a) finally learn how to keep it between the ditches, or b) decide this was a stupid idea. When a) hopefully happens for you, you will recover quickly and rapidly build equity in your trading account. At about that point in time, your prop firm contract will be about to expire, and at that point you can use your stellar track record to: aa) negotiate a much better split and commission structure with the firm you're with or any number of other firms, or bb) you will have the equity and experience to go it alone. I'm talking from experience, here. Unless you have several hundred thousand dollars - go prop, keep cash in reserve, and you and your wife pinch pennies. I have a wife and three kids. We ate alot of beans and franks before the lobster came to the table. As a matter of fact, when the months are lean we can still throw around nickels like man-hole covers.
Don't let the nay-sayers get to you. Now: If you are ready, and DO have a system that works, you will still have problems, and must be prepared to adjust to them. Here are some: 1. You will have a technical issues that cost you money: Data down (wrong). Access to broker down, etc. 2. You will deviate from your plan (ask alphie), and wish you hadn't (I think this is a healthy step). 3. You will get tired of doing this, and question if this is the right business for you ("is this secure enough?"). 4. You will pray for something... Good Luck. I think you will be fine PS. Always be ready to change.
It sounds like you've formulated a well thought out plan and tested it. Your efforts in this regard are impressive, and I hope you will meet with success. Let me just say that I'm not a "system" trader, and therefore, I view all systems with somewhat of a suspicious eye. The problem is that in order to develop the system, you had to base it on past market conditions. You then did part of your testing on past markets....although you did do some "forward testing". Whether it was back testing or forward testing, I think one statement is true....and that is that the market will change. This is a certainty. I don't mean to hold out the fact that the market changes as a negative for you. I just hold it out as a cautionary note. In other words, I hope your method works for you, especially after all the careful work you have done. But whether it will work forever is another question. But first things first....let's see if it works now. I bring up market change because evidently this method you have designed WILL work as long as the market does NOT change signficantly. On the other hand, if there were some type of change during these initial months evidently your plan is to quit. It may be though that as you go along, you may need to tweak a few things, improve a few things. And these changes to your method may well keep your method in tune with a changing market. I've been in the market since the '60's. I've certainly seen some tremendous changes. I remember the market streaking up for example in 1975 on what we were calling "panic volume" at the time.....30 million shares. The tape would run late on this heavy volume. Puts, calls, index futures, discount commissions, day trading, on line trading....just to mention a few....are all changes I've seen in my career. And each of these has had an impact on the way the market trades. In the next few weeks single stock futures will begin to trade, futures on narrow indexes...and chances are these will also change the way the markets trade. Just remember, if one of these systems actually worked forever, then that system trader would soon have all the money. Rather, there is no substitute for using your brain to trade...as long as you can train it to think in the right way. That way when you're confronted with changing circumstances you can change with it. Or, in your case, just understand that you will need to continue to use brain to make adjustments to your method over time. Again, I hope this all goes well for you. There is no reason to expect that it won't given what you have said. But if it does, just remember Rome was not built in a day. One question I have is regarding this "dynamic sizing" that you refer to. Would you be able to amplify how this works? OldTrader
For your situation I would recommend buying houses below market value, renting them out and retiring completely. You should be able to completely retire by the time you have 100 houses (could take ten years) if each house provides 100-200 dollars free cashflow per month. But of course you can be skeptical, as is almost everyone.
Thanks for all the advice. I probably should have asked for it over a year ago when I was starting out. From the pm and posting's I haven't seen anything that we've missed duing the testing stage, so I'm hopeful the system will work as designed. Did lots of testing over the weekend to see what results to expect using 1 lot trading to start. Found out the risk increased because varying contract size is critical. I decided to just trade full size from the start, this Friday. I feel more comfortable trading this way since this is what we've done for the past 6 months. All our orders are entered using stops, so we're practicing entering buy stops above the market and sell stops below the market. We're also doing replace/cancel orders to practice doing trailing stop updates. Hopefully we'll get used to the production platform today. I got so caught up with the testing, that I didn't finish my trading plan. I hope to finish it in a day or two. I'll convert it to a pdf and zip it to see if it can be posted.
40, If this doesn't work out, perhaps you can land a gig writing for one of the financial websites. You're more interesting and knowledgeable than most of their supposed experts.
On the surface it certainly appears that you have done your homework, and given alot of thought to your future. I suppose that you realize that the days of big paychecks at whatever your past profession was are nothing more than fond memories. It would seem that your past experience and training have taught you to carefully evaluate all possibilities, and prepare a comprehensive plan. However, I am appalled at the two possibilities that you came up with. sandwich making, or futures trading. Pardon me if I offend, but that has to be the most asinine choice I have ever encountered. Middle age crazy is one phrase that comes to mind. With a wife, two children and at your age, you must have lost your mind. You have responsibilities and obligations. To put your family through this is beyond inexcusable. Wives and children have a habit of trying to please the head of the house, so I am not surprised that they support you. But if they truly mean anything to you, if your marriage means anything to you, if the long term relationship with your daughters means anything to you, then you will come to your senses, and come to them quickly. You are not a young and wild kid any more. Good God man, get a grip. Put the apron on. move your nest egg into something safe, and play with your dream of beating the futures market if and when you can afford to wipe out.
I believe he has said he will lose no more than 40k and has enough money to support his downsized lifestyle til 2004... As prepared as he seems to be...why is this so crazy??
This looks like classic mid-life crisis to me. The loss of a well paying job. The realization that there is not another one waiting. The loss of 40K is substantial. And there is no guarantee that losses would be limited to that amount. The risk of failure far outways the chance for success. It's just plain foolish and reckless.