A Non-Correlated Strategy Trading Journal That Shows Profit

Discussion in 'Journals' started by raVar, Oct 27, 2019.

  1. raVar

    raVar

    excellent question, and one I would almost like to dedicate an entire thread to. If you don't mind you might find me quoting this particular post, and starting a new thread.

    To answer the question succinctly? It's probably in the answer that you don't want to hear. But it is the truth. It sort of depends. LOL

    I have heard an incredibly skilled options Trader that I know? Say that he thinks that he could do it on as little as 80,000. But mind you, he is an incredibly skilled options Trader, only trades his own private capital, and his risk tolerances has are much greater than my own. So he pushes the envelope to an incredible 5% monthly.

    When you learn more about performance metrics and what is possible over an entire career? By looking at things such as performance databases that are third-party audited such as Coquesttradersresearch, iasg, and others such as Barclay Hedge? You find a 5% monthly figure is incredible. But people with private prop it is closed to the public or an individual trading his own individual capital who is insanely skilled? Might be able to do that. And I know that that particular Trader can. But then again, he has a lot more than $80,000 and it's not a big deal if he has a flat month or even loses 65 basis points.

    Another trader? Might be able to do it 125,000. And another one might need 800,000. I have first-hand information of another individual who does it on 100000. Depends on the strategy, the markets being traded, the capital efficiency, and the skill of the trader
     
    #31     Oct 29, 2019
  2. schizo

    schizo

    For most traders who fail, it's not because they didn't have enough money. It's because (1) they didn't have a trading strategy and (2) they lacked the discipline to follow through on their strategy.
     
    #32     Oct 29, 2019
  3. Snuskpelle

    Snuskpelle

    The two kind of go hand in hand.
     
    #33     Oct 29, 2019
    digitalnomad likes this.
  4. qlai

    qlai

    Just curious, is he "pushing the envelope" being short gamma?
     
    #34     Oct 29, 2019
    raVar likes this.
  5. raVar

    raVar

    He favors short delta ... but actually I know I've seen him take plenty of long Gamma plays as well. From what I've been able to determine (and you know how that goes) I think he's running a stable underlying program, and then ontop of that, he pushes an even mix of long gamma plays he can find, and then short delta at the ends of the spectrum, and then just pushes it to near the red line on both sides. So it seems like he has three things going on at the same time. Which, as you might determine (Non-Correlation) I tend to favor that approach. :D
     
    #35     Oct 29, 2019
    qlai likes this.
  6. raVar

    raVar

    I'm used to dealing with ... shall we say ... negotiated relief as far as Margin. So starting off with $5,000 should prove interesting from the restrictions and problems that come with such limited capital.

    Regardless ... per the process (link below) the equities market would have to travel farther than 2 sigma (actually, more than a 99% probability) to the downside, before getting the long-flat strategy to reach the threshold causing the long-flat to go flat. So it's starting to look we'll be long Equities, in the long-flat strategy.

    I'm thinking I'll probably be leaning towards QQQ call spreads, as there is a bit more juice there. Probably 6 point spread (for those who are new to Options, don't worry, I'll explain as I go along). So I'll have to do some quick mental math to figure how much I should leave in cash, for the margin necessary for the spreads and possible rolls.

    But that is how things look to be shaping up for this Friday

    As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
    _______________________________

    Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
    Spreadsheet: That keeps track of each trade, each process, and then everything together ...
     
    #36     Oct 29, 2019
  7. imjohn

    imjohn

    Agreed with points 1 & 2. I was focused on OP presenting as "truth" that a trader "will never, ever be able to pull in a living-income from a small $25,000 trading account". My initial thought was, it depends on the individual's living expenses, and then whether their average level of profitability (with whatever account size they are using) meets or exceeds those expenses.

    That said, I hijacked the thread with this side topic. Apologies to Ravar. Carry on the Strat Journal. Will continue as an observer.
     
    #37     Oct 29, 2019
    raVar likes this.
  8. schizo

    schizo

    Well, let's do some math. Suppose I need $5,000/month for living expenses. This pretty much covers rent/mortgage, insurance, gas, food, etc. There are roughly 22 trading days in a month. Hence, I would need a profit of $227.27 per day, every day. Is this doable?

    I trade S&P E-mini futures. Suppose I trade only 1 contract, which requires only $500 day margin. Each tick (0.25 point) is worth $12.50 and there are 4 ticks to a point. Hence, 1 point is $50. That would mean I need to capture 18 ticks or 4.5 points. Now is that doable?

    Although it's not highly likely to capture (almost) 5 points in one trade, I'm pretty certain this could be done with 2 to 3 trades with the goal of capturing anywhere from 6-10 ticks per trade.

    The caveat, however, is do you have a well-planned strategy and the discipline to execute it? This goes back to my earlier premises. It doesn't matter how much trading capital you have, whether it's $25,000 or $250,000, if you have no idea what you're doing, you're going to lose it all.
     
    #38     Oct 29, 2019
  9. raVar

    raVar

    Have replied and started that topic in the following thread: https://www.elitetrader.com/et/threads/trading-taking-and-income-and-capital-requirements.337367/
     
    #39     Oct 29, 2019
  10. raVar

    raVar

    Have replied and started that topic in the following thread: https://www.elitetrader.com/et/threads/trading-taking-and-income-and-capital-requirements.337367/
     
    #40     Oct 30, 2019