I'm retired and don't need more than my current income. Will be more than happy if I can make enough to buy a weekly bottle of good value Champagne ($29.99 Perrier-Jouët on sale at the local liquor store) and a Saturday night dinner at Chili's or TGIF or Ruby Tuesday with the wifey. Just asking for shared experience if any: Which markets? Position size? Ratio between take profit (TP) and stop loss (SL)? I plan to trade mostly ES, but also GC, CL, (maybe NG) on IB TWS with $40k in equity, so low commission nice access to markets and obviously razor thin take profit and stop loss. My problem is this is obviously a tiny account in the greater scheme of things but even if $100 a week probably sounds like chump change to them all ET top guns, that'd be a 13% ROI on a $40k account. I don't have much of an edge, except I don't need the money (so no error inducing stress). Just wondering in particular what the correct TP/SL ratio is. Planning to start with TP 0.80% and SL 0.60%. Does that make any sense? Or should I go golfing rather?
Forgot to mention: I don't need the $40k either, so can accept pretty large drawdowns. (not sure that's a plus )
You should go golfing... Without an edge your trading has negative expectancy. To you trading will be similar to playing in a casion -> you'll loose money in the long run. You can still trade that way for the fun... but don't expect to make money (consitently) in the long run. Ninna
Hi Ninna, Thx for the advice. I was thinking (naively?) on short time frames who's got a consistent edge? Not sure even Goldman Sachs knows (or rather wants to know) whether the market is going to move up .8% before moving down .6% in the coming hour or so (which is the bet I am making with that TP/SL combination). So SL below TP should in the long run be some kind of an edge. Does that make sense or am I fooling myself? TJ
Maybe scale down at first and trade "substitute" contracts via stocks where you can deploy less capital. Like substitute buying odd lots of SPY for ES, etc. You can then test out your strategies using real money but a scaled down version until you are sure you have positive expectancy. Until that point, why waste more money than you need to?
Agreed. IB has a paper trading account going with the real one. So will use the paper trading for large trade and smaller size on the real deal. Why do you suggest SPY odd lots? To scale risk to the $40k? Or is there any other reason? Thx
You are fooling yourself... By skewing the TP/SL ratio you skew your # win/# loss ratio but at the same time also your avg win size/avg loss size ratio. When you look at the profit factor your expectancy still remains the same (zero minus commissions). GS doesn't trade without an egde. Especially at high frequencies. Having an edge doesn't neccesarily mean knowing/predicting where the market will go in the next X minutes. Ninna