Well, a lot of people say it's a "self-fulfilling prophecy because so many people use them," but that's not really the case. The only people who use fibs are noob traders and small players, who really don't matter in the big scheme of things. Do you think a hedge fund moving $MMs daily gives a shit what a few thousand noob traders are doing? The argument is especially ridiculous in the Forex market (which is where the most people seem to be using fibs). Forex markets move billions daily, yet it's the noobs with the micro accounts with $100 in them that are using them and saying "OMG EVERYONE USES FIBS THEY'RE A SELF-FULFILLING PROPHECY!!!!" Please. Thank you, sir!
Well, if fibs are as magical as everyone thinks they are, then there is no risk of ruin I used to have an entire bookcase full of trading books from when I was learning, but I've sold most of them because they were worthless. A few of them had some advice that gets quoted all over every trading forum, like "don't let a winner turn into a loser" and "learn to control your emotions," but none of that is really helpful if you think about it. The rest were full of like Dr. Elder saying "look here's my Force Index indicator I created, and look how well it works on these cherry picked charts!!!!!" Or a bunch of after the fact the fact trendlines. Hey, what about all those other trendlines you could have drawn that wouldn't have worked? Who is "obviously much smarter than" me? The people that write the shitty books? Or the people that flame me because I make more money than they do with a smaller account size? Sure. But let's not forget how often losses actually happen. Last week, in 17 trades I had two losses. Average win size $450, average loss size -$679. If someone had a 99% win rate where their winners were +1 but their losers were -20, and an account size of 100, would you tell them not to trade because 5 losses would wipe them out? Now I understand that people who martingale make the similar arguments... "omg I have 99% win rate!!!" but they also usually have no stop loss and it takes one loss to blow them out. I have a hard stop defined for every trade before I even enter. At my current size, it will take approximiately 73 consecutive losses to blow my account. Of course, before then I would no longer have enough margin to go 9 contracts deep, so let's say I'll quit if my account size falls to $20k. In that case, I can still survive 44 consecutive losing trades. Now I'm not trying to get cocky. I do occasionally have losers that are big, but also sometimes they are smaller, depending on the range I establish before I enter the trade. And as I mentioned in the other thread, for any given trade, the max winner is larger than the max loser. Well dude, if that happens, I will send you a PM and tell you you were right. How about that
I'm not going to respond to all of this, but referring to your 20:1 risk reward, I would say yes, and nothing has a historical 99% win rate, you are making bad assumptions again Think about the odds of winning the lottery?.. Now apply that to losing in this game I hope you do well really, but mathematics will start to set in to your reality and that is when your old friends on this thread will statistically start to be correct. GL, seriously I hope you pull this off, but I am hoping you have the stomach to handle the eventual deviation from the norm
So hard to answer that question. Personally, I think you should start with 25k and see how much you generate that way. I mean you have days where you make $500-$1000 per day, every day for a few weeks, then you might have one bad day where you lose 5k. Or vice versa. I dont think you can really set goals in trading. You find what works and take what the market gives you. If you try to push too hard, you may find yourself getting pushed back. If you are new to trading start with the bare minimum. I know its tempting to put your whole bankroll in one account to "maximize" profits, but you really need to see how well you do first trading live.
If you're averaging $500-$1000 a day for a few weeks, what (outside of a trading halt on your stock or a black swan event) would cause a $500-$1000/day trader to lose $5000 in a single day? I mean I've posted some very large losses as a noob trader, but never on a day trade, only on swing trades (and usually a result of forming a strong opinion).
Yes, mostly losing your cool and getting mentally frustrated and losing patience. Those are the downfalls of discretionary trading. Those can also be factors in an automated system you can't keep your hands off of. In reality the best bet is to take a historically proven system and give it to someone with trusted hands that won't be tempted to manipulate the program as it is running live.
Reasonable? People on here talk like they book thier profits in advance. Why would it be unreasonable? Because some idiot on a public chat forum says so?
I mostly agree with you but you are overlooking strategy. While your account size ultimately determines how much risk u can take, hedged or net neutral strategies (intraday) allow you much more $ exposure while minimizing risk. Obviously a single, unhedged position is more risky so 1-2% risk makes sense given the inevitable drawdowns, but if you are hedged then 1-2% risk per trade is an inefficient use of capital IMO. You will still suffer drawdowns greater than 2% when everything goes wrong, but that works both ways, and as long as you have a max loss you won't blow up. Crude but efficient risk management. Also absolute numbers DO matter. Why anyone gives a shit what they make % wise is beyond me, UNLESS you are managing OPM. Even if you don't beat the market (in terms of % of total BP) but you are making $$$ consistently does it really matter? If you are leveraged 40-50 times YOUR account is going to thrash the market %wise if you are profitable. If you have a high six or seven fig account you probably can't get 40-50x leverage but u get my point.
Regarding how people view trading performance, ET hasn't changed much over the years. The OP doesn't even make reference to any particular market, leveraged or unleveraged. Maybe he doesn't know the difference. He's probably just starting out with questions popping into his mind. How much one can make with what one has is a natural one, of course. He has $50,000. So why $300-$400 a day? Maybe that's what will cover his living costs or what he thinks is a decent amount compared to what he knows from the various jobs he's come across. Who knows? Look at the responses from some of the yahoos on here. They get their calculators and project the $400 out into the future and say it's ridiculous because that will end up owning the world at some point. Then there are the statistical comments about how a blow out is inevitable because of risk of ruin or some other. Consider a leveraged market like the ES. $400 avg/day on a $50,000 account means the person doesn't know what he's doing or he has most of the account sitting idle while he's trading. A lot of people here will be hostile to that viewpoint. That's just par for the course. Most everyone on ET doesn't make anything from trading.