After reading that explanation, I still don't think it makes sense. Why would you start making more risky/less payoff trades as you get more experienced?
I never said compounding makes me mad. I said I'm content to make $500 per day and have no intention of scaling up even if my account is $1M. Sure, with a $50k account I go up to 9 ES contracts. Compounding that way, with a $1M account I could go up to 180 ES contracts but seeing $9,000 per point would probably make me shit myself. That's more money than most people make in a month. PER POINT. By the time I got that much money I would have it in long term investments (the kind where percentage DOES matter), anyway.
9 contracts on the line with a $50,000 account should make you shit yourself as well. It is my guess you do not trade at all. Thats almost 1% per ES point. What happens when the price just keeps going the other way? Double up? Then triple.. then... BOOM! JP has your 50 large.
You do not understand risk management, you are showing it by this previous post. Percentages aren't relevant for traders? Seriously?
Sort of right. As a trader: * I have as little account for trading as I need reasonably for the amount of contracts I am comfortable trading, including in between drawdowns. * I possibly am prepared to occasionally blow up my limited trading funds. Like once every 2-3 years.... and refund the account from reserve. The point is that it simply is inefficient to keep more money in a trading account than needed. End of month, take money out. Some goes into reserve / investments, some goes into living. From reserve some point some goes back into trading when trading is "upped" to more risk per trade. But the later one is not compunding - it is also a matter of comfort with the risk movements. So, you dont start with X usd and get percentage of it - you start with "comfortable risk per trade" and move back to "how much money do I need". Risk per trade must be less than the percent you may be sensible risking from a percentage risk point of view, but is your comfort level. And from that you then calculate how much money your account should have. Which blows up percentages, too. Because you keep capital investment small. The rest goes into "investment". Funds, bonds, whatever Well, whaetever yields at least a nominal return in USD, so no beer and hookers
take $40K out of your account, trade one lot or minimal shares untill you are consistent. then scale up only every one to two months at a time. Once you are consistent scale up slowly again. You will then have all the answers you need
you can't trade $50M+ like $500,000 for sure! ---------------------------------------------------------------------------------- Ridiculous! You mean like 99.9% of hedge fund managers? They need to get new careers? I don;t get it,
They don't TRADE as in DAYTRADE. You can not move in and out of the market in seconds if you are that large. The consensus here you ignore is that "Trading" is assumed to be "short term trading within a significantly smaller period than a session". What hey do is swing trading (days to weeks). And that in baskets of instruments (multiple stock etc.). The asusmption so far on the other side of the discussion was fast trading - look at the 1200 USD published result with 46 trades IN A DAY. That is severely limited in liquidity. No way to scale that up to a 50 million USD fund.
and how man billions was he trading? Just f*** stupid to compare the two. $1B I'd be happy with 6% $500,000 I'd need a lot more than 6% see the difference? ------------------------------------------------------------------------------ For all you high flyers out there making 1% a day remember that Bernie Madoff only promised 12% a year and he couldn't achieve that.