With a pure mathematical and statistical model, it is very easy to factor in transaction cost, discrete dividends, earning... The trick is to build a model that is realistic enough so it is not garbage in garbage out.
Imagine that you'd risk 10 cents for every trade and have 10 losing trades in a row. Would it be a psychological problem? You probably mean $128k - first quarter you are risking your initially planned $1k, so it's 2^(8-1). In real life, of course, it's not gonna happen. First, you not going to double it overnight, but smoothly grow it from test sizing to the desired capacity. Most strategies with a Sharpe of 2 or over will get there very quickly.
When I hear people saying that they want to papertrade, what they are really telling me is they are afraid to lose money, and you can't trade if you are afraid to lose money. Don't doubt me. This question lacks important information. What is the strategy designed to do? Is it designed to have a lot of small loses that are outpaced by a few large gains? Or is it, a 50-50 expectation between losers and winners? Or it could be that you have a lot of small winners, with the occasional large loser, but the system is still profitable? With that said, that this scenario would piss me off significantly more if it was in a cash account versus a paper trading account. Yeah, I was off by a power of 2. Who claimed that my doubling rate was steadfast and anyone trying to adopt this strategy would have to double it overnight? If you are looking for hard rules to trading, you will not be successful. The only real rule is that you have to find a strategy that fits you and your personality. Don't expect someone else to hand you the Holy Grail. Take other peoples advice, strategies, and philosophies of the market into consideration. Adopt, tinker, or disgard as you see fit. Believe me, I have tried plenty of ideas. A lot I came up with, others that I found from others, and the majority of them fail to produce returns that are worthwhile. My method, of starting small and ramping up has treated me well in testing various strategies. If a trading method fails when you are trading small lots, there is no way it will scale up to become successful.
Dude, if you don't understand the basics of the modern market you are not really in position to act like a guru. E.g. knowing what HFT market makers do and how they make their money (as per other thread) is required knowledge, markets 101. So forgive me if I doubt that you have been successful long-term and not just pretending to be a BSD on the internet.
What is that you trade tho ? By any chance, CFDs ? Huge leverage ? Which trade chats you were in ? Sorry if missed that.
I traded options and my size was pretty big since I double downed twice. Bought BA calls, and it dropped.. So I doubled down. Etc... Then I jumped in nflx earning puts, expecting it tank after earnings... Stocks did open red but my puts also lost money due to time decay and premium lost... Huge mistakes... I think I will stop daytrading and options now. Swing trades might suite me better.
The problem is that retail traders do not typically use the same margins. There was a study of trading accounts many years ago and it found that retail traders routingly violated their risk management rules the higher the account grew. I've personally seen such with trading pals...they started off with good risk management for several years but the numbers begin to spook them in a weird way and then cause them to take unecessary risks... The fear should have caused them to lower their risks. Instead, it caused them to dramatically increase their risks (e.g. doubling down on a bad/losing trade position) in market conditions they shouldn't have been trading when they should have been on the sidelines waiting for market conditions to improve or return back to what it was when their account was growing. It's psychological and if someone saids its just poor discipline...that's still psychological. By the way, financial reasons is usually in the top 5 of reasons why couples split up...up there with infidelity and communication problems. Yeah, you're absolutely correct...she did not miss any of that money that she disliked that caused the divorce and that she received after the divorce. wrbtrader
I always use the same margin, I always use a stop, I (try to, as this part is very difficult for me) always follow my rules. If I don't do that I get in psychological problems. In fact the fear for getting these psychological problems help me to be disciplined. My confidence comes from my discipline.