I know this is going to sound like whining or bragging, but it's not, and you guys are the best people to understand this. I swing trade. I started doing it about 15 years ago. I'd do it with little or no leverage, and for years mostly broke even. It was like playing Blackjack, and it was entertaining. But once in a while I'd get burned on a trade pretty bad and drop out for a while. Sometimes even a year, but I kept coming back. Over time, I got better and better at it. I spent a lot of time studying what was supposed to work in text books, learning what doesn't work (the hard way), and kept going. I got better at it. I kept trying to find a holy grail, but in the end, I realized that I was better off screening a bunch of stocks, and then selecting the one that fit the best based on liquidity, fundamentals etc. I'm trying to say that what I do might seem like it could be automated, but I do use enough discretion to say that experience plays a role in what I do. Now meanwhile, I was invested heavily in real estate. And my family was growing, and my day job income wasn't keeping up. Over time, I had to spend more and more of my trading funds just to make ends meet. Now, by the Grace of God, my wife just got a real job, and we'll be able to fund that account and crawl out of a financial abyss. But meanwhile, I find myself in this situation (1.) I have less than $10K to trade with and (2.) I've gotten really good at trading. I've put together a track record over the last 4 months that solidly demonstrates I can double my trading account every year. IMHO, I feel my method is finally polished enough to where it is consistent. But here's the thing. To the outside observer, it doesn't look like much. For example, since the beginning of the month I took my biggest account, and made $216 off of $7K. And I still have to contend with the T+3 bullsh-t. $216 doesn't sound like much, but I made it safely, and consistently, just like the last 4 months. Go through the math, and you either understand that this will double an account annually, or you don't. And I have to contend with T+3 trading rules and I can't even put in a conditional sell signal with my crappy broker because I'm trading in an IRA. Now, I've written about the loneliness of success on this forum a couple of times. But I find as I get better, it gets worse. I've really got it figured out now. And I should be happy. I am happy in one way, but in another way, it's depressing. I feel like I have some really rare knowledge that I'm proud of, but I'm a long way from doing anything serious with it. I'm 50+ years old, and comfortable, but by the time I can prove anything, it will probably be too late. My dream is to work on Wall Street, running a fund, or assisting with it. I know I'd be good at it, but all I have is an outstanding blotter with an assortment of accounts totaling $10K. Dang it, I can make money easily now. But it's going to take forever to build anything big...even calculating doubling time. It's going to take forever to get recognition that would get me hired. Meanwhile, I make a really good wage in a job I find boring as hell in a different field. I guess I'm just venting, but I feel like I have something wonderful, but it's too little too late and nobody close to home understands it. I've invented the lightbulb, and my friends are like, "why don't you just use a candle?" Does anyone out there understand what I mean? Don't flame me. I'm being very open here.
Well you should be happy now, you've won. The $$ will come on its own if what you say is true. You may have issues with scaling up though as it sounds like you do not have as much experience trading larger size.
at some point in this life one has to go all in ! it means sell your real estate, etc etc, take money out of your ira's, 401 (k), savings, collect what you can from credit cards, ect etc you will be surprised how much you will accumulate, and then dive in if your method is as good as you you think it is you will make it , if not - then not forget-about wall street, this is for boys with the right resumes and flexible spines... good luck !
The problem is you're comfortable and probably expecting to grow your account while being comfortable. If you seriously know you have it then you'd just get the money where-ever you can - friends, family, mortgage, credit card etc. It might not be "smart" but if you have true edge then it's the smartest thing to do. Also, how do you know your current trading record simply isn't because of the market conditions? I've had that in sim over a decade ago where I felt I could read the market perfectly but that lasted less than a year.
These are great responses. I guess it's a test of faith in my edge to liquidate assets to invest in the method. That's a good idea, but I can tell you that my liquid assets are whittled down to nothing and I'm just hanging on right now. Again, now that the wife is working, it's like another income we never had, so I expect savings and investments to flourish quickly. Just don't know if I'm ready to sell rental properties that are ear-marked for retirement. I guess I can keep doing what I'm doing and then look at the possibility of selling one of them or something. I feel like if I had an amount equal to my income in my investment account, I wouldn't have to work, so the idea is tempting. But when you're in your 50's you do have to start paying attention to end-of-the-road strategies.
Very true. Never scaled up. What I'm doing should scale easily. Still, if I was put in charge of millions of $$$, that would rattle me somewhat.
Sell rental properties to generate cash to trade with because you're convinced this time it's going to be so much more successful? Dude. Do not do that.
Roger that. Perhaps repair my wounded credit and borrow against one or something. So in the short run, I'll be doing sophisticated things to a very pedestrian portfolio.
The best Edge is what you can rely on the most. Trading money though, is risk capital and can be lost in a flash one way or another (ie. broker/legal risk). You've said it yourself, you've been taken into unwanted larger losses and this have made you pause for a year or so. If a $10K account could do that to you, maybe your edge is not so proven as you like to believe? Did you recoup your losses, or just write them off, are your backtesting robust and what do they tell you, etc.? You're already playing a long game and diversifying is always a good thing. Most people earn less with their trading than in other areas anyways, if they earn anything at all over the longer run trading. Getting more capital could be a good idea, but don't go to loansharks, credit card companies or pay stupid interest in a world going into negative interest territory. Having real estate, real value, is probably the best bet anyways, something our children and children's children won't afford. Besides that, please refrain from extrapolating a few weeks earnings into infinity. Market behaviour change, your edge may change, or an inevitable larger loss may be part of your setup that is not yet mitigated. Even the act of scaling up can be risky. So what is your curve, extrapolating or real pnl over longer periods and/or significantly many trades? Are you able to automate, and scale up as your system proves itself over time? Actually performing this feat over and over might make you more certain about what you're doing or what you should be doing, on real terms, not wishful thinking how you want to be perceived. Nobody else really cares where your money from comes from anyway, but they will care if you inadvertently put them out on the streets.