I read in another thread that you guys have 20+ years of trading. I was just wondering if your total profit/loss at year end hit a plateau or continues to rise since there is theoretically an unlimited profit potential. It probably depends on the market condition but i am throwing the question out there anyway. thnx in advance jc
Well... I'll confess that 2000 was my first losing year. I'd incorrectely interpreted the action as a Wave 3. Meaning, I wanted to" buy the Wave 4 dip and go short Big Time on the retest of the highs, Wave 5." That all turned out wrong, so I not only lost some money in 2000, but I didn't profit from the short potential. Since then accounts are on the rise. While I have several years of scrambling and scraping by to score only a small gain, I also have 4 years of 100%+ return. My conservative psyche probably means that type of performance fluctuation will always be with me. Don't mind much, as long as I don't get killed along the way. As for "unlimited profit potential"... it gets harder to perform with larger money. And as I once posted how much money I'd made over the years only to have someone reply with "Liar", I'll not be doing that again... But let me offer encouragement. The growth potential is as unlimited as your discipline and courage.
I don't think market conditions have all that much to do with it, as all markets have very high profit potential, at least 60% every year and usually much more. Problem is, most tend to "like" trending up markets and view other as "adverse market conditions". Years ago I read someone's something which basically advised, "be one with the river". Continued success requires a good job of adapting ones behavior to the market's behavior. No easy task. As for making lots of money and "available trading capital"... On any amount of money and enough time, a good trader should make either $Millions or "Lots of $Millions"... most of which come in the lastest years. When I started in the financial markets in '77, my first investment was $25/mo on a bankdraft into Templeton Growth Fund. It's possible for one to start with nothing, and end up wealthy... though not assured. (It's also not assured that once one has made $Millions that he will keep it!)
Like Gnome, I have had setbacks as well. For me, the second half of 2001 wiped out my gains for the first half (fortunately, I had been paid already on the first half gains). So if I were trading for myself, I would have actually lost money for the year. I did for the guy I work for. This would have been my first negative year ever. I have been trading since late '79, but not full time until the mid 80's. There seems to me to be a limit for me in the kind of trading I do. It was easier for me to make, on a dollar per share basis, more when I traded smaller size. Trading larger size actually can move the markets, and for a daytrader this is huge. If I were making the trades for a mutual fund, where time and timing are not as crucial, it would not matter if I wanted to buy an enormous number of shares. But intraday, pennies matter big time. I trade with one guy who's only limit is his dollar amount per position. He can trade $2.5 million of one issue...no share limit, just dollars. I honestly don't know how he does it and consistently makes money. (I must add however that he does not trade on a daily basis as I do, so I suppose that has a lot to do with his style). He is just a better trader than I am...or very different at least. I could not trade like he does in a million years. I have seen him trade into earnings and be wrong, and double up on his position many times. This is something I could never bring myself to do. I am NEVER that confident. But he has the results to let our backer trust his judgement. So I guess there really is no limit. But for me, I have been comfortably trading the same size for several years, and have no desire to trade more. I never use all my buying power. I mean NEVER! My only desire at this point is to have more flexibility in what I do. As of now, I can only trade equities. I wish I could trade derivatives as well, but the guy I work for is not comfortable with that. This despite the fact that he knows I was a market maker on the CBOE, PHLX, PSE and AMEX and for a brief time, a floor trader at the CBOT. Plus I did some trading on the MERQ (S&Ps), And successful at all. But it is his money, so he makes the rules. I could trade for myself and do whatever I wish I suppose, but as I stated in another thread, I have not had great success without the accountability of trading for someone else. I guess this is a major weakness on my behalf, but I do recognize it, and it is something I just live with. And besides, I do not have the kind of money to trade on my own in the style I have developed trading as I have. So I guess the answer to your question is anything is possible. Just not for me. I have reached a "plateau". Fortunately, it is adequately high enough to satisfy my needs. I do try and stay fiscally responsible knowing that my income can be erratic. I trade less in the summers, and make less in the summers. I try and budget myself for this. I think all traders need to keep in mind that there will be some bad times to get through. Elation in the good times should be reserved. Don't think that when you hit a hot streak, it will last indefinitely. When things are going badly, you must know that you will do better in the future just as you have in the past. Ups and downs are part of the life of a trader. Funny thing is, when I pay my taxes, my year end earnings are really surprisingly consistent. Hope this sort of answers your question. It is a tough question because you can get 100 very different answers from 100 different traders. So keep that in mind. What I have said applies only to me. Best, RS7
thanx a lot for the responses. There really is no substitute for experience. I knew there would be a lot of different answers but your knowledge from experience is invaluable and i cant wait 20 yrs to answer it myself(hopefully i will last 20 yrs). thnx jc
Don't be so anxious. I would love to be 20 years younger Especially if I knew what I know now. Too bad it doesn't work that way. Good luck, and I am sure you will last 20 yrs. if you want. Just stay focused and determined. And don't let anyone dissuade you from your goals. There will always be bumps in the road, but you learn from them all. I am still learning every day. And even though I am thinking about retiring, I most likely will not. I just enjoy trading too much to just walk away. I guess I will always be involved in some capacity. Even when I have a bad streak, I consider myself lucky to be doing a job I love. I don't think that many people can make that claim. RS7