I think a lot of traders start off thinking that they will grow their account organically by trading a small account with one lot and adding more lots with more profits. However - I feel it is nearly impossible to make decent money or even appreciate decent performance when you're trading 1 lot. For example: 10YM points a day on average is like over 15% a year and similarly for ES - 1 point a day average is over 10% a year. Yet when you're trading one lot - averaging 10 YM points or 1 ES point a day feels like shit because its only $50/day. Hence even if you're trading well - you feel like you're constantly under performing and eventually start taking bigger risks and trading more often to 'outperform'. All this increases stress - and you develop bad habits. Now consider increasing size from 1 lot to 10 lots. Now all the sudden your 10YM points and 1ES point a day average now yields $500 a day on average - which is decent money. So now you don't really feel like taking bigger risks or over trading to 'outperform'. I think this can greatly reduce stress. I'm going to give it a try but I'll start with 5 lots first. Obviously - you have to first be performing decently and consistently with 1 lot to even consider sizing up. But I think waiting for organic growth to size up organically is leaving a lot on the table - and exposing yourself to too much stress if you expect to make decent money trading 1 lot. And especially now with the increase in margin requirements waiting for 1 lot to grow to 10 lots (which comes out to 1000% or whatever) is too much to expect. Any thoughts?
Totally disagree. Once you're used to the $500/day it'll start feeling like $50/day. Here's the recipe for long-term survival and prosperity in this game: Grow your account slowly over time. Add size as a position moves in your favor. Never move your stops. Each trade will be one of these: a small loss, a small gain, or a big gain. That's the holy grail right there. 99% of traders don't do this. opm8
wall street is the only place where you pay money(commission) to gamble. the house (market makers) are the people you are trading with. futures and options traders are playing negative sume game.
$1,000,000 profit isn't a lot if your net worth is $100 million.. if your account value is only $10,000 a $500 loss IS SIGNIFICANT THAT IS A HUGE LOSS IN ONE TRADE!
you need only 3 lots to reduce stress, take first one at +2 ticks = reduce stress by half, take second one at 4 ticks = reduce stress to zero, put stop loss at 5 ticks for third lot and trail.
Taking a $500 loss on a 25k account is the same as taking a $50 loss on a 2.5k account. The key thing is waiting for the lowest risk trades - nail the entry, take a decent profit, and be happy with what you have. I made 350 YM points in the previous 9 sessions - no losing day. But making 1250 in two weeks felt like nothing at all - so I overtraded today and lost 50 YM points. Now had I been up 12,500 in the past two weeks I would have been happy being up 600 today instead of feeling like I was underperfroming and falling into the overtrading trap.
Why not? I think a realistic and conservative goal for a trader has to be to make 10%-20% a year in unleveraged returns. 1 YM lot is has a notional value of about 70k. If you make 10%-20% a year trading YM - that comes out to about 7-14k a year. Try living the good life off that. Try growing the account after withdrawals for expenses. Its impossible and that's why its so stressful because its a near impossible task. So then you try to make 100-200% a year by taking bigger risks and overtrading and you either blowup or fail to build the kind of solid foundation to go forward and become a top trader. Now if you have the money to trade 10 lots then why not trade 10 lots. Just sit and wait for those extremely low risk trades, use tight stops, and use a very reasonable profit targets.