Home > General Topics > Trading > How long will it take to turn a $5,000 account into $100,000?

How long will it take to turn a $5,000 account into $100,000?

  1. It's no secret how winning traders win and take the profits from everyone else. They have an edge and they exploit that edge day in and day out. It's a number game. If you buy a can of beans for 30 cents and sell it for 40 cents you make a 10 cent profit. Do that 10,000,000 times and you've made $1,000,000. Trading is the same. If you make (on average) $50 for each trade you place then you execute 20,000 trades and you've made $1,000,000. Simple isn't it?

    I've written an article called The Edge which explores how long it would take you to start with a $5,000 account and turn it into a $100,000 account trading the ES contract.

    I'm not sure if I've posted this in the right forum (should it be in Career Trader?) but I'm sure that a moderator will move it if appropriate.

    Comments and criticism welcome.
     
  2. How long or how many or how often?

    I work for a guy who trades the euro, and has even adjusted his trading hours to take advantage of the price movement that has occurred of late in the 'middle' of the night. He averages around 10 3 contract trades a day, and has been gaining around 275 ticks on those trades, or $3400.

    Since these day trades can be done in a $5000 account, the answer to you question is under 30 days. Meaningless answer isn't it, but how many traders would lose their $5000 in 10-15 days, and what if your market loses its trading range? So I understand the arithmetic in your article, but it seems to assume many things in terms of being able to assign any profit goal and then automatically go achieve it, which is just not going to happen for the majority, is it?
     
  3. Assigning any profit goal would not work. You need to sit down and calculate what your edge is and how many times a day/week that edge is available and plug in the numbers.

    The best place to get these figures are from your past trading records and if you've kept good records you'll have a strategy name with each trade that you did.

    If you don't have trading records then you need to take the results of your back tested system and purchased system and plug in those numbers.
     
  4. Hi,

    The downside stops you doing this quickly. It is possible to leverage to the hilt (400:1) and make this profit in short order but....... take a few losing trades and you get taken out big time.

    I am an independent FX trader. I have a non-commercial website that deals with this issue (amongst other things). Go to www.mortysill.biz and follow the 'Money management' link.

    Because I know most retail FX traders think about how quickly they can double (usually) their money - I have set-up a challenge: follow 'Hall of Fame' link on the web site.

    Regards
    Morty :)
    mortysill.blogspot.com
     
  5. The answer to your question is pretty simple:

    y = 3 / (ln g), where 'g' is how many times you can increase your capital per year

    For example, if you are extremely good and risk tolerant and get a very nice maket so that you could double your capital every year, then

    y = 3 / (ln 2) ~ 4.3 [years] - you need a little over four years to make $100,000 from $5,000.

    If you are 25, you could buy that Porsche (from your article) before you turn 30... but I would personally wait for another year to double the $100,000 and buy a nice Ferrari 430 :D

    [​IMG]
    The new Ferrari F430
     
  6. yourself to the ES contract. There are other contracts to use and the best plan would be to use whatever is giving the best opportunity. Possibly start the day watching the ES, but be setup to see other contracts, NQ, ER2, bonds, Euro(I need to start watching this as Sundance shows), etc, to take advantage of which is moving.
     
  7. I have an answer using a Forex example and compounding. For this to work, the initial trade must generate a profit approximately equal to the initial margin plus stop size.

    For the Euro, this would be 1,000 plus 300 = 1,300 initial margin. Therefore the first trade would be three standard lots (5,000/1,300). Taking 20 points per trade (which is very achievable) and two trades a day, the first day generates 1,200.

    5,000 plus 1200 = 6,200. Which allows 4 standard lots the following trading day. Keep doing this and you get the following table:

    Day Start Lot size Finish
    1 5000 3 1200
    2 6200 4 1600
    3 7800 6 2400
    4 10200 7 2800
    5 13000 10 4000
    6 17000 13 5200
    7 22200 17 6800
    8 29000 22 8800
    9 37800 29 11600
    10 49400 38 15200
    11 64600 49 19600
    12 84200 64 25600
    13 109800 84 33600
    14 143400 110 44000
    15 187400 144 57600
    16 245000 188 75200
    17 320200 246 98400
    18 418600 322 128800
    19 547400 421 168400
    20 715800 550 220000
    21 935800 719 287600
    22 1223400 941 376400
    23 1599800 1230 492000
    24 2091800 1609 643600
    25 2735400 2104 841600
    26 3577000 2751 1100400

    Sorry about the alignment, I think it's still readable.

    Forget 100,000! You could get to the big 1M in 26 trading days. What's your appetite for trading in 275 million dollars! Remember no losses in 26 straight trading days.

    Best wishes
    Morty
     
  8. How long? Odds are.... never.
     
  9. Thanks Morty. I took a look at your site. It's good and plenty of useful info. Thanks again.
     
  10. The rule here is to know how many consecutive trading losses
    you are likely to incur with your strategy.

    Then, you make sure the total loss from these
    consecutive losing trades does not exceed 10% of equity.
     
  11. In contrast to what you say in your article (see quote below) to what Morty's site says, I am a believer of survival...

    What I am giving you here is a framework around which to calculate your expectations

    Guy2 you also said this too:

    There are many assumptions in these figures. We have not discussed the possibility of having 20 losing trades in a row followed by 20 winning trades in a row. If you used a stop of 2 points per trade and the first 20 trades you placed were all losers then you will have lost 40 points which (based on trading 1 contract) is $2,200 (including commission of $5 per trade) and your account is down to $2,800. This is a devastating way to start but nonetheless is a possibility and a reality that you should plan for and not ignore.

    Making a spreadsheet Morty's way seems more defensive and the way I am accustomed to thinking about survival and expectations. It must be wonderful to have such an efficient and consistant edge that one could think in a proactive way.

     
  12. He must be a trillionaire by now. :eek:
     
  13. I had a bit of fun with the 5,000 to 100,000 puzzle. Treating it as such - a puzzle.

    High leverage is a retail phenomenon. Professionals would think 100:1 over-leveraged eg in retail spot Forex (my specialization), 1,000 USD initial margin gives you 100,000 USD to play with. Or, put another way 100,000 to lose.

    I'd recommend always trading mini accounts. You cannot get away from 100:1 but you can have smaller equity-at-risk.

    Example:

    Assuming a 30 point stop, 1 mini lot trade and 10,000 USD equity. The maximum equity at risk is (30x1)/10,000 or 0.3%.

    If you leveraged the living breath out of it, you could trade 10,000/1,300 or 76 mini lots. Equity at risk is now (30x76)/10,000 or 23%. Trying explaining a 23% drawdown, on one trade, to someone who cares! Heaven forbid, you should have three losing trades in a row.

    Best wishes
    Morty :)
    www.mortysill.biz
     
  14. Oh Morty (may I call you Morty?), what you could do with an Oanda account!!!!

    hint: 1 unit incremental bet sizing available there...


     
  15. 7 years.
     
  16. Mvic, May I ask if it took you five years to discover how and the last two to make it?

     
  17. blew out three accounts, 1st one was $5K, other two were $20K and $18K before I stopped gambling, over leveraging, learnt some trade management skills, and made back my losses +$100K. Took me 7 years, as it took me realtively small amount of time to blow out 1st two accounts most of the time wasn't even trading. A smarter person could probably do it in 2-3.

    In case anyone is intereted apart from experience and watching the markets Elder's and Seprandeo's books were what made the difference for me. Also, I start every year out with $100K and whatever I make at the end of the year I take off thetable and have put in to RE. I have blown up a few times over the years (not for a while) since I started making money but my strategy over the years has served me well. Can't say that I haven't just been lucky though. If I didn't take all earnings off the tabe every profitable year I would probably be broke.
     
  18. Mvic,

    Thanks for sharing. Your honesty and time will be appreciated by many who read this archive, and I hope you share more along the way...(Folks isn't it good to read wisdom from good honest traders, without the ego trip?)

    Happy Thanksgiving,

    Michael B.

     
  19. Happy Thanksgiving to you too!

    Not sure I am deserving of your kind words as I still consider luck to have played a large part in any success that I have enjoyed trading. I can say this appropo this thread, even in my most profitable year of over 2 decades of trading I have NEVER done the % equivalent of $5K to $100K (what is that 2000%?)in one year. My very best year was a shade under 1300% and there have only been two others over 1000%, in over 20 years! Of course you also have to give consideration to the fact that I reset my account each year and trade relatively small size.

    Also, I should mention that there have also been a couple of years where I ended the year with a $0 balance (which would mean I have lost $150K as after I lose my starting $100K I refund my account with $50K after a month off).

    Very hard to face the fact that you actually lost money after a year of stress and hard work.

    Last thing that I will say before I sign off is that I have had a spouse through out that made a very good and reliable monthly income that more than covered all living expenses so i never was trading with money we needed to live on. In retrospect that too is probably one of the things that made a huge difference to my profitability.
     
  20. Were there some special causes for the losses? :confused:
     
  21. It only took me about a year. But that was 1998.

    :)
     
  22. Mvic,

    Thanks for sharing your story... it is very rare that someone decides to reveal his true story with all the ups and downs.

    Good luck :)
     
  23. What rare things to see on ET, honesty and humility.

    Most successful traders are not insightful or honest enough to admit the role of luck in their outcome.


    m

     
  24. "We also assume that no money is drawn out of the trading account during this time period"

    LOL. Get real. Taxes alone will make your journey even longer.
     
  25. Everyone had their share of down times, myself included. However, the original question is how long will it take to turn a $5,000 account into $100,000.

    My answer is you can do it within a year if you know what you're doing. However, it may take many years before you know what you're doing. For some people, it may be forever.


     
  26. Correct: I didn't mention that it was gross revenue that we were looking at during this study and that taxes would have to be paid on that. And yes you're 100% correct in saying that would make the journey longer.

    You could easily work tax into the equation by adjusting the formula. In fact I think that you've come up with a good idea here and when I rework this article I will change the spreadsheet such that you can enter the rate of tax that you pay on gross profits such that you can calculate a time horizon with a target net profits based on your tax rate.

    Thanks EftTraderLives.
     
  27. The original post ended with this in bold below. It was not merely a one line question. Forgive me if I caused the thread to go offtopic.

    I did not realize the work was incomplete and the author needed help to complete the article.

    Setting up defensively and trading defensively is still a valid way to determine trade size and the author might take a look at that too.

    Simply, an edge also has its drawdowns and survival is the name of the game. To hypotheticaly consider account growth with a simulated assumption is not fair to set up parameers with, to discover extremes.

    QUOTE FROM THE ARTICLE:

    This is a hypothetical example and no suggestion is being made that you will be able to do this. What I am giving you here is a framework around which to calculate your expectations.

    I say a trader should calculate the way Morty suggests to properly measure expectation and to do otherwise may be doing a disservice to a new trader. (lol I have not actually calculated the "defensive" way and compared it to the article, wouldn't it be funny if it was faster?, but i do not think so)

    Michael B.

    Comments and criticism welcome.



     
  28. To dreaaaaaam the impossssible dreaaaaaaam
    To fighttttttt the unbeatableeeeeeee foeeeeeee
    To bearrrrrrrr with unbearable sorrowwwwwwwww
    And to runnnnnnn where the brave dare not goooooo
    To rightttttttt the unrightable wronggggggggg
    And to loveeeeeeee pure and chaste from afarrrrrrrr
    To tryyyyyyyy when your arms are too wearyyyyyy
    To reach the unreachable starrrrrrrrrr

    Dream on man.
     
  29. I'd suggest creating two spreadsheets. One a margin account and another an IRA account.

    If you haven't already (I assume you work and contribute to an IRA), open up a brokerage account and roll your IRA funds into it. The disadvantages are that you cannot withdraw without penalty and that you cannot short (because no margin available). The advantage is, no cap gain taxes.

    It will make your trading a little more disciplined (and likely for the better anyway).
     

  30. If you ask that question, you will probably never reach 100k.


    Master trading and the dollars can't help but fall into your pocket.
     
  31. What a sorry bunch of schmucks to even think you can turn $5K into $100K in today's market! Yeah, you can also win $300million playing the lottery but, so what? The chances of that happening are very, very close to zero.
     
  32. I would guess that less than 0.5% of the people on this board have ever managed to generate a 2000% internal rate of return on their money. So before concerning myself with the question of how long it will take, I would first try to figure HOW to create such superior edge.
     
  33. True. I will be ammending the article and placing a link to this thread in it. I will try and include a pre-article on where/how to create edges.
     
  34. 5 months:) Man those were the days.....I took $12,000 (I know its not 5000) in just under 5 months. Took TRAC from 3 to over 30, BIDS (this pos still around lol) from the Toronto exchange to Nasdaq from 3 to 32, KTEL from 7 to 70, 265 points from QCOM, 125 pts from YHOO.

    Ok some of those were after the initial run, but those were the days when you could buy calls on an SDLI and catch a 1 day 100 point run.

    Now its more about risk management....limiting loses, riding the "truetrend." If you trade 10 ES, pull 4 pts a day, which is doable, you make $2000 a day. 500 days or 2.5 years without increasing size. If you wanted to max out and use one of the brokers who only ask for $500 performance bond/ES on $5000.

    Its about lasting, not hitting the home run. Stay the course. Home run hitters either adapted or got a job. Those of us that have lasted the last decade did so by adapting our styles and being risk-adverse.
     
  35. Those nice days when you could hit 100 points homeruns will be back eventually. The trick is to stay alive and be in the market when that day finally come.
     
  36. How long do "those days" last for. There was a period during the roaring 80s when you could stick a pin in the paper and pick out any stock and it was a winner and we've more recently seen that with NASDAQ stocks in the late 90s.

    I wonder if anybody has measured the period of time (as a percentage of all time) when these sorts of markets exist? For example as a percentage of each decade?

    That would be an interesting study if not done already.

    Thanks for all the comments.
     
  37. Just read this which I thought was topical and relevant:

    Ryan Jones is considered one of the trading industries "most complete traders". Starting his trading career at the early age of 16, he had traded nearly every major market and strategy by the age of 21. At the age of 26, Ryan signed a book deal with John Wiley making him one of the youngest authors ever in the field of futures trading. His book, The Trading Game, Playing by the Numbers to Make Millions is still considered to be the authority on the subject of trading and money management by many leading traders. Ryan's advanced experience and knowledge across many trading fields such as Technical Analysis, Option Trading, Money Management and the S&P have lead to several trading feats, including turning a $15,000 account into over $107,000 in less than 90-days short-term trading the S&P (real money).
     
  38. I could see this being possible within a year if investing in equities, but it would involve being leveraged, so you could just as easily blow out your account if your capital and risk management strategy isn't sound.
     
  39. This was an interesting thread. It looks like there is quite a bit of risk-taking behavior by using a pyramid style of trading. I have scalped the ES a couple of years ago and had a really good win ratio but it was always for .25 to .50 point, seldom more. Also, I used one contract. I think this would be hard to do in any short time frame without more leverage.

    I will give it some thought, though, because my goal for a long time has been to make $100k in one year. This is my best year so far but I'm about $30k short of $100k for the year. Also I haven't traded very frequently, most of my money has come from other investments. I have, right now a little over $6500 in my IB account and a little over $63,000 in CD's, savings and checking accounts. If I could do this using T-notes and the EUR/USD contract it would be easier because leverage is greater but I would just try for the extra $30k I need for by year's end. Thanks for the inspiration to give it one more go this year.
     
  40. Contest accounts are not traded in a way that a rational investor would trade a real money account (either his own or OPM).

    Anyway, if you develop a tradeable edge, then indeed you can compound your account in an exponential way.
     
  41. I didn't know that was a contest account? Are you familiar with that person or claim? I am not.
     
  42. I would think that avg of 4pt per contract per day (net) is not possible in ES (considering the extreme disadvantage in execution due to tick size). Especially the last 1.5yr with avg daily range of under 10pt.

    I'd be happy to hear otherwise ofcourse.
     
  43. This is insane...


    $500 performance bond/ES on $5000
     
  44. Sure, Ryan Jones is a also vendor. He has a signal service for S&P, a trading system, an audio course etc
     
  45. Thanks.

    Have you ever tried any of his stuff? Is it any good? Do you know what method or system he used for this competition?
     
  46. I turned 10k into around 400k (I know I said 360k in an earlier post but I forgot about the second account- I'm still paying the taxes on it!)
    This was the last three months of 2000 and I shorted 2 ND at a time three or four times per day. Maybe more. No indicators, no volume, just a price chart and a phone.
    Just luck and a runaway market, that's all. I haven't been able to replicate it since and the more I know the worse I trade, it seems.
    I guess my answer would be to find a market that is moving fast and ride it. Go with the flow and don't worry so much about the money. I can remember days coming home and not knowing if I made 5k or 25k that day.
    Albert
     
  47. I wouldn't limit yourself to no losses in 26 straight trading days. My experience in scalping markets has taught me it is usually better to keep trading small 'comeback' trades rather than let a losing day sit on the books and poison the rest of your week. This is jmo, maybe others think it better to reflect, regroup, etc. I think that has a strategic importance to implementing your plan but I don't know if it is wise just to stop and quit for the day if you've been scratched one or two times.
     
  48. I've been trading, equities and futures for 9 years now and have had a fair amount of experience on and off the floor. I've seen people make huge money in a short amount of time, but in my experience it's a vanishing minority of people who are able to achieve this. In my experience most novices starting out with a 5k account blow out more often than not. Not trying to dampen enthusiasm, but I think it's best to enter the field with your eyes open.

    Dan
    http://www.TradersLog.com/
     
  49. Dan,

    I agree with you and from what I've read, the often quoted figure of 90 to 95% of those accounts being blown-out I would bet is an accurate figure. The smaller the starting account size the more likely it is to blow out. This is compounded by the fact that (I am guessing here) there are probably more inexperienced traders running that small account.

    From your experience, what would you say was the single most important factor that led to those failures? There are obviously many factors that can contribute to this high percentage of failures but if you had to pick one and say this one appeared more often than any of the others as the reason, which one would it be?

    Personally, I would guess the most important reason for $5k account blow-outs to be:
    Lettting losing trades run to their stops and not letting the winners run to their targets.
    In the ES for example with 2.5 point targets and 2 point stops you will probably find that the losing trades lose 2 points per trade but the average winning trade is rarely 2.5 points because the trader is too quick to take their profits.
     
  50. Thats right. Ignorance is bliss.

    The less you know the better off you are in a one way market.

    But once you learn better, theres no going back. So best thing would be to find a newbie and give them your money to trade
     
  51. I daytrade the ES and use a spreadsheet to visualize my results.

    The red figures in the sheet you have to add and you will get a better sight at where you are and what will happen if you are stopped out in your last position.

    A1 is the euro/dollar rate as i live in the euro zone.
    A2 is the margin per contract in $
    A3 is the maximum position you think you can take as daytrader
    A4 is the stoploss in points
    A5 is the starting capital in $
    A6 is the $-value of 1 point
    A7 is the commission and slippage in $

    In the table you will see the following:
    column 1 calculates automatically how many contracts you can take according to the parameters you gave in A1-A7

    column 2 is always the price at which you bought

    column 3 is always the price at which you sold

    column 4 is the net profit for this trade in $

    column 5 is the net profit for this trade in euros

    column 6 is the net equity of the account in euros

    column 7 is the net equity of the account in euros if your are stopped out in this trade

    column 8 is the net profit for this trade in $ if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

    column 9 is the net profit for this trade in euros if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

    So when i take a trade, i know exactly how many contracts i can take within my riskmanagement system and i know exactly what i will loose if i'm stopped out.

    You can also use this sheet to simulate and test how many time and trades it takes to double your account. Just fill in all the parameters and watch the result.
     


  52. SORRY !!!!!

    sheet was protected; this one you can open.
     
  53. dude - what's the password ffor the spreadsheet?
    Otherwise no one can use it.
     
  54. look at the previous posting.
    didn't check my posting on the forum, will do that from now on.

    :(
     
  55. %%%

    Like that elitertader post who copied ''dream the dream/starrrrr song.:cool:

    Risktaker, excellant points on lottery risk/reward;
    but dont consider a well researched trading business a lottery,
    consider a lottery a stupid tax on people who cant do math.
     
  56. Nice car at the bottom of your 'article'.
    Nothing wrong with your mathematics if you go by your statistical averages.

    This is not how things work though!
    If you plan on doing thousands of trades, like you reckon, things may fluctuate quite a bit. You may encounter periods of above average loss reducing your capital to zero. Game is over! Your mathematics is linear in assuming that your capital could become negative for a while in order to recover later.

    The correct way to look at this, is to figure out your probability of ruin. Not so easy to do, but a very real threat. You are in fact misleading naive fellows with your spam and its flashy car picture. Very few will ever get to it on $5000.

    nononsense
     
  57. That's why you have to calculate your maximum drawdown.
    At least you will have an idea about the risk you have of losing lots of money.
     
  58. That's a very good point and one of the assumptions in the article that I haven't explicitly addressed. The longer you trade and the more trades that you execute the higher the probability of experiencing a long series of losses. I did a quick calculation and it shows that a series of 47 losses in a row would wipe out the account during the initial phase between $5,000 and $10,000. So the probability of ruin during the initial phases would be the equivalent of the probabiltiy of having 47 losses in a row or something close to that (for example 25 losses, 2 wins and 25 losses).

    Once you've breached the $10,000 mark and for each $5000 multiple after that the probability of ruin starts to reduce even though you are increasing the number of contracts that you trade. This is because if you have a series of losses that drop you below one of the $5,000 multiples you reduce the number of contracts you are trading and therefore lengthen the number of sequential losses required to wipe out the account.

    Is that logic flawed in any way?
     
  59. Yes, I think it still is, albeit we continue a discussion without having fully defined the process that we are talking about.

    (1) Your calculation of the 47 losses in a row required for ruin assumes that each such loss equals the average loss.
    This is at best simplistic.

    (2) Again, your strategy of reducing contracts traded is too loosely defined to say anything about.

    As I stated before, the calculation of a risk of ruin for a strategy is very difficult. This is certainly the most important qualifier of a strategy. As another poster pointed out, the maximum drawdown also has some bearing but is not the same as risk of ruin.
    Often, only approximations based on models are feasible strengthened by judicious simulations. This is why I talked about naive calculations being 'at best simplistic'.
     
  60. This kind of computation is very good to understand basic things, but totally unuseful as a risk management or projection tool. At this point, you need to determine probability densities and do some simulations.

    Expectation is the only number you can be sure you will never reach, a little like the peak to peak power :D
     
  61. Indeed it cannot be used as a risk management.
    I made a study of the way i trade and the conclusion was that i only had to use a 2 points stop. Therefore this sheet was usefully to me because i always knew where i was standing.
    If you note down all your trades without using a stop you can calculate where to put the stop to have an optimal result with the best risk/reward ratio and see the maximum drawdown.

    You can als calculate with more certainty within which limits your results will be in the future, but if you have a good system it should be very clear that in the long term you will never lose money just by watching the trades of your testing.
     
  62. Many thanks for the constructive comments and criticism in this thread. Nononsense: I've linked directly back to one of your comments from the original article to give readers your perspective which I think is valuable.

    I've written a follow up called How long will it take to turn $5,000 into $0? which I hope will give more insight into accessing the risk involved and specifically the risk of ruin.

    One issue that I've been struggling to address is that of being more specific and that has been commented on by a couple of people. Because no particular strategy has been defined here it is very difficult to criticize how money management would be applied to it. The examples that I have give have assumed an edge and a fixed loss and profit figure.

    I agree that this is not realistic but feel that it's a good starting point.
     
  63. Stop-loss can be useful in some very special (and rare) cases, but most of the time it only results in overfitting of a system.
     
  64. I don't agree. My stop is actived in less than 5% of all my trades. So to me it is a "last saving belt" if my system fails or if i make a mistake.
    The most important thing is to create a system that works without stops and without optimizing after backtesting. Your system should perform well as it is and under all circumstances.
    Only after that you have to think about stoplosses.
     
  65. Stoplosses break scenarios that could have resulted in a positive result, and in consequence reduce your portfolio performance. They only work when the distribution of your returns approach something like a bi-modal distribution, where scenarios present a strong persistence.

    What you've described in your post is a typical overfitting. Sorry.
     
  66. My testing with +1000 trades proved the contrary.
    My return improved. If i'm stopped out of a position that finally would have become profitable i will be in again before any damage to my return is done. If i'm stopped out that doesn't mean that i cannot take a new position in the same direction after i was stopped out. I just have to look for a new entry point.
    Stoplosses break also scenario's that could have resulted in heavy losses, and in consequence improve your portfolio performance.

    If i understand your logic you say that if you are stopped out that trade is gone and the profit is lost.
    The discussion is too theoretical.
    You have to see first what the system does before you can conclude anything. Some systems give much more, or more reliable signals, so there the influence of stoplosses will be different from lousy systems.

    As i'm not that smart and can barely read, write or calculate i had to use an approach that was adapted to my intelligence. So i started with a logical but practical approach.
    At my first year at the university i had a prof in math that could calculate things we never heard of before. When he was asked if he could predict the stockmarket he told us that it was impossible.
    As mathematician he is 1000 times smarter as i am, but he's not able to make 10% of the profits i make.
     
  67. Your prof wasn't really smart as he forgot to tell you that maths haven't anything to do with a single case, and especially yours.

    IF IT WORKS IN YOUR CASE, THEN THAT'S GOOD FOR YOU, BUT :

    1) THIS DOESN'T PROVE WHAT YOU'VE DECIDED OR IMPLEMENTED FOR YOUR TRADING WAS THE BEST WAY TO DO IT

    2) THIS DOESN'T PROVE THAT IT WORKS IN GENERAL

    SO PLEASE STOP COMING HERE AND TELLING EVERYONE THAT THINGS ARE LIKE THIS OR LIKE THAT BECAUSE THEY ARE (OR YOU THINK THEY ARE) FOR YOU.

    In conclusion, if it works for you, then you're happy but don't claim that things are like this in general. You are in the very seldom cases (perhaps, as it is impossible to tell without knowing your trading method, which, I have to tell you, I don't really care about) I was refering in my previous post.
     
  68.  
  69.  
  70. Well the fight is like between two guys I know:
    - one sticks to his long term proven strategy, listen to his technical analysis, never goes out of it, keeps the line of approved methods - and makes his money from the market
    - second has some basic streategy, bus on his words "he feels the market" and changes his buys and sells often based on intuition. And his revenue (as a percentage frombase) is higher

    Well as I am a poor newbie, I like to talk to them and realised, that NO method can work generally, you just have to find you the one, that you are happy with.
     
  71. The best way to turn 5k into 100k and the fastest is to watch Cramer religiously and act on his advice.
    There are no other ways to achieve this objective.
     
  72. It would depend if you hit 0 first
     
  73. it's pretty simple (but not easy...)

    find any edge with positive expectancy, apply money management and run that shit to the moon
     
  74. Hi,

    I have been following this thread from the beginning and it has thrown up a huge diversity of opinion. I am sure market moves are very non-linear and chaotic. They probably cannot be modeled for any length of time eg Long Term Capital Management.

    The essence of FX trading is trying to guess what the Big Boys are going to do next and being of the right side of whatever they do. Viewed like this FX trading is a behavioral science like watching the migration patterns of wildebeest!

    Sometimes the market moves in a mathematical fashion eg fibonacci retracement, other times it moves sideways randomly then suddenly it moves a great distance because price has moved thru an arbitrary level (trendline break, previous low, taking out stops or a pivot point). It can then whipsaw back on release of economic data which last month didn't affect the market at all.

    I suspect most traders are absolutely fascinated by this behavior. It probably doesn't bear too much analysis. The art of trading boils down to simply recognizing patterns. Some of these can be quantified and some can't.

    I also suspect that each trader's workable strategy is probably a unique solution. We would all recognize the building blocks but the execution is impacted greatly by the trader's individual psychological profile.

    I'm not clever enough to have come to these conclusions myself! I have found John Piper's book "The way to trade" crucial in my developing my own trading style.

    Best wishes
    Morty
     
  75. Probs and stats are about PROBABILITIES. So you can never proof with certainty what you are saying.
    About the gap in my knowledge, you're right, i' m an idiot. But i know very smart people ( probably like you) who can make big impressions on others with very difficult words. They repeat what they learned in college and at the university without being critical or creative. They just reproduce without thinking.

    I might have a gap in my knowledge (nobody is perfect) while they have a gap in their wallet ( for as far as they trade).


    For me only one thing can prove if something works or not: the state of your bank account.
     
  76. ...so it is unlikely that you'll ever prove anything here, right?

    ET is FULL to overflowing with liars, scammers, dreamers and the self-deluded. You may not fall into that group, but on ET...who knows?

    m
     
  77. Again a gap of knowledge. You can prove things in probailities. Never heard of 'almost sure' convergence, of 'in law' convergence, of 'in probability' convergence ?

    If you can live on your way of trading, that's fair, keep on doing. You don't need a high knowledge of maths, finance or whatever to make money in trading (but it helps). But please, don't come and make theories you can't feed because you miss the knowledge.

    But let me say it again : if you are so sure about what you claim here, you should write an article, ask for a PhD and become a famous professor as your theories are putting down more than 300 years of scientific research. What a revolution ! Don't forget a university professor earns quite well...and has plenty of time to trade next to his job...
     
  78. Modeled long enough to make a profit

    btw, LTCM has made their debt back with interest using the same models
     
  79. Thanks, I didn't know that. Perhaps someone needs to write the sequel to the first book!

    I just checked on Amazon and couldn't find any new books. I must of missed this in the financial press.

    Thanks
    Morty
     
  80. It's likely a typical cross-section of the the market participants.
     
  81. you are all getting it wrong,

    Best strategy to turn 5k into 100 k

    1-- Go to BestBuy
    2-- Buy a TV set (pref Plasma)
    3-- Watch CNBC all day (by the way, Cramer head look even bigger on a plasma set)
    4-- Act on Cramer's advice, buy what he says to buy, sell what he says to dump
    5-- keep it doing it for about 6 months
    6--euhh...by that time, you either killed yourself , or are locked in a federal prison
    7-- 100k doesn't matter anymore....
    8-- Start a show where you "teach" newbie traders how to BEAT the marker
     
  82. For us not watching US televesion: Please explain the Cramer thing....
     
  83. Does anybody know if a trader here on ET has proven his/her earnings?

    I believe that this could be done and still preserve the identity and actual earnings of the trader.

    If the trader gives his/her broker permission then the broker could release % gains made by that trader and identify that trader by their ET nickname (assuming that they don't use their real name as their ET nickname as I do).

    The broker would obviously need the trader's written consent and the broker has an incentive not to fake the results as I believe they could be held liable both civilly and criminally if found out. Also the broker should be happy to do this because they would suddenly have a free channel of communication open between themselves and hundreds of traders wanting to verify these results.

    Comments? Ideas anyone?
     
  84. And what has the trader to win? NOTHING.
    Risk to lose his anonimity.
    Maybe risk of fiscal poblems.
    Risk of people that might try to contact him with good and/or malicious things in mind.
    What can he proof? Traders that make money during 5 to 10 years arent' even accepted as proof of a moneymaking system.

    In short: a succesfull trader has nothing to win, but all to lose.


    "they could be held liable both civilly and criminally if found out"
    don't publish anything, than you don't have to take a lawyer and go to court.
     
  85. Post your trades in realtime, impossible to cheat.
     
  86. Easy to cheat -- no verification that you actually made the trade.
     
  87. getting filled at the "called price" becomes the issue then....


     
  88. If your signals are very profitable that will be the proof that you CAN make lots of money.
    Wether you trade or not is not important because the discussion is always: you cannot predict the market.

    The fills can be proven afterwards by the confirmation from your broker. This way you cannot trade two accounts with opposite positions.

    If you see what you have to do to prove what you can. Conclusion: trade for your own and don't mind what the others think from you.


    BTW: my system tells me that i should stay out of the market for today. There is not enough potential in the Eminis. :D
     
  89. Hi Guy2,
    Cramer is one of the founders of street.com and a talking head on CNBC who "thinks" (I'm not sure he is able to think however) he has a feel for the markets and is always opening his mouth trashing that stock and praising another....of course, anyone who followed his advice would end up bankrupt...why people are still watching him is beyond me..

    www.thestreet.com
     
  90. a man asks god

    dear god,what is the 100 years earth time to you ?

    god said, it's 1 second to me.

    man asks again ,how about 1 million us dollars to you ?

    god said , it's i penny to me .

    the man asks again , dear god ,can you give me your 1 penny ?

    god said , sure ,just wait 1 second .
     
  91. Thanks oktiri. I watched CNBC once and that was enough.
     
  92. I do not believe that "paper" trading accurately reflects what would have happened had the trades actually been made. The market reflects the actions of its participants, and market makers and specialists routinely run and tank the market to try to squeeze out the small accounts.

    Anyway, to each there own, but I wouldn't settle for anything less than copies of tax returns obtained directly from the IRS.
     
  93. Poor us who do not pay capital gains taxes in our countries... :D
     
  94. Hey oktiri,

    Going by what you write here, you must be watching that CNBC fellow a lot. I always wondered about your posts, I got the message.

    :D
     
  95. I can't argue with that.
     
  96. A lot longer than to turn a $100,000 account into a $5,000 one. :p
     
  97. A web site called Collective2 (www.collective2.com - i think) was recently brought to my attention which gets around the cheating problem of posting trades in real time. You post your limit/market order to the site and they have real time prices which monitor your trade and record it. This site is designed for system vendors to create an independently verifiable track record which they can't manipulate. The concept seems like a good idea to me.
     
  98. It can be done very quickly (2 years) if you have crazy position sizing and get lucky...

    If you are a consistent trader with a cleverly thought out money management strategy, and if you reinvest proceeds, then we are talking more in the order of 5 years... but the bigger you get the more difficult things become to grow quickly...
     
  99. If you had net gains of 2.5% per month compounded monthly 10k = $13,448.88 after the first year.

    End of Year 2 = $18,087.25
    End of Year 3 = $24,325.35
    End of Year 4 = $32,714.89
    End of Year 5 = $43,997.89


     
  100. I think 100-200% per year is an optimistic scenario for standard swing trading with standard margin (in a smallish account). Let's say you get 150% after taxes:

    EOY1: 12.5k
    EOY2: 31.25k
    EOY3: 78.13k

    That would be a little over 3 years.

    All of this is making a lot of assumptions of course...
     
  101. Realistically speaking, if u have a very well defined edge which has undergone massive backtesting and tweaking plus u have been trading the edge for the past 1 year is it possible to turn $5000 into $100,000 in 1-2 years?

    To make $100,000 trading 3 contracts on the ES in 2 years u'll need to make $1390 a month per contract. Or, 27.8 ES pts a month per contract.

    Would an experienced trader with a good system be able to make $1390 per contract per month? Or an I overestimating the rewards of successful daytrading?
     
  102. Well if you break that down further an assume that you trade 18 days per month that's an average profit of 1.54 points per day. Assume that you execute an average of 2 trades per day and the commission on that is 0.2 points (i.e. 0.1 point commission on each trade) then you need to gross 1.74 points per day which is 7 ticks. If your strategy had a win/loss ratio of 50% and you made 4 points for each win and lost 2 points for each loss...
     
  103. So someone skilled in pattern recognition would be a naturally good trader then? What other profession cultivates the skill of pattern recognition? And has anyone measured the success of people moving from that industry to trading?

    For example - muscians - are they good at pattern recognition? Who else?
     
  104. Guy2,

    if you make 1.74 points net profit a day, you will have 184 250$ profit after 100 days of trading, including the reinvestment of the profit up to a position of maximum 50 contracts per trade.
    The first 100 000 $ will be reached after 83 tradingdays.
    If you make 1 point a day for 2 years as specified by you and with a max of 50 contracts a trade, you will have 312 984 $ of profit.
    Profits are generated by 2 factors: the profit per trade and the frequency of trading. Most people underestimate the power of the combination of these two factors.
     
  105. Very true. The law of large numbers says that if you had an unfair coin then by betting on the side with the unfair advantage will have you winning and it's just a numbers game after that.
     
  106. Wrong. You are the second in two days who claims that on ET, and you are both wrong.
     
  107. Please explain why...
     
  108. I give you a simple example : if you play heads and tails, and get 5 heads in a row, is your probability of getting a 'tail' increasing or is it still 50/50 ?
     
  109. 50/50 .... because the coin doesn't 'know' there has been 5 heads before.

    But what do I know!?

    Best wishes
    Morty
     
  110. About a year and a half ago, I had a secondary IB account with just a few grand left in it that I had maxed out on YG contracts. At one point the account equity dipped to $1,250 or so, but gold staged an afternoon rally that left me clear of a liquidation call that day.

    About 6 months later at its peak, the account stood at around 70K, with all the gains coming from continual pyramiding of YG and YI contracts (YI having a much smaller margin req at the time).

    This was around April of 04. Two weeks after that peak, the account was back under 2K. Fun times.
     
  111. 50/50, but if you throw 10 bilion times the total should be 50/50.
    As at this moment you had 5/0 in the long run, you would have to have 5 more tails than heads to get to a 50/50 average.
    So in the 10 billion minus 5 throws, you should have more heads than tails to get to the statistical 50/50 situation.
    So is isn't 50/50 i think, because you have to count in the 5 throws you already had.

    Am i wrong? (not that it would make a difference to my trading)
     
  112. To me this means you're a gambler, not a trader.
     
  113. I could have thought of alot worse things to call me than "gambler". :)

    It was just a warning to those with "calculator-itis" to be careful what you wish for; if you really want to figure out the fastest way to take 5K to 100K, you'll find some way to do it, if you try hard enough.
     
  114. Obviously still 50/50.

    But I said an unfair coin and the law of large numbers... So I don't understand your example...yet...
     
  115. You are right, if you have UNFAIR coin with even 49/51 chance and bet engough times, you make your money.

    I think science_trader didnt noticed UNFAIR word...
     
  116. This all depends on the person and how much risk he can tolerate/manage.

    My guess is as follows:

    85% - will never grow 5K to 100K
    10% - it will take them 2 years
    4% - it will take them 1 year
    1% - it will take them 4 months and in one year probably grow it to 1Million.

    Back to reality now. The question should be re-phrased to how long does it take someone to take a 5K account to 0 :) !!!

    Most ppl are destined to lose in my opinion. They don't have what it takes. Everyone thinks they can make money, they don't realize they're up against some of the smartest minds in the world. Do the major leagues (sports) allow anyone to come in and play in their league. NO. Unfortuneatly the market does, lambs to the slaughter and this cycle keeps repeating as a never ending new crop of hopefull traders enter the market over and over again.

    ozzy
     
  117. My guess is as follows:

    98% - will never grow 5K to 100K
    1.5% - it will take them 2 years
    0.4% - it will take them 1 year
    0.1% - it will take them 4 months and in one year probably grow it to 1Million.
     
  118. :)

    Your probably right.

    ozzy
     


  119. guy wrote a follow up ...

    http://www.elitetrader.com/vb/showt...7&highlight=written+follow+up+ruin#post690157


    agreed. however, the cycle does at least a couple of things:

    1. it puts money from losing hands into winning hands

    2. it provides an education based on experience

    you can easily pay $25,000 a year for four years from a university, and walk away with little more than $100,000 in loans. it is common to get an education (maybe) with no experience behind it.

    losing money can be a great learning instrument. then again, it can also just be the result of a delusional and addictive personality. let's assume the former :D

    take care -

    omni
     
  120. a 50 plus 1 advantage would work wonders if you had the patience and next to zero commission. Granted with the competition in today's marketplace, commissions are not nearly as of a concern as before.

    I like to think of the market as a casino, tip the odds in your favor with a concrete edge, and play it systematically. In the end, the house always wins
     
  121. Nothing changes with a 49/51 or even an 80/20. The reasoning is the same. The only thing it changes is the expected return.

    Just think of all possible paths your outcome may follow. After N times steps, one third of all the paths will be below the expected return (let's call it A(N) for average after N steps). Actuall this one third of scenarios are between A(N) and A(N)-sqrt(N).

    Let's consider all paths that end up exactly at A(N)-sqrt(N). If you consider N steps again for all these paths, only one sixth will end up above A(2*N) (which is the average after 2*N steps) and one third between A(2*N) and A(2*N)-sqrt(N).

    And you can keep on going the reasonning for more and more time steps.

    You can understand it in another way. If you consider a fixed interval around the average A(N), let's say [A(N)+epsilon , A(N)-epsilon], the proportion of scenarios in this fixed interval decreases when N increases, and this is the reason for the word 'DIFFUSION'.
     
  122. Well, right now I'm too tired to read an try understand, but with unfair coin 51/49, when I bet 100 times on 51 side and win return is twice the money, I go away with the profit.
    Nothing else to say.
     
  123. Indeed, just DO IT.

    Leave the theoretical discussion to those who dare not try to trade and prefer to discuss about hypothetical and theoretical chances until they're dead.
    It's clear to me that some of the "math wizards" on elitetrader never have traded and never will trade. They don't have the abilities needed to become a successfully trader. One of the main errors that they make is thinking that there is a 100% correlation between knowing math ( preferable at the highest level possible) and being a successfully trader. There is no correlation at all between these two elements.
     
  124. Couldn't disagree more. I believe there is a strongly negative correlation.

    M
     
  125. :)


     
  126. If this is the only answer you are able to give, then why do you post ? What do I care if YOU, small little spike500, think that I don't trade ? Do you really think I need your acknowledgement ?

    You're just one in the middle of hundreds (even thousands) of posters who come to ET, post here for 3 months and then disappear...
     
  127. I'm daytrading since 1990 and still survive.
    People that post such an amount of postings like you do with very difficult words to impress people do that to compensate for an inferior feeling in other domains.
    If i go away after three months it might be because of the "level of the huge knowledge " that you post.
    You seem to be the only poster who exactly knows how things works.
    I'm still waiting after the first practical thing, posted by you, that is useful in real trading. All i read is academical bulls***

    Can you show us a real track record that confirms your ability to make profit as a trader?

    And when i said that there was no correlation between knowledge of math and succesful trading i meant a positive correlation of course.
     
  128. And you don't even know how to read : I don't care about you.
     
  129. get lost kid. ur full of it.

    Zen.
     
  130. I'm curious to see any track record from our masters of math. But that's probably to much to ask.
    I know several genius that can explain how it works in trading, but they never made a dime in trading.
    They all can prove mathematically that it's a matter of luck, but they are not very lucky in trading.
     
  131. We are so ashamed to compare our meager returns with your great ones you know...:eek:
     
  132. You have meager returns? That's impossible, because what i do is impossible according to your theory. And when i read your scientifical explanations it is clear that you're the greatest.
    Don't be afraid, i'm psychologically prepared to take the shock of your huge returns.
    Afterwards i will post mine. My shrink told me that was the best therapy to overcome my "losers image".
     
  133. Oh you don't need to post your returns....as WE DON'T CARE (already said 3x)
     
  134. So on a site about investing and trading you're not interested in returns? That's the MAIN THING that it's all about.
    Unless you come here to show off with your knowledge in math.

    People here are interested in return on capital, not in theory about math.
     
  135. Could you please post here links to threads were people have posted a proof of their performance ? Easier to find politics debate I think....
     

  136. As you seem to be the expert and the only one who has the holy truth, it's obvious that everybody is waiting to see how you perform.
    You don't have to do any efforts anymore, i know enough.
     
  137. You see...no post about performance on ET....

    For the question on how I perform well or not, as I told you 4x : I don't care about your opinion/acknowledgement as for me you are nothing more than someone we won't hear from in 3 months time.

    Let me add my piece of advice : avoid listening to people who are celebrated for their great performance in trading. You won't learn anything about trading through them. You better read books by people who failed. At less you'll learn from their mistakes. The only problem is that people who fail in trading don't write books.

    And finally spike500, you can answer to this post if you want, but I won't answer back as you seem to be totally deaf (or perhaps illiterate who knows...).
     
  138. How long will it take to turn a $5,000 account into $100,000?
    It all depends ...
     
  139. 3 days at the most.
     
  140. How?
     
  141. guy2,

    Ok, your crossing the line now....


     
  142. Not sure I follow ElectricSavant? Did I do something wrong?
     
  143. True - I was thinking in terms of trading futures - hadn't considered a gamble here.
     
  144. lol,

    Guy2. This is ET. Do not expect an informative response...I surely hope you do not do your research and consider the contributors in ET to be of any importance with anything valid to contribute....


    Michael B.


     
  145. "5 months Man those were the days.....I took $12,000 (I know its not 5000) in just under 5 months. Took TRAC from 3 to over 30, BIDS (this pos still around lol) from the Toronto exchange to Nasdaq from 3 to 32, KTEL from 7 to 70, 265 points from QCOM, 125 pts from YHOO."

    yeah, the problem was that "back in the day", it was like shooting ducks in the barrel getting in. With almost no formal understanding of the history of the markets, I converted $50k into about $1.1 million from Nov. 1998 to March 2000, using a largely buy and hold strategy and getting out "whenever the reason that I bought the stock no longer applied". I was in the Internet space at the time in my job and just did a Peter Lynch style approach to aquiring web hosting (remember EXDS, that was a 5 banger for me, and I did not even catch the whole ride on that one) and router companies. I actually had no real idea at the time what an amazing accomplishment that was.

    Of course, the downside was that I actually started to believe that I knew something about the market. After taking some profits in 2000, I re-invested the money and "caught the falling knife" 4 times over the next 2 years. (I was convinced that after the 3rd attempt, that the falling knife could not fall a 4th time, LOL).

    Net-net (no pun intended), I got out at $75K. When I tell people this story, they love to point out that this was actually a 50 percent profit over 4 years -- they say this of course, just to torture me.

    Near the end of that losing streak, I adopted a mechanical TA volume breakout system thru the help of a friend, complete with money management, stops, exits, etc and have averaged about 20 percent a year since then using other money that I had from before -- even though I did this crazy high tech investing, I always understood the value of diversification.

    So even though I had great returns initially "back in the day", I don't miss it at all. That whole roller coaster ride in the end, turned out to be just a bad dream for me, although it did provide one hell of a lesson in trading/investing psychology.
     
  146. :) - I thought I'd broken some sort of rule here :)

    I take the Fooled by Randomness approach to all comments that I receive from any source. I've written a very sophisticated (IMO) back testing system and I love running all these myths through it and finding out what really works and what doesn't.

    I do find some interesting comments from the odd person though and am always willing to listen to any opinion.

    In fact I've been toying with the idea of creating a poker simulator that would run a monte carlo style test on different hands of poker to see what hands would win out in the end. The simulator would include naive and rouge players at random that would not bet/play to their hand's potential in order to make it as realistic as possible.

    Regards,
     
  147. When i read this thread i have the feeling that many traders start from the wrong principle.
    They look for indicators to make immediately and fast money. They rely to much on math. They think you can solve everything with math. Math can help you, but first of all you need to start from a sound and correct basis.

    The first thing I did was observing the behavior of the ticks. I started reading books, not on trading , but on psychology. I read about the irrational behavior and thinking of humans. I learned about the emotions that prevent humans from trading pure rational. I learned which part of the brain was responsible for doing what. I concluded that the basis of a good trading system had to take all these things in consideration. Human behavior drives the markets. And they do that in an inefficient, irrational and emotional way.

    Once I knew that, I started thinking how to measure all these things and put it in a visual recognizable form. The first aim was to prevent losses as much as possible, because if you don’t lose you can keep trying to catch a big move without being wiped out. I looked for a system that gave me this “eternally trade for free” possibility. Once losses were under control the next step was to maximize the profits. I never had a specific return in mind that I wanted to achieve. I was already lucky not to lose money. I knew I had to learn to walk before trying to run.

    Year after year I adjusted my system, not to optimize it to the actual circumstances, but to make it work in every market at any given moment. At least ten times I was sure the system was complete, and as many times I experienced that the job was not over, or will ever be over.
    Each trading day, after the close, I started analyzing the previous day: what happened, what said the system, what did I do, why didn't’t I do what the system said……I evaluated and learned some lessons.

    The frequency of adapting the system went down dramatically. There were two reasons for that:
    First the system became better and better, so improving it became more and more difficult, and secondly I had less and less new ideas to explore, I had tried hundreds of ideas and ran out of inspiration.

    To me trading is a profession, you have to be engaged in it in an addicted way because otherwise you will never find the energy to stand up each time you fall. And believe me, I fell hundreds of times, but I stood up again, even the day when I lost 50 000 $ within 24 hours. But each time I asked myself: am I chasing a dream or is what I try to do possible?
    I always tried to give myself an honest and objective answer, because trying to achieve something that is impossible to achieve is useless.

    At this moment I still have to work on the most difficult part of all: myself.

    The system performs well, but the human that has to manage the system has not yet the discipline to do what has to be done each time. Almost every day I violate the rules of my system, sometimes very hard, sometimes very subtile. Each time I don’t follow the system for 100% I feel guilty.
    But I know what the cause is of this behavior: that’s why I started building my system by reading on psychology.
    The basis where I started from is the only real problem that still has to be solved: human behavior.

    My conclusion: trading is a very tough business, asking a lot of inspiration, transpiration and commitment. Only a few will be really successful, but the reward can go beyond your wildest imagination. To be able to win, one has to participate.
     
  148. spike500: what instrument(s) do you trade? and are you a day/swing/scalp/combo trader?
     
  149. daytrading ES, trendfollower
     
  150. I'm guessing (from what you've said) that your win/loss ratio is low but your winners are big. You probably have a lot of trades that lose a little or make a little or scratch and then very few of the big runs - but when you hit them they're big.

    May I ask, what is your average hold time for your winning trades (or at least those that make more than 3 ES points)?
     
  151. My win/loss ratio never was low, but when i lost , i really lost.
    But that's over since 1994 ( after a huge loss). I now respect my stoploss .
    At least 85% of my trades are profitable.
    Average hold time depends on the trend. If there is a move of 3 hours i stay in three hours, if the move is from opening till close, then i stay in from opening till close. I normally do 1-3 trades a day. I think (but i never calculated ) my average profit per trade is between 3 and 4 points.

    From all the profits i make i give back between 10 and 15%. My stoploss is always at 2 points.
     
  152. My worst loss was $4000 trading Globex EUR.The money didn't seem real at the time.(Maybe they'll give it back if I ask nicely)
     
  153. Interesting that you can't calculate your average profit. It would drive me nuts if I couldn't do that. I have all my trades in an Excel spreadsheet and you can get the average profit in 5 seconds - and tons of other stats - like average time in trades that were more profitable than 3 points - and stuff like that - really quickly and easily with a couple of clicks.
     
  154. I didn't say i can't calculate it, i never did it because i don't care.
    I know my system works well, and don't count anymore every day how much i made. I've done that for years, now i turn on my computer when the markets open, i trade and after the closing i close my tradestation.
    But if you feel the need to calculate, you can calculate 24 hours a day. You can even calculate how rich you can become if you are able to fine tune your system by 0.25 points each trade.

    It's like driving a Ferrari. When you buy him you get up at night to go watch your beautiful car. You know exactly the top speed, the horsepower etc etc... You get exited each time you drive it.
    But after 5 years, your Ferrari is just a Ferrari, a car to drive. No exitement anymore.

    BTW how long you stay in a trade has no statistical use. The trend defines how long i stay in or get out.
     
  155. Just take one big gamble instead of trading for years... because otherwise if you trade properly it would take years before you have $100.000,-.
     
  156. For some this is true, for others not.

    I have a friend who is training to ride on a bike 70 miles with an average speed of 15 miles an hour. After years of training he concluded that it is impossible.
    You know why? Because HE can't. Does that mean it's impossible?
     
  157. Comparitively speaking

    a flea can jump farther than any human

    an ant is stronger than any human


    Should I set my goals reachable? (or should I try to evolve)



     
  158. If you read Fooled by Randomness (i think that it's in this book) he explains how you should just take one big gamble if the odds are against you: i.e. 0.49 chance of success or lower.

    But if the odds are in your favor (0.51 or better) then you should play the law of large numbers like the house does in the casino.
     
  159. Law of large numbers <-> expectancy
    Your trading <-> one scenario
     
  160. spike500

    Nice series of posts. They should be very helpful to others.

    I especially agree with you about knowing how you work. What I mean is knowing your pysiology and pyschology.

    Were I to prioritize the best path of iterative refinement in this area it would be to use reinforcement of successful behavior and knowing how to terminate and recover immediately from failure when failure occurs. Humans have a greater propensity to protect themselves than they do to hunt and explore. Using this knowledge to rebalance your systems to tend towards hunting is very important.

    You can see that so many people in ET are definitely stuck. They never hunt at all, mostly out of fear I would guess.

    My partner has a colleague who writes on stuff other than markets (clinical hypnotherapy). His book The Wizard Within has some ancillary stuff that will appeal to you. In chapter 5 thee is a good starting point, particularly the test beginning on page 50 and the followon set of statements beginning on page 64. this area deals in learning from experience which you are doing very well at.

    Another person with whom I am coauthoring with, time permitting, has had several of her works translated into English recently. They have not gone to press yet and are still in review.
    get her publication "the Self healing Human" there are about 50 copies in the US now. There are many typos and awkward expressions so if you use it send markups to me so I can forward them. This is new stuff to the world. She is an immunologist and her focus is fixing busted minds and brains. Chapters 2, 3 and 4 will change your trading for life.

    The Wiz book is conventional knowledge (hemisphere stuff) the healing book is where you see the possibility of trading with sports memory on automatic (you have to dig here a little; the deep rough out on it is in the works). The beauty of this type adventure is that you use yourself as the thinking model and you come to understand how you yourself work.

    The most amazing part is that your trading and associated emotions change totally. this opens a whole new universe for you to cruise around but it is not easy to go back to where you were before. Who cares.

    what a lot of this comes down to is building a computer and software to trade. the location of the computer is in you and you build the software rapidly and totally in the computer.

    If you know of the MIT operation that is being done to fix things using local people and local solutions in deprived areas; this is much the same on a personal basis instead of external and community based.

    Finally, ifyou are reading BW 03MAR05 on page124 there is a comment on "unearthing the unarticulated needs" instead of doing stuff the old way. You can read the 04APR05 issue, particularly the top 50 profiles and see this happening. Trading will be going through the same thing soon. Once a few people start letting the cat out of the bag, almost anyone will be able to pick up on it and run with it. It is kinda a nano technology of the trading individual. This should really open some doors for you.
     
  161. How long until a truly global economy?(Not to put you on the spot of course)
     
  162. What happened?
     
  163. Nice post. I share the same perspective on the psychology of markets but funny thing is I don't use a system at all and couldn't daytrade the stock indices for the life of me. Same path, different roads.
     
  164. Stupidity and ignorance
     
  165. In the Risk of Ruin (aka How long will it take to turn a $5k account into $0) part of the article I stated (with support from Perry Kaufman's work) that the highest risk of ruin was at the beginning. i.e. when the account was smallest.

    There is another possible reason why the Risk of Ruin may be biggest at the beginning but it won't apply to all traders here on Elite Trader.

    That reason is the lack of experience that a beginning/new trader has. This lack of experience will obviously increase the probability of making mistakes (in any area of trading) which will have negative financial consequences.

    So a new trader starting a new account at say $5k has a higher risk of ruin than an experienced trader using the same sized account and same strategy.

    I would say that this is analogous to any profession. An experienced bricklayer has a greater chance of laying a straight wall than an inexperienced bricklayer.
     
  166. Good points Guy. We all gotta put our time in to win in this game.




     
  167. this is true, if your plan is to either make your goal (100k) or go bust (0) and not stop in the middle, you're better off taking a risk that'll pay off the first time (ie a 20-1 payoff/~odds with your entire 5k at risk) instead of either 1. taking smaller risks that have less payoff or (ie your 5k at risk but only a 2-1 payoff/~odds) or 2. not betting your whole bank role each time(ie 20-1 payoff/~odds but only a portion of bankroll at risk); since the more times you play (with the odds against you), the more likely you are to end up at bust (since the house edge will grind you down). And opposite is true if you have the edge (ie you're essentially now the house)...Too lazy to write the probability/expectancy calcs right now...
     
  168. You've got to be careful not to mix payoff and risk (or probability of payoff) and interchange the two.

    For example, if I say to you that I have a strategy that works 10% of the time you might not think that that is a very good strategy. But if I then told you that the amount risked on each trade was 1 point and that when it won, it won 20 points then that changes the picture.

    So every tenth trade (on average) makes 20 points and the preceding nine trades lose 9 points so I'm up 11 points for every 10 trades I take.

    That's why, when you see these adverts on the net that say 90% win ratio you know that they mean nothing.

    A 90% win ratio is a losing strategy if you have to risk 20 points on each trade to make 1 point (for example).

    So what I'm rambling on about is that the payoff should be calculated against the probability of that payoff and the amount that is risked to see if we achive that payoff.
     
  169. Well what job cannot be done from almost anywhere now? If physical pressence is required then that can be delegated real time. I've seen an advert recently where a surgeon remotely operated on a patient 2,000 miles away.
     
  170. How long will it take to turn a $5,000 account into $100,000?
    A bit more than a month (if you double your money every week).
    :cool:
     
  171. agree with everything u said. sorry it wasn't clear.
    what i meant by my lines like --
    20-1 payoff/~odds is that
    if u risk with 1 dollar, the payoff is 20 dollars, and the odds of hitting that are 1/(20+/- ur edge) = ~5% +/- edge.
    the example i used simplified things in assuming theres a general correlation between odds to payoff, and that ur/house edge is fairly constant no matter what the odds (like in the case of american roullette the house edge is always 2/38 ).
     
  172. :) I know that you're joking nononsense but you got me thinking extreme stuff:

    Some brokers allow you to day trade a margin of $500 per contract so that means you could trade 10 ER2 contracts with $5,000 start capital. Now if you take a look at the Daily Notes page you will see that the 10, 20 and 40 day average ranges for the ER2 are 10.36, 10.51, and 9.15 respectively. Let's call that 10 points for the sake of convenience.

    Now I've heard about this genius trader called kingfish who can take 10 points out of days with 5 point ranges. Because I'm not that clever or talented a trader my goal is a more modest 5 points out of a 10 point range. 5 ER2 points on 10 contracts is $5,000 on the first day.

    2nd day I have $10,000 margin so 20 contracts...

    Why limit ourselves to doubling our capital every week when we can do it every day?
     
  173. Hi guy2,

    That I was not joking must have been obvious from my adding: :cool:

    Of course, you can't do this without thinking. I'm glad I got you thinking extreme stuff.

    As to your doubling every day, methink that's truly extreme stuff. Myself, I couldn't imagine ever getting there.

    Be good,
    nononsense
     
  174. 500$ margin is only possible for small size trading, your margin will fast double or more when your size increases. ( margin will be maybe 1000$ when over 100 contracts and increase exponentially).


    doubling up your size that fast will bring you to the next problem: volume. At the rate you double you will have in no time a size that is bigger than the daily volume of the market. In 21 trading days your size will be over 500 000 contracts.

    But 1 thing reassures me: you will never be able to double on a daily base.:D
     
  175. Buy a gun ($100?), go to a bank and make lots lots of the money! $100:eek: :eek: :eek: :D :D :D000

    Just a j:p ke
     
  176. Very true spike - you'd have to split it across a few accounts.

    true again - however I like the idea that 5 back to back 5 point days (i.e. half the daily range) - would take an account from $5k to...

    End
    of
    Day
    1 -> 10
    2 -> 20
    3 -> 40
    4 -> 80
    5 -> 160

    Anybody ever have 5 back to back 5 point or better days?
     
  177. Hi Guy2, nice maths... but if you don't fully automate the strategy, you have to factor in the mind adaptation time to the increasing size.

    See, lets say you got really, really lucky and passed through the 4 days as your plan suggests...

    Picture this : Friday morning, ER2 opens, you send your 100 contracts long order to the market. Oops you just ate 3 levels of market depth. :( You're not used to that.
    The markets gets a bit wild and moves against you. You start sweating. Each tick is $1,000 worth.
    You don't know why, but you have just canceled your stop loss order. Market drops 2 points.
    At this point you feel totally paralyzed. While the market is falling, you realise you got caught in a trend day of ER2. :eek:

    Just a thought... :)
     
  178. I agree lurefo,

    During my first year of colleage I created a system for betting on the ponies and tested it during that year. I collected the race cards from all the races for the year in my province (2 a week) and did all the calculations on Lotus 123.

    My worst drawdown was losing 9 races in a row. The money management system was the Martingale System. On the 10th race it was all recouped and plenty won but I knew then that if I'd been faced with that bet I wouldn't have made it - even if I had the money.

    That's when I learnt that the martingale system will eventually not work. At some point during your career you'll hit a long enough bad streak to wipe you out using that system.
     
  179. what about, only start putting real money on the bets, after 9 losing races ? ;) i sound like a newbie
     
  180. I know that you understand why trade4succes but just in case there is a newbie reading this:

    If you flip a coing ten times and each time it comes up heads, then what is the probability that it will come up tails on the next flip?

    Assuming a fair coin, the probability is 50%. The coin does not have a memory and the previous results have no influence on the future results.
     
  181. umm. yep.
     
  182. 1 year Dow emini trading 2-4 contracts at a time, 50 dollar loss set gains 200-400 a trade depending on knowledge I knocked off 750 for the day and shut down no need to over trade. When you feel enough is enough time to go. Start to try and blow up or make it in a week you will go broke. 3,000 dollar futures account only trading dow e mini's 3 months 52,375 dollars
     
  183. In fact martingale ALWAYS 'works'. You got to realize that it always works both ways!
    :)
     
  184. Johnnyfive, you lost me a bit there. Did you take a $3k account to $52k in 3 months? Or was that a hypothetical example?
     
  185. I'm in the same boat as you. We both have that hump to get over on. I've read that small accounts like ours is limited to 3 trades a week(stocks), until we grow it to 25K. It also probably depends on your broker. I don't know what you're studying to possibly grow your account? But I've been checking out videos on Poor Man's covered puts, married puts, and spread puts on Youtube. Well good-luck on your road to riches.
     
  186. The posting you react on is about 12 years old. By now he will be very rich or very poor. He was last seen in january 2006.
     
  187. You need to undertake big risk, and need big talent.
    Try it for yourself and see. That's the only way you'll know,

    In trading, you can't really compare yourself to anyone else. Trading is very much an individual sport. Alot of interpersonal introspection, o_O

    The best traders, in my opinion, are kind of loners (and maybe weirdos and losers, in some people's eyes)

    But to semi-answer your question, how many people do you expect to nail a basketball shot from across the court...
    Or get laid by a SuperModel,

    I can turn $5K into 100K...given enough attempts with paper trading accounts.
    Could take anywhere from, who knows...two weeks, or two years...given certain market conditions and luck.
     
  188. %%
    Good point no nonsense; a martingale dog collar always works also, was designed for sighthounds [ greyhounds, not gambling, even though many gamble on grayhounds LOL] My banker dad made his own.............................................................................
     
  189. What is that?

    Regards,
     
  190. Google is your friend. I actually thought that was some kind of option strategy...

    "Designed to prevent a dog from ‘backing out’ of its collar, the Martingale has a limited slip choker action. Also has become the training collar of choice among many dog trainers as it remains quiet when correcting the dog rather than creating a metal shank sound of a choke chain.

    Note: This collar should not be left on an unattended or unleashed dog."
     
  191. %%
    Pekalow types faster than me LOL.
    I think it [martindale dog collar]was designed by a gambler or trader but i cant prove that LOL.WHY?? ; it gives the beast little more slack, but does not choke the life out of profit , i mean beast , like choker collar does
     
  192. Thanks.