You bring up some interesting points. The concept of leverage and streaks (money management), as an edge in itself, is worth exploring, imo. Some of the best professional gamblers won huge sums in games of pure chance. They did it by leveraging streaks and viciously protecting capital. Say your grub stake is 3K. That is untouchable. When the principle grows, anything over 3K you double down on. For example, say you conservatively trade and build the account to 3.5K. Now you have 500$ to double down on. You hope for streaks. 500 > 1000 > 2000 > 4000 Every time you lose, your start back at 3K, which is left untouched. This way, you gear heavy with "the markets money" and leave your grub stake intact. This works especially well in the markets, because they're prone to fat tails. When the market hits a bull or bear run, and you're on the right side, you win huge, if you bet huge, and successively. There must be an allowance for banking some profits to increase the grub stake. On the flip side, the whole power of this strategy is doubling. But you don't want to double up to 128K, then lose it all, down to 3K. I'm sure there's more written about this somewhere.
So the better people get to know you, the less they like you. Did you ever think maybe it is you and not the rest of the world that is the problem?
This wasn't exactly what I was writing about. There is a way to do that using fixed fractional notation. The concept is to keep the leverage per trade the same and scale every trade. This is not possible in futures because the contracts are so big but is possible with smaller contracts. The effect is similar to compounding multiple times per year, nearly identical. So, the more trades you place the higher the compounding ratio. Risk is kept constant. I do use bet sizing but my secret is I bet more when I'm more confident. Now, you could combine that with fixed fractional and choose to bet either say 5% or 10% per trade (for a small account). Not sure what I was talking about there but I was using binaries/options/spreads which allowed me to take existing positions and sometimes make them profitable with limited risk. For sure though.. you won't take 3k or even 10k and trade with 2% and make anything... you have to risk much more. what your saying sounds good but often in practice doesn't hold up.. bandwagon effect and all.. The idea I was exploring was "extreme leverage". This concept has some merit.. however, there are hidden costs to using more leverage.. such as the bid/ask spread becoming larger in proportion to the account.
^Legendary gamblers ran up pithy sums into mid six figures over a couple days, doing just that - doubling up on streaks. The movie Floored interviewed one particular degenerate trader who used that approach - that was his whole edge. He caught a big move, ran it hard, and got f*ing rich. I can't find the clip. What I'm saying here....if you don't have a reliable strategy (and trust me, they exist), compounding is worth a look. Gut instinct aka discretionary trading is unbelievable hard. What's your account at now? From the initial 3K?
Yep, well the way I do it historically is bet more when I'm more confident.. course I slow down when I'm losing. This helps me because I can be in the market and breaking even and then really pick up a good read and push it and make up for all the costs of just breaking even. However, I won't be doing this in my RM account, at least at first, because I'm already over leveraged. I think it may be useful for me to kinda backtrack and explain to myself how I got "here". About 2.5 years ago.. I started with my C2 accounts with the goal of tracking my performance for the purpose of record keeping and getting funding from prop firms/investors About 1.5 years ago... I didn't have the money to hold futures overnight and found NADEX. I was placing a lot of overnight holds at that time. I had non market related money hardships too. NADEX seem like a good solution. I tried them and I found them promising but there were quite a few things that I didn't feel were ready for prime-time. I still am interested in the NADEX concepts (spreads and binaries) but I realize I was doing better in futures market. 3-6 months ago I started to realize most firms were not paying any regard to my record. I was also able to "get" backing at a prop firm and realized it both wouldn't make sense nor be possible for me to take such a position because they don't pay any salary. It'd be an impossible situation for me. I'd need at least a year of savings to live on and then my first year expected return would be less then I make now. At this time, I felt my C2 systems would be very important going forward because I now had 2 of the best futures systems out there. I had did 60% the previous year with only a 13% DD (55% with 33% for my rule-based system)). I had a few subscribers and felt I could meet my goals from my system. Currently I found that after C2 takes their 30% cut of sub fees and that most subs don't have any idea about the reality of trading I became concerned about meeting my goal. More over, I found that winning didn't ensure that subs would stay with me. I actually found subs leaving when they were making money. Yet, I found other systems in steep drawdowns that had subs. My best guess is that it is easier for a sub to quit a system when they've made money.. its kinda like trying to get to break even, I guess. Also, I became more and more dismayed with C2 management as I found a vendor with 50 failed systems promoting a system and he had about 50 subscribers. I estimate the best systems are making around $15,000/month but most aren't making anything. The "cream of the crop" guys like me are breaking even. The real money is made from knowing the customer. in this case.. it means forex and huugge net returns. Again most of the guys doing this with solid systems are losing money to C2... There are a few systems that are making good money though. As for C2, I will continue to offer my systematic strategy there so long as I have subs. I will also offer my discretionary system if I can get the orders. But, I will NOT give up edge just to show I'm trading my system. As I recalculated what I could make as a "top tier" performer, I began to realize I would not unlikely to hit my goals of having a 50k account by the end of the year. But wait.. one reason I quit trading at NADEX was because I wanted to devote myself 100% to trading my system (where my sub was trading many contracts).. I didn't have time to trade 2 systems. So, C2 recently offered a program where I could trade my own systems and waive the autotrade fees. There were a few factors that led me to do this. The support at NADEX was great.. I'd definitely consider them again.. It really all boils down to a question of edge and appropriateness. 1. First, I had switched most of my discretionary trading to real day trading and so I didn't require the margin. Previously I was more of a swinger.. 2. I was able to replenish the capital that I required due to unforeseen hardship. So, I went live auto-trading but had several problems. I was scaling in and out of 5 lots but the auto trading software can't handle that: it was opening positions when I was closing them because I was only trading 1 lot. I made an adjustment and said I'll just go all in/all out. Next, I had been counting "crosses" as fills whereas C2 goes to market at a touch. This meant I could never be assured my fill whether it touch or cross. Even I lose ticks when cross because my order is held for 10 seconds!! This was worse then even what MIT would give me. Of course, you may say your subs will face such issues: true but they should still be profitable. I'm everything for the capture.. I hope to capture points. I may even use MITs if LMTS don't get the job done.. but I can see what is happening and make it work... to get the capture... This is kinda where I'm at now. I realize without any subs on this system then it doesn't make sense for me to give up performance/take more time to try to work around these issues.. again as C2 management kinda let me down too. I was spending too much energy trying to fix their systems and not getting any appreciation in return. Basically.. a big part of my switch to futures is because I feel I'm more of a true day trader now and extracting most of my profits intraday. I do have enough to hold overnight but only if I don't get hit more then 1x or 2x. I'm switching to focus on my RM trading over my C2 discretionary system now as I feel there is a better chance I can make more from my own trading then from my c2 system. However, I still won't make enough to hit my goal.. So I will have to think of something.
Coach: How's it going? Me: Well you know.. I guess its the hard slog. Just putting in the work. I do a lot of work and then I have to check to see if my system triggers to make sure that my subs get into the trade. It can get to where it seems like work. Coach: The work will make you stronger. Don't lose sight of the initial enthusiasm. The glory of how many predictions in a row? How many amazing predictions? And then captures.. intraday captures.. where you push your best trades and take it off just right. Of course, then there is the ability to see "all the pieces" from the watch tower. Now it is time to get back to the watch tower.. see all the pieces... you will capture again. Me: Yes, I am still inspired.. whether I am seeing all the pieces or just focusing on the capture or predicting the market. It is good. I had net $450 just playing around on the DOM today. I wasn't trying.. just playing around with 1 contract. Coach: Right... don't worry about percentages. Whether you do 100%, 200%, 300% or 20%.. I don't care. I know you can do great returns. What's important is that you do it in your real money account. And I want you to take risks as appropriate.. You win by default as long as you don't let a trade get away from you. What is your plan in regards to that? Me: I'm comfortable risking up to 10%-12% per day (max risk). I think this will allow me to trade at historically optimal level. I'd like to keep that to 5%-7% but we could do 10%-12%. I want to stay in the game. Coach: Just how fortunate are you to be able to trade? Me: As fortunate as it gets.. Coach: Just believe... you'll do fine. http://www.youtube.com/watch?v=yLX15eFEHW0
Okay if you want #'s... You can see my systems at Predictor Discretionary (discretionary system) and Predictor Day.. one of my mechanical systems. All the trades were recorded there. I am now trading 6k but its only because I've put more money into my account. I've netted I estimate around $330 since inception in real money. This is basically break/even. I'll be risking around $650 day. I think if I perform well then I can average between $600-$1500 month.
Lucias, many are not cut out to trade real money because of their risk tolerances. In your case, you were swinging for the fences with your make believe money account but now with real money on the line you are a different and very fearing low risk tolerant animal. $600 to $1500 a month is a far cry from your Pollyanna aspirations in your make believe account. Regardless, I give you an "A+" for honesty, a trait few on this forum seem to possess.