Successful Trading and Compounding - On Steroids

Discussion in 'Journals' started by gmst, Mar 24, 2012.

  1. gmst


    Welcome to the new journal. This is going to be a no nonsense journal, focused on making me independently wealthy. This journal will continue till account increases to at least 1MM USD, at that point I may decide to stop this journal. I will run this account with the discipline as if I am running OPM. Salient facts and plan of action:

    1) Start Capital: 2500 USD
    2) Will use large leverage - upto 30x leverage for FX, 2500 USD per ES contract and 5000 USD per CL contract.
    3) Will primarily trade 1 FX and 2 ES strategies and possibly 1 CL strategy - all intra-day
    4) There will be no non-strategy trades on Futures. Zero. Period.
    5) Whenever possible, will also trade 5 other FX strategies - all intraday
    6) Will also trade some macro moves and some spread strategies playing over several days/weeks using less leverage - mostly support/resistance/trend type of strategies.
    7) Continue researching more intraday strategies and add them to this program when they fit with the program.

    Will withdraw 10k for every 100k increase in capital and put the capital in 4 different groups. Once account reaches 550k, will withdraw 50k and will withdraw 100k when account reaches 1.1 MM.

    1) Group1: Same intraday strategies as in this journal but with considerably low leverage
    2) Group2: Mostly focussed on daily/multiday/multiweek trades mentioned in point 6 above. Possibly will use systematic trend following on multiple markets. Will also do multi-day spread trades
    3) Group3: Safe and other investments - in government bonds, my house, business franchisee, real estate etc.
    4) Group4: An account for completely discretionary trading - if I have interest yet.

    Following is the link to my earlier journal.
    Successful Trading and Compounding

    There will be weekly updates.
  2. I read ALL of your previous journal and I commend you for baring it all but:
    Dude I'm not even sure you are trader material and apparently you have no clue as to what is wrong.

    First of all before I go into what I see is wrong with this picture is : You have to recognize only 10% of the population out there are successful in the market. Out of that 10% only 2% of them are able
    to navigate the minefield that is called trading without ruining their lives to one extent or another. So my take home message here is there is no shame or defeat in recognizing that trading is not for you , learn from it and go on to be successful in another area of life, if that is the case.

    The glaring issues I see are as follows:
    1) Your first sentence reveals the wrong type of goal, becoming ind
    wealthy is a result goal . You need to establish process goals for how
    you plan to achieve that result. IOW determine the qualities you
    lack then focus on developing those qualities.
    a) A good one for you is establishing discipline: because you don't
    have it and I mean AT ALL.
    2) You don't have near enough trading capital.
    3) Because you don't have enough capital, you think more leverage is the answer, it's not ,you need less risk not more.
    4) You trade too frequently and commissions are killing you.
    5) Honestly I think you have fooled yourself into thinking you have multiple edges, perhaps you do but with the above problems you have zero chances of success IMHO.

    My advice is do ANYTHING but trade with real money.
    take a break enjoy life, save some money, paper trade, establish a career.

    The market will always be there when you are ready.
  3. gmst


    Yes, trading does destroy lifes, careers and personal relations, if not done properly. Agreed. I have taken about 2 months break since previous journal to think it over so that trading doesn't destroy my life.

    My last journal was process oriented, was trading strategy oriented etc. My new goal is oriented towards the bottomline. In my wisdom, becoming independently wealthy through trading is the CORRECT goal for me to have at this stage. In my trading career, I am beyond the phase of strategy development and market experience. Now, its just a question of execution - thats all.

    Also, about your point on establishing process goals of how to become successful in trading, if you carefully read my first post, I have laid it all. Going to trade "primarily" 3 strategies with specific leverage numbers. Also have written down how I am going to withdraw capital from the trading account so that I don't lose it back during some blackswan - if this is not a plan, what is ? Read Mark Fisher's book ? He talks about having a plan. Today, I have as good a plan towards my trading as anyone else on this site.

    About your other points, yes its possible that I might add some more capital to the account. We will see. I will reduce the risk once account reaches at least 500k or maybe 1M - fast compounding requires large risk. My aim is to run the risk relatively close to Kelly. Also, in this journal, my trading is going to be relatively infrequent, so won't be like previous journal.

    Finally, I haven't written anything in my previous journal about my edges - how can you come to conclusion without knowing anything about my edges that I have fooled myself into thinking that I have edges ? I understand that you are trying to offer me advice. But sorry, its clear that you are making a lot of assumptions, and deducting your conclusions based on your assumptions and not facts.

    Also, curious what makes a person a trading material in your eyes? Turtle program very clearly demonstrated that you can pick up an intelligent person and he will be on average profitable given a good method and discipline. Most ibanks and hedge funds routinely hire grads our of b schools and make them traders - and at least 30% of them make money irrespective of customer flow. And I am more intelligent, more dogged and more open-minded than most of the turtles. Let me put a more direct question to you? Can you take a 2500$ account and trade it for 6 months with IB - where they cut your trading privileges when account goes below 2k ? Its not easy - just try it, even if you are a very successful trader making 6/7 figure income a year. And you would begin to appreciate what I did last 6 months. Finally I clearly wrote in my last post in previous journal that my FX trading sharpe has been very good - still you think I am not trader material. Sorry but either you have read the journal in haste, or your logical skills are seriously in question.

    And before you hit the reply button saying it seems you touched a nerve and thats why I have been sharp in my reply to you. No no no - let me clarify when I read your post, I thought about it for around an hour - because you really sounded authoritative and I wanted to make sure that I am capturing the feedback. But on closer analysis, I came to conclusion that your assertions don't hold water. I have no intention of being disrespectful to you, just that there are a number of logical fallacies in your observations and you are reaching your conclusions while not knowing a lot of facts.
  4. leonarda


    You keep quoting "when i get to 500k etc.." and you're starting from 2.5k... You're delusional mate...unless this is your 10+ year goal or something...? In which case i apologise.
  5. gmst


    well I didn't write the time period - did I? I am in this for the long haul. No need to apologize. Also, its possible that I might add some more funds to this account - not much though. Just watch the power of compounding.
  6. gmst


    Alright Leonarda, I will give you a more specific answer. If everything goes as planned and with some margin of error (since I would miss few trades because I might be sleeping or might be on road), the account starting from 2.5k should reach 500k within 2yrs.

    The following parameter:

    1. How many strategy trades did I miss ?

    will be the primary criterion for me to measure my performance. Actually, I will report this on a weekly basis. Total PL, drawdown, PF, win% etc. will all be secondary measures of performance. The reason is I am doing systematic trading - where everything is well tested and already planned. So I want to give my highest priority on real world execution vis-a-vis strategy trades. Traditional performance parameters will take care of themselves if execution is ok.

    Btw thanks for your question. Thinking about it and answering it led me to the idea of reporting number of strategy trades I miss. This would prove to be an extremely important statistic.
  7. Someone who uses 2.5k as initial capital should be much more thinking about working for money. 200x in 2 yrs is more than unlikely, but simply impossible. You realize that this is 5% a day? No trader makes more than say 0.2% on a consistent basis. Anyway, the title says it all.
  8. gmst


    Hi its 25% pm compounded for 2 yrs. If you are looking at daily compounding (not monthly compounding as in last sentence), its 1.1% a day, compounded for 2 yrs (252days*2 = 504 days).

    If a good trader makes 0.3% consistently with leverage 7, with leverage 28, he would make 1.2% a day. So, target is not impossible mathematically, yes it is very hard no doubt about it. Cheers.
  9. Nothing is impossible in this world. the history of market is also the history of speculation and delusion. There are probably a million people out there who entertain the same fancy ideas. I would go for the lottery instead. Chances to succeed are higher. seriously, work for a reasonable stake, learn to make money and then in 3-5 years try it if you have an edge which is so magical.
  10. "and have had many blow-ups since then."

    there goes 5 minutes of my life I will never get back...
    #10     Mar 26, 2012