600.7k gain on winning trades, you forgot to subtract the 550k in short term loss, hence short term net gain is 50k roughly
Neke, how do you arrive at that probability?? You're assessing your probability of attaining an approx. 400% return in 7 months at 45%?? What's your perceived probability of a -50% return? Is your goal to have your account bal. touch 500k momentarily...or reach 500k and never go below it again?
Yes, I mean being able to generate nearly 400% gain from now to year-end, without withdrawals, and have a balance of at least 500K on Dec 31, 2007 from trading profits. I could adjust for withdrawals in due course. (A) At the end of week 11 (ended 5/11/2007) my gains were 126K after 2.5 months, starting with 76.6K . That comes to a compounded monthly rate of 47%. That is much higher than my expectations, and probably unsustainable. (B) Then came last week's disaster, of which the bulk of it I can lay to breaking of my two commandments. As of this week (ended 5/25/2007), I have a return of 53.3K after 3 months, or a monthly compounded rate of 19%. (C) To go from 110K to 500K in the next 7 months, I need a compounded monthly rate of 24%, barring withdrawals (and of course no deposits). This comes to something between (B) and (A) above. For me the key is ability to stick to money management and trading rules like my two commandments. I do not even question my edge. I am hoping that I have the resolve to adhere to the rules . Based on the probability of that and of me maintaining the edge, I arrive at the 45% chance. I know the final figure is ways from here, but you can see the resolve in my face to stick to my edge and eschew all temptations to violate my commandments.
Based on the fact that you have suffered a drawdown of >30% AND a drawdown of >50% within the first 5 months of the this year alone, your chance of an account blowup appears at least as likely as your chance of attaining your goal. Personally, I'd recommend going back to square one and examining whether your goal here is really about making money, or merely an exercise in ego gratification. You're a smart guy with an edge. Don't waste it.
What are your objections to using Ameritrade? I have used them from when they were Datek Online. I do not see a compelling reason to use IB, trading only stocks and stock options. Commissionwise I am better at AMTD. I know IB charges 0.005c/share, but once you start trading more than 2000 shares per trade like I do, they are no more cheaper. Besides I like AMTD customer service better. I still use IB for my wife's account (sub 25K) which I trade on a swing-type overnight trading basis automatically. I do also use their TWS API mostly for supplying quotes and intraday data for my automated set-up.
nothing against ameritrade but never liked them either, use them a few years ago and I wasn't very happy.
Great post, I totally agree! I am also reading this thread regularly with interest and wish you the highest success neke, both in your trading and in the larger picture as described in the post above. My best regards, MK
I guess the question that I have is: if you feel you can continue to duplicate your recent trading history indefinitely, then what did you start doing differently on 2/25 when you started this thread? Why weren't you already worth 126 billion dollars? You could have gotten there in a handful of years at those monthly return rates. A few weeks ago, you would have thought the chance of hitting your goal was over 50%, until you hit a major drawdown. Since then, you've identified two new rules that you'll follow going forward. One thing to think of, that I wouldn't know the answer to is: before your bad week, how much of your gains came from trades that broke your two commandments, but just happened to work out in your favor? I'm suggesting that there could be more trades that you could have put on that showed you big gains, but if done thousands of times, would put you in the red. I'm not trying to crap in your patch, but am suggesting that it isn't reasonable to expect monthly returns of 47% or even 19% over an extended period of time. Even if you had an edge that could give you those numbers, it probably would eventually be identified by others and whittled away.