The Billion Dollar Club

Hi Joab,

Do you mind elaborating?

<p>

Are you serious about the 10% monthly (200+% p.a.) bit? If so what kind of leverage are we talking?

 

Current Team <p><p>ERIC<br>Drtn:&nbsp;Short<br>Entry:&nbsp;29.93<br>Date:&nbsp;07/11/2007<br>Disaster Stop:&nbsp;31.43<br>Qty:&nbsp;300<br>Cost:&nbsp;$8,979.00<p>LCAV<br>Drtn:&nbsp;Short<br>Entry:&nbsp;17.48<br>Date:&nbsp;08/11/2007<br>Disaster Stop:&nbsp;18.35<br>Qty:&nbsp;600<br>Cost:&nbsp;$10,488.00<p>ALTR<br>Drtn:&nbsp;Short<br>Entry:&nbsp;18.66<br>Date:&nbsp;09/11/2007<br>Disaster Stop:&nbsp;19.82<br>Qty:&nbsp;250<br>Cost:&nbsp;$4,665.00<p>XLNX<br>Drtn:&nbsp;Short<br>Entry:&nbsp;22.83<br>Date:&nbsp;09/11/2007<br>Disaster Stop:&nbsp;24.74<br>Qty:&nbsp;200<br>Cost:&nbsp;$4,566.00<p>NDAQ<br>Drtn:&nbsp;Long<br>Entry:&nbsp;41.83<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;37.96<br>Qty:&nbsp;470<br>Cost:&nbsp;$19,660.10<p>SYNA<br>Drtn:&nbsp;Long<br>Entry:&nbsp;55.60<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;50.51<br>Qty:&nbsp;360<br>Cost:&nbsp;$20,016.00<p>AG<br>Drtn:&nbsp;Long<br>Entry:&nbsp;59.36<br>Date:&nbsp;14/11/2007<br>Disaster Stop:&nbsp;55.20<br>Qty:&nbsp;330<br>Cost:&nbsp;$19,588.80<p>MTG<br>Drtn:&nbsp;Short<br>Entry:&nbsp;23.01<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;25.33<br>Qty:&nbsp;210<br>Cost:&nbsp;$4,832.10<p>MER<br>Drtn:&nbsp;Short<br>Entry:&nbsp;56.67<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;62.35<br>Qty:&nbsp;90<br>Cost:&nbsp;$5,100.30<p>

 

Ex Players <p><p>CIEN<br>Drtn:&nbsp;Long<br>Entry:&nbsp;45.33<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;42.54<br>Qty:&nbsp;440<br>Cost:&nbsp;$19,945.20<br>Exit:&nbsp;42.54<br>Date:&nbsp;19/11/2007<br>Return (pts):&nbsp;-2.79<br>Return (%):&nbsp;-6.15%<br>Return ($):&nbsp;-$1,227.60<p>AIZ<br>Drtn:&nbsp;Long<br>Entry:&nbsp;64.75<br>Date:&nbsp;12/11/2007<br>Disaster Stop:&nbsp;60.99<br>Qty:&nbsp;300<br>Cost:&nbsp;$19,425.00<br>Exit:&nbsp;64.22<br>Date:&nbsp;14/11/2007<br>Return (pts):&nbsp;-0.53<br>Return (%):&nbsp;-0.82%<br>Return ($):&nbsp;-$159.00<p>MLNM<br>Drtn:&nbsp;Long<br>Entry:&nbsp;13.90<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;12.67<br>Qty:&nbsp;1400<br>Cost:&nbsp;$19,460.00<br>Exit:&nbsp;14.02<br>Date:&nbsp;14/11/2007<br>Return (pts):&nbsp;0.12<br>Return (%):&nbsp;0.86%<br>Return ($):&nbsp;$168.00<p>JEF<br>Drtn:&nbsp;Short<br>Entry:&nbsp;23.67<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;25.39<br>Qty:&nbsp;210<br>Cost:&nbsp;$4,970.70<br>Exit:&nbsp;25.39<br>Date:&nbsp;14/11/2007<br>Return (pts):&nbsp;-1.72<br>Return (%):&nbsp;-7.27%<br>Return ($):&nbsp;-$361.20<p>TKC<br>Drtn:&nbsp;Long<br>Entry:&nbsp;23.93<br>Date:&nbsp;08/11/2007<br>Disaster Stop:&nbsp;22.73<br>Qty:&nbsp;830<br>Cost:&nbsp;$19,861.90<br>Exit:&nbsp;25.46<br>Date:&nbsp;13/11/2007<br>Return (pts):&nbsp;1.53<br>Return (%):&nbsp;6.39%<br>Return ($):&nbsp;$1,269.90<p>CIEN<br>Drtn:&nbsp;Long<br>Entry:&nbsp;47.07<br>Date:&nbsp;05/11/2007<br>Disaster Stop:&nbsp;44.24<br>Qty:&nbsp;350<br>Cost:&nbsp;$16,474.50<br>Exit:&nbsp;44.24<br>Date:&nbsp;09/11/2007<br>Return (pts):&nbsp;-2.83<br>Return (%):&nbsp;-6.01%<br>Return ($):&nbsp;-$990.50<p>MON<br>Drtn:&nbsp;Long<br>Entry:&nbsp;94.38<br>Date:&nbsp;06/11/2007<br>Disaster Stop:&nbsp;89.66<br>Qty:&nbsp;210<br>Cost:&nbsp;$19,820.46<br>Exit:&nbsp;96.73<br>Date:&nbsp;09/11/2007<br>Return (pts):&nbsp;2.35<br>Return (%):&nbsp;2.49%<br>Return ($):&nbsp;$492.84<p>MTG<br>Drtn:&nbsp;Short<br>Entry:&nbsp;19.21<br>Date:&nbsp;08/11/2007<br>Disaster Stop:&nbsp;20.17<br>Qty:&nbsp;550<br>Cost:&nbsp;$10,565.50<br>Exit:&nbsp;20.17<br>Date:&nbsp;09/11/2007<br>Return (pts):&nbsp;-0.96<br>Return (%):&nbsp;-5.00%<br>Return ($):&nbsp;-$528.00<p>MOS<br>Drtn:&nbsp;Long<br>Entry:&nbsp;69.03<br>Date:&nbsp;06/11/2007<br>Disaster Stop:&nbsp;65.58<br>Qty:&nbsp;280<br>Cost:&nbsp;$19,329.46<br>Exit:&nbsp;71.09<br>Date:&nbsp;08/11/2007<br>Return (pts):&nbsp;2.06<br>Return (%):&nbsp;2.98%<br>Return ($):&nbsp;$575.74<p>IBKR<br>Drtn:&nbsp;Long<br>Entry:&nbsp;29.15<br>Date:&nbsp;05/11/2007<br>Disaster Stop:&nbsp;26.23<br>Qty:&nbsp;340<br>Cost:&nbsp;$9,911.00<br>Exit:&nbsp;28.99<br>Date:&nbsp;06/11/2007<br>Return (pts):&nbsp;-0.16<br>Return (%):&nbsp;-0.55%<br>Return ($):&nbsp;-$54.40<p>

 

Current Bench <p><p>BMC<br>Drtn:&nbsp;Long<br>Entry:&nbsp;33.33<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;31.46<p>SOHU<br>Drtn:&nbsp;Long<br>Entry:&nbsp;52.12<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;46.88<p>TGIC<br>Drtn:&nbsp;Short<br>Entry:&nbsp;9.32<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;10.27<p>AG<br>Drtn:&nbsp;Long<br>Entry:&nbsp;58.59<br>Date:&nbsp;20/11/2007<br>Disaster Stop:&nbsp;55.19<p>

 

Ex Benchers <p><p>BGC<br>Drtn:&nbsp;Long<br>Entry:&nbsp;72.12<br>Date:&nbsp;14/11/2007<br>Disaster Stop:&nbsp;66.99<br>Exit:&nbsp;66.99<br>Date:&nbsp;21/11/2007<br>Return (pts):&nbsp;-5.13<br>Return (%):&nbsp;-7.11%<p>ZRAN<br>Drtn:&nbsp;Long<br>Entry:&nbsp;23.38<br>Date:&nbsp;14/11/2007<br>Disaster Stop:&nbsp;21.99<br>Exit:&nbsp;21.99<br>Date:&nbsp;21/11/2007<br>Return (pts):&nbsp;-1.39<br>Return (%):&nbsp;-5.95%<p>ODP<br>Drtn:&nbsp;Short<br>Entry:&nbsp;19.27<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;20.51<br>Exit:&nbsp;16.72<br>Date:&nbsp;21/11/2007<br>Return (pts):&nbsp;2.55<br>Return (%):&nbsp;13.23%<p>CKFR<br>Drtn:&nbsp;Long<br>Entry:&nbsp;47.53<br>Date:&nbsp;13/11/2007<br>Disaster Stop:&nbsp;45.10<br>Exit:&nbsp;47.49<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;-0.04<br>Return (%):&nbsp;-0.08%<p>FWLT<br>Drtn:&nbsp;Long<br>Entry:&nbsp;144.45<br>Date:&nbsp;14/11/2007<br>Disaster Stop:&nbsp;129.98<br>Exit:&nbsp;129.98<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;-14.47<br>Return (%):&nbsp;-10.02%<p>CY<br>Drtn:&nbsp;Long<br>Entry:&nbsp;34.00<br>Date:&nbsp;14/11/2007<br>Disaster Stop:&nbsp;30.59<br>Exit:&nbsp;30.59<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;-3.41<br>Return (%):&nbsp;-10.03%<p>CCRT<br>Drtn:&nbsp;Short<br>Entry:&nbsp;13.29<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;14.63<br>Exit:&nbsp;12.42<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;0.87<br>Return (%):&nbsp;6.55%<p>MS<br>Drtn:&nbsp;Short<br>Entry:&nbsp;54.72<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;59.23<br>Exit:&nbsp;50.36<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;4.36<br>Return (%):&nbsp;7.97%<p>ABK<br>Drtn:&nbsp;Short<br>Entry:&nbsp;29.69<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;32.67<br>Exit:&nbsp;24.90<br>Date:&nbsp;20/11/2007<br>Return (pts):&nbsp;4.79<br>Return (%):&nbsp;16.13%<p>ACF<br>Drtn:&nbsp;Short<br>Entry:&nbsp;11.89<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;13.09<br>Exit:&nbsp;10.41<br>Date:&nbsp;19/11/2007<br>Return (pts):&nbsp;1.48<br>Return (%):&nbsp;12.45%<p>LEN<br>Drtn:&nbsp;Short<br>Entry:&nbsp;20.61<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;22.68<br>Exit:&nbsp;17.60<br>Date:&nbsp;19/11/2007<br>Return (pts):&nbsp;3.01<br>Return (%):&nbsp;14.60%<p>RAD<br>Drtn:&nbsp;Short<br>Entry:&nbsp;3.70<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;3.97<br>Exit:&nbsp;3.53<br>Date:&nbsp;19/11/2007<br>Return (pts):&nbsp;0.17<br>Return (%):&nbsp;4.59%<p>NTRI<br>Drtn:&nbsp;Short<br>Entry:&nbsp;24.30<br>Date:&nbsp;15/11/2007<br>Disaster Stop:&nbsp;26.74<br>Exit:&nbsp;23.33<br>Date:&nbsp;16/11/2007<br>Return (pts):&nbsp;0.97<br>Return (%):&nbsp;3.99%<p>OI<br>Drtn:&nbsp;Long<br>Entry:&nbsp;45.24<br>Date:&nbsp;16/11/2007<br>Disaster Stop:&nbsp;42.88<br>Exit:&nbsp;42.88<br>Date:&nbsp;16/11/2007<br>Return (pts):&nbsp;-2.36<br>Return (%):&nbsp;-5.22%<p>TX<br>Drtn:&nbsp;Long<br>Entry:&nbsp;36.22<br>Date:&nbsp;06/11/2007<br>Disaster Stop:&nbsp;34.40<br>Exit:&nbsp;38.00<br>Date:&nbsp;09/11/2007<br>Return (pts):&nbsp;1.78<br>Return (%):&nbsp;4.91%<p>KLBAY<br>Drtn:&nbsp;Long<br>Entry:&nbsp;41.10<br>Date:&nbsp;06/11/2007<br>Disaster Stop:&nbsp;39.04<br>Exit:&nbsp;41.00<br>Date:&nbsp;07/11/2007<br>Return (pts):&nbsp;-0.10<br>Return (%):&nbsp;-0.24%<p>

 

Yes, I am serious !

Use 2:1 leverage starting with 500k and see IF you can get that return never risking more then 5% max per trade.

If you can post your fills as soon as you can that would be great.

 

A lot of the 'experts' advise that it is not prudent to risk more than 2% on any trade. Infact, I have read that professional traders often risk much less than 1% per trade. I am sticking to the 2% guideline, at the moment.

However, my gut instinct is that 5% is an acceptable risk for small accounts IF and ONLY IF a system with a quantifiable edge and low historical drawdowns is being employed. I know that acrary has a thread on position sizing with some very interesting and original ideas. From what I remember, the thread suggests it is ok to risk more than 2% depending on the performance characteristics of the system employed. I intend to study acrary's position sizing ideas in the near future and see if I can incorporate them in FAB TEAM.

Even if I do decide to risk more than 2%, I will still be limited by the amount of capital available, unless I significantly reduce my stop sizes and/or the number of stocks I trade at a time. My model allows me to have 10 or more open positions, which means I can not allocate (assuming 2:1 leverage) more than 20% (it can even be as low as 5% when I have more than 10 open positions) of my capital to one position. Sometimes, this means that I am compelled to risk less than 2% of my capital on a particular position.

Having said that, I believe this obstacle can be overcome with the intelligent use of options. It is one avenue I am keen to pursue, particularly since I will be able to apply some of the stuff I learnt on the CQF.

Joab, what are your views on the 2% risk guideline?

 

Your correct 2% is the industry standard so to speak BUT in my experiences I have found that with no more then 20 positions (at one time) and with accounts under 5 million and highly liquid stocks (as yours seem to be) then 5% is the ONLY way that you can consistently produce returns in excess of 10% per month.

I currently manage 5 million now (up from 2 million) and it is getting more and more difficult to maintain these returns.

The biggest problem is not size but rather asset.

Just because a stock has the correct edge technically speaking doesn't mean it's trade worthy.

 

Assuming you allocate equal capital to each position, I don't see how you can have as many as 20 open positions and still risk up to 5% per position.

For a 5m account with 20 equally funded positions and assuming 2:1 leverage:

Capital for each position = 5m x 2/20 = 500,000
5% risk = 5/100 x 5m = 250,000

To calculate risk in each position (i.e stop size) = 250,000/500,00 = 50%

In other words, to risk 5% when you have 20 positions you will need to have a 50% stop. Is this how you go about it, or am I just being dense?

 

I thought when they talk about 2% or 5% risk they mean 2% or 5% of the value of that position and not the value of the account. So for a 5 million account with 2:1 leverage and 20 equal positions, 5% risk would be 5% of 500,000= $25000. Since you are using leverage of 2, from $500,000 in each position, only 250,000 is yours. So 5% of each position would be only $12500 !!