Trading with Five Hundred Thousand Dollars

Discussion in 'Trading' started by Harry123, Apr 2, 2004.

  1. Harry123


    Hi, I wanted to get the opinion of the members here on what kind of risk they would be willing to take per trade on an account of 500k. Lets assume the account will trade 100% in equities only. Furthermore, what types of strategies would you employ the maximize usage of the 500K over a years time. How many accounts would you have? What would you be expecting to gross per month with 500K? Also this would be for an home trading not looking to ever trade prop. Customer accounts only. ETC ETC ETC. Looking forward to the responses thanks.

    P.S. Of course I have my opinions on these thoughts, nonetheless, I am looking at a for brain storming thread with many different perspectives. 20K heads are better than 1.
  2. Hi:
    I manage a private trust quite a bit larger than you are discussing. I am invested in long term, medium and short term instruments. Also I trade commodities and indexes with several systems both discretionary and mechanical. This is the way that most professionals diversify and manage systematic risk. To manage other risk elements, I use derivatives and hedges of various types. In my opinion, very few ET subscribers have sufficient experience or education to be of help to you. Most professionals will not comment much in this context. I am also restricted in what I can offer by the terms of my employment. if you need help managing money, I suggest you decide whether you want to learn to do it yourself, or alternatively go about the task of finding a good manager by reviewing fund performance over a time period of at least 5 years (10 would be better). Good luck to you. Steve46
  3. Cutten


    I'd risk about $10-25k on each trade.
  4. Harry123


    Would that be the amount your willing to lose each trade or the amount of total capital you would place on each trade?
  5. I would trade 10 stocks in 50K parcels, risking a maximum of about $3k per parcel.

  6. Saham


    I'd like to know 2 things...

    1) Is this HarryTrader?

    2) If I answer the risk question right do I get the $500K?

  7. Cheese


    Start capital size funnily enough is not important.

    A big slug of capital for those who are not wholly disciplined and without a finely honed and tested trading model is an invitation to jack away all of it or a lot it anyway.

    Make the points. Accumulate the points. Increase your bet size in ratio to your increase of capital though net profit accumulation. Do this and you can follow the yellow brick road all the way to your ultimate goal.
  8. mind


    several pieces of advice
    1. look at any answer including this post from a very cautious point of view. not so much because the people who answer do not know what they are talking about, but because they are very inhomogenous. you are not asking your question to a group of hundred long short equity hedge funds with proven track records, but to an anonymous mass of people who trade literally everything possible in any possible way with unproven track records.
    2. you should be clear in what you want and then try to find it. if the 500k are the extra money of someone rich who wants some real action going on, you are probably heading for returns of 50%+ per year with some big swings being part of the game. if it reflects the entire wealth of an individual who wants to make a living out of it you might look at lower, yet more stable returns.
    3. analyse your possibilities. you won't build up a statistical arbitrage operation within three months.

    i am not sure if you should not head for one or two fund of hedge funds, make 12-15% p.a. and sleep most of the time without caring about the spx and the vix. in any case i would buy some literature on hedge funds if i were in your place.

  9. Personally I would base those numbers on your risk tolerance, investment objective, etc. You have to ask yourself how big of a loss you can stomach, how much return you expect on the money, and if it's realistic to achieve those returns without exceeding your maximum loss. If not, you're better of in a CD!!!!
  10. I have never seen interest in trading equities compared to futures but maybe for customer accounts there are interests like perceiving fees from them :D. BTW I'm very amused about the last change on introducing floating capital indices that will rotate equities portfolios much more often : this "financial industry" is indeed amazing :).

    #10     Apr 2, 2004