What options do you have at $500 / month?

Discussion in 'Options' started by Aquarians, Jan 26, 2018.

  1. Might have stated here previously, I've got $500 / month to burn out of the savings I draw from my salary. I can draw more but like in trading, I don't like margin calls :p

    With respect to finance I think of myself as some Swiss Army knife. I know programming (C++, Java, Perl) enough so I can build non-HFT systems from the ground up. I know quant finance enough to adapt the Fokker–Planck equation to a Black-Scholes statistical arbitrage case most people don't know or care about (coze it doesn't make money obviously, at least not until inflation reaches double-digit annualized percent :). And I've done enough trading on my own $10k Interactive Brokers account to figure out there must be a better use of those 50% per year losses that I'm covering from my own pocket :)

    So... I'm putting a temporary stop loss to the stuff I've done in the last 12 years (working my ass alone trying to break trough, all by myself) and contemplating what options do I have, apart from working my ass alone trying to break trough, all by myself.

    As a quant developer employee in finance there was absolutely no difference from what I do currently outside finance: there's not a goddamn thing I can do about what I do and why I do apart from working 8 hours straight without questions asked and cashing the paycheck. And hoping it holds for another 30 years or so.

    Apart from all that hype though, new languages, new paradigms, new tech, the fundamentals haven't changed much. So if I hold for 30 years+ that's gonna be because and if I can correctly identify those fundamentals out of the noise that gets wiped out periodically. And for that I'm willing to re-direct those $500 / month.

    My idea currently is paying a peer reviewer to pair-program with me the stuff I make. Think NASA has not two but THREE different TEAMS doing the same thing independently before risking to send not a human but a robot to Mars. At $500 / month however, I can't get a half time CSS designer in Pakistan at least INTERESTED, let alone someone of a comparable caliber.

    But $500 is not zero so I'm guessing it *does* offer me some options. Curious about what would you do in my place.
    Last edited: Jan 26, 2018
  2. truetype


    In light of your skills, get a high-paying job. Save six figures, then resume trading.
    jharmon, Pekelo and ET180 like this.
  3. You definitely don't need six figures to trade.
    That's even absurd to think that a larger initial account will generally equate to success, or greater success.
    A big dumb rich trader, is still a big dumb rich trader. (or won't be for long)

    You may be quite shockingly surprised, what you can do with $500 in the market.
    An expert, or great, trader with a $1,000 trading account...will without a doubt surpass an average/or just good trader with a starting $100,000 account.

    If you ask me, 'Risk Management' are for traders who don't have a clue what they are doing, or have no skill or edge or focus.
    Their idea of trading...is to place many random bets across the board, and hope and pray a few of them expand hugely to cover all the other capped losses.

    Make Trading Great Again 2018...High-Five`, ET extraterrestrials :p o_O
    Some people have a fistful of salt in their hand, while others have a fistful of something much more powerful...like Plutonium,
    Last edited: Jan 26, 2018
  4. Xela


    No; definitely not.

    On the other hand ...

    I think undercapitalization's a very common contributory factor to failure, myself (partly because it so regularly leads to unwise risk-management).
    zdreg, Patrick Slevin, iprome and 6 others like this.
  5. Yeah, only I'm not there yet. And $100,000 buys you 10 years of $1000. A lot of time to think about what to do with those $1000 you got left.
  6. Also you may be quite shockingly surprised, what you can do with $5 at the lottery.
    An expert, or great, lottery winner with a $5 lottery ticket...will without a doubt surpass a trader with a starting $100,000 account.

    (Recursively defining "expert, or great" as $5 lottery ticket player that surpasses a trader with a starting $100,000 account. If with $1000 of lottery tickets you STILL don't surpass what a trader with a starting $100,000 account does then you're a lousy failure, as defined by NOT an expert or otherwise great trader).
  7. You see, $100,000 of capital buys you 200 trials of my $500 per month investment. You can get those 200 trials out of $1000 too, but with a $5 investment per trial. So when you make that x1000 exit, $500 buys you $500k. A nice return of investment from those $100k.

    But at comparable risk level, those $5 get you a "nice" $5000. Only there's no such thing as an x1000 opportunity at $5 risk level in 200 trials so you lose them all. You still can "get" those $500k out of those $1000 by investing them exactly... twice. So if you do that and get $500k you're either an idiot (lucky) or a crook (got insider info).
  8. I'm gonna concentrate on this one, I suppose.
  9. Trading like that is Easy-Come Easy-Go!
    It only takes a few minutes for a nice trend to go against you. I got in 2 contracts of NatGas futures at 2.45 (after the 2nd bottom) taking 5k of margin. NG is at 3.18 now. 300% return of capital in 4 weeks. Could've legged in aggressively. But the 300% would've been negative 3000%, if the trend reverses and not enough time to make adjustments.

    Even legendary traders can be caught be surprise when a trend reverses. And it goes down faster than it goes up. See article about Andy Hall, Crude trader closing his fund


    Now I don't feel bad when about the (seemingly minor) losses I booked for Crude back in March.
    Last edited: Jan 26, 2018
  10. Neuroway


    Absolutely, Xela. And I'd add that some brokers allow you to trade small, very small lots. Oanda, for instance, where you can open a mini-position of €1 on the EUR/USD. Size perfectly playable with, say, a $100 account. But of course, BTC or XAU are definitely out of reach when all you can muster is a mere $100. You gotta know what you can and what you can't touch given the capital at your disposition. That, I would say, is the most important factor in Assets & Liabilities Management.
    #10     Jan 26, 2018
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