A Trading Experiment | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Experiment - Trading Market Sentiment 41 replies

Low Risk, High Reward Trading Experiment 3,318 replies

A Trading Experiment 26 replies

Trading Experiment: 100% by end of year 26 replies

My news trading experiment 12 replies

A Trading Experiment

  • Poll

  • Do you need money to make money?
  •  
  •  
  •  
  •  
  • #1
  • First Post: Sep 27, 2006 9:42pm Sep 27, 2006 9:42pm

"it takes money to make money"

Hey all,

Most of you have probably heard the saying above ... which really bugs me cause if ya got money, then why ya need to make money? ... I know it is deeper than that but I am in a shallow mood . Anyhow, I have just started a small experiment, to test this exact theory out, an experiment to see if a trader can go from having no capital to a crap load more than that (so eloquently put I know).

Now to be clear, I am trading a full live account spread across a few brokers, that is completely seperate to this and I will be trading it at the same time, but what I want to do is simulate what it would be like if I went bankrupt tomorrow (without the furious wife preferably and granted without the intense "oh my god this gutter is cold" pressure).

Would it be possible to go from nothing back to a full account size again (maybe more who knows) using only the assets you have to your name?

So to keep track, I have started a little trading experiment blog, you can see it at:

http://tradingexperiment.blogspot.com/

You can see I have already started selling something I want, my rarely used these days PS2, to raise a small amount of capital to trade micro lots somewhere. It may bore the pants of most of you, but in case anyone wants to play Big Brother and watch from afar, have a look. Im sure there are some in the same situation, so it would be nice to hear from you as well.

Ill post account statements, charts .. and all that jazz to keep it transparent and prove that it can ... or cannot ... be done, at least by me anyway, I'm sure others can.

Mods, please if you view this as some form advertising just whip it off to the classifieds, no worries.
You can quit and they won't care, but you will always know.
  • #2
  • Sep 27, 2006 9:49pm Sep 27, 2006 9:49pm
Having a lot of capital to get our trading started is certainly nice, and makes the proccess a lot quicker, however I believe you can start small, add a little more each paycheque, and with sound/consistent money management, psychology, and of course compounding, I think it is very possible (though it may take ages) to turn an intial couple thousand + 2-400$ monthly deposits into a nice sum.
  • #3
  • Sep 28, 2006 1:55am Sep 28, 2006 1:55am
Hello Akuma99,

Will follow with interest!


PS: No was my answer to the poll question above.
best,






Quoting Akuma99

"it takes money to make money"












Hey all,

Most of you have probably heard the saying above ... which really bugs me cause if ya got money, then why ya need to make money? ... I know it is deeper than that but I am in a shallow mood . Anyhow, I have just started a small experiment, to test this exact theory out, an experiment to see if a trader can go from having no capital to a crap load more than that (so eloquently put I know).

Now to be clear, I am trading a full live account spread across a few brokers, that is completely seperate to this and I will be trading it at the same time, but what I want to do is simulate what it would be like if I went bankrupt tomorrow (without the furious wife preferably and granted without the intense "oh my god this gutter is cold" pressure).

Would it be possible to go from nothing back to a full account size again (maybe more who knows) using only the assets you have to your name?

So to keep track, I have started a little trading experiment blog, you can see it at:

http://tradingexperiment.blogspot.com/

You can see I have already started selling something I want, my rarely used these days PS2, to raise a small amount of capital to trade micro lots somewhere. It may bore the pants of most of you, but in case anyone wants to play Big Brother and watch from afar, have a look. Im sure there are some in the same situation, so it would be nice to hear from you as well.

Ill post account statements, charts .. and all that jazz to keep it transparent and prove that it can ... or cannot ... be done, at least by me anyway, I'm sure others can.

Mods, please if you view this as some form advertising just whip it off to the classifieds, no worries.
  • #4
  • Sep 28, 2006 2:26am Sep 28, 2006 2:26am
I answered NO to the poll. As an IT consultant you use your clients resources, you make no financial investment in the client's business, the only cost I incur is intellectual capital - experience gained over the years.


With trading, you don't have to take out a 2nd mortgage on your home, bank loan or anything of the kind . . . if you do, it's the first sign of greed. Start small, gain confidence, take small chunks daily and build it exponentially. Remember money management is important - TP & SL!
a journey of a thousand trades begins with a single pip
  • #5
  • Sep 28, 2006 2:30am Sep 28, 2006 2:30am
Agreed Maya.

I love football (soccer).

You guys are gonna throw one heck of a party!


Quoting Maya
I answered NO to the poll. As an IT consultant you use your clients resources, you make no financial investment in the client's business, the only cost I incur is intellectual capital - experience gained over the years.


With trading, you don't have to take out a 2nd mortgage on your home, bank loan or anything of the kind . . . if you do, it's the first sign of greed. Start small, gain confidence, take small chunks daily and build it exponentially. Remember money management is important - TP & SL!
  • #6
  • Sep 28, 2006 7:52am Sep 28, 2006 7:52am
Akuma,

Seems I have seen this challenge put forth somewhere before....hum, can't think where though

In response to your poll, I had to answer yes. The simple reason, you have to have some money, your own or borrowed, to simply trade at all. Brokers don't like to provide you a zero margin on any position, expect no position at all.
  • #7
  • Sep 28, 2006 8:13am Sep 28, 2006 8:13am
I've actually started a similar experiment to prove to myself that you can start from (almost) zero to grow an significant account. I started out with an amount that figured I could always get together, 1000 EUR, and see how long it would take me to turn that into 50 k$. Today equity is at $4160. And I'm sure small funds can be turned into something significant with disipline and determination in a reasonable short time.

However, I also found the experiment to be invalid.

The reason, I'm missing the mental challanges involved with trading. As I'm now used to larger stakes, blowing this account wouldn't affect me in anyway. So it is much easier to take rational decisions.

On the other hand, if it were my last few pennies, the mental pressure would be on!

But perhaps it simply means I don't have full control over my emotion during trading yet and I learned an other lesson?

Anyway it is a nice experiment.
  • #8
  • Sep 28, 2006 8:17am Sep 28, 2006 8:17am
BTW,


you probably already guessed that I voted yes!
  • #9
  • Sep 28, 2006 8:32am Sep 28, 2006 8:32am
I think it's an excuse for the lazy. It makes it easier for a middle class person to say "you need money to make money" and then give up.

Pay yourself first. Invest 20% of your pre tax dollars no matter what, regardless of bills, mortgage, credit cards, and car payments. You'll find a way to bring in additional income and be more frugal in your spending.
  • #10
  • Sep 28, 2006 8:39am Sep 28, 2006 8:39am
It depends on how do you understand the term of money. If money means 1$, 1000$ or 10000$. Let's supose that would be somewhere a broker that can let you open a live account with 0$, he let you even go on minus. You still have to pay, for example, the Internet connection and other stuff. I think that you need some money to make money. Not for investing, but for spendings.
The trend isyour friend untilis about to end...
  • #11
  • Sep 28, 2006 8:47am Sep 28, 2006 8:47am
If you sold your PS2 for money to trade, then you answered your own question: yes. To me, this is the same as having that money in the first place, hence, the needing money part.
  • #12
  • Sep 28, 2006 8:42pm Sep 28, 2006 8:42pm
Quoting twinchell
If you sold your PS2 for money to trade, then you answered your own question: yes. To me, this is the same as having that money in the first place, hence, the needing money part.
case closed.
  • #13
  • Sep 28, 2006 10:07pm Sep 28, 2006 10:07pm
Guys, of course you obviously NEED money to start, I think his question is really a matter of "can I grow a thousand dollars into enough to live off, or do you need 50-100k to start to be successful at all.
  • #14
  • Sep 28, 2006 10:32pm Sep 28, 2006 10:32pm
Quoting ScottH
Guys, of course you obviously NEED money to start, I think his question is really a matter of "can I grow a thousand dollars into enough to live off, or do you need 50-100k to start to be successful at all.
Trading, to me, is based on a return on investment (ROI), and hopefully, compounding. One can "grow" $1 into enough to live off, the only uncertainty is time. I'm sorry I fail to see the question.
  • #15
  • Sep 28, 2006 10:59pm Sep 28, 2006 10:59pm
Quoting twinchell
Trading, to me, is based on a return on investment (ROI), and hopefully, compounding. One can "grow" $1 into enough to live off, the only uncertainty is time. I'm sorry I fail to see the question.
The question is, is it feasable to turn a small sum such as $1,000 and be able to add and compound it in a reasonable amount of time (5 - 10 years) into enough to live off of.
  • #16
  • Sep 28, 2006 11:09pm Sep 28, 2006 11:09pm
Quoting ScottH
The question is, is it feasable to turn a small sum such as $1,000 and be able to add and compound it in a reasonable amount of time (5 - 10 years) into enough to live off of.
I'm not trying to be a pain in the ass, I promise. But it appears this thread has turned into "it takes money to make money" being equivalent to "turn a small amount into a large amount in X time". I was simply stating that in my opinion it takes money to make money.
  • #17
  • Sep 29, 2006 1:06am Sep 29, 2006 1:06am
Quoting ScottH
The question is, is it feasable to turn a small sum such as $1,000 and be able to add and compound it in a reasonable amount of time (5 - 10 years) into enough to live off of.
To do that with a small sum like $1K you will need something more than a 100% annual return. For instance a 100% return over 10 years starting with $1,000 and taking out 30% of your profits annually (to pay taxes) will get you to $118,587 in the 10th year. Start with $10,000 and you can move the decimal place over one place. Note: this is not taking out any money to live off from.

Let's assume a slightly more realistic scenario where you start with $100,000 and need $50,000 annually to live off from, and must pay 30% of your annual profits in taxes each year. After 10 years of 100% returns annually you have ammased $3.4 million and will have lived off from $50,000 and will have paid your taxes. Most people who are earning more this way will "need" to make more than $50,000 per year, and as such will slow down the compounding substantially. This scenario works out much better if the trader has several hundred thousand stored up to use for living expenses, without drawing on trading capital in case a bad few months or year comes along where trading produces losses.

Now the question becomes, can you make a 100% return or more each year for the next 10 years?
  • #18
  • Sep 29, 2006 1:50am Sep 29, 2006 1:50am
This could have two answers.

NO, you don't NEED money to make money. Technical answer. (The one I voted for!)

YES, for most people you do need money to make money.

Having money already, allows you to dedicate more time to your trading/investing. Takes the pressure off. Allows you to make more mistakes aand start again more often. ...Most people (the extremely large portion) will NOT be able to trade from a low starting amount. IMHO
Bundy's status today: "Waiting..."
  • #19
  • Sep 29, 2006 7:15am Sep 29, 2006 7:15am
Theoretically I believe the answer to your qn is yes. Using a system that is profitable after spread and slippage, leveraged trading and re-investing of profits the amount you start with and the choice of leverage factor merely changes the amount of time it takes to turn $100 in to say $1m. The key factor here is to know the performance characteristics of your system. If you know your largest drawdown over say 3-5 years you can calculate a comfortable leverage factor that won't send you broke even if say double your largest ever historical drawdown is experienced. Given the above criteria it should only be a matter of time, patience, dedication and willpower to reach very large sums.
  • #20
  • Sep 29, 2006 10:17am Sep 29, 2006 10:17am
Oo this has people thinking at least .. ok firstly, by selling my PS2 does not invalidate the premise of the experiment, I am starting with no money, not no assets, so I am selling something to convert it to starting capital and see how we go.

Perhaps the statement of needing money to make money is too general, perhaps, need a lot of money to start with to make a lot of money in the end is something closer ... whatever.

This is nothing new ... many have done it im sure in private .. i just thought I would make it public as a bit of a public experiment that's all Anyway up to you whether you take any interest in it really .... enjoy the weekend!
You can quit and they won't care, but you will always know.
0 traders viewing now