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(can) small accounts make a living ?!

  • #381
  • Mar 25, 2009 6:11pm Mar 25, 2009 6:11pm
Quoting behof
Hi Folks !

For your viewing pleasure I've attached a compounding table.
You can change the account size and the daily gain.

It shouldn'tbe a serious advise how to trade but only give a psychological
picture what compounding can do even with only small daily gains !!

Happy trading

Bernhard
Hello Bernhard, that is a fantastic spreadsheet. Thank you!
  • #382
  • Mar 25, 2009 6:19pm Mar 25, 2009 6:19pm
Quoting SmoothTrader
I have personally done it twice in my life.

Once starting out in the trading pits in 1981 with just $2,000 trading capital, I managed to grow well into seven figures within five years while still living off the income, and again in 1994 after my stupidity in allowing a partner to embezzle most of my wealth. It cost me my business, my house and my marriage, but I was able to do it again.

I'm not saying it is easy because it is not, but I am saying it is possible.

GREEN PIPS to All.
That is incredible. WOW!!!
  • #383
  • Mar 25, 2009 7:13pm Mar 25, 2009 7:13pm
Quoting H. Rearden
It really depends on what you define as small - for some people one annual salary from the job they are trying to get rid of, is a 'small' price to start another business.

I have done it for years and will carry on doing it for many more (given that I will stay mentally and physically fit to do so, of course)

Day 18 out of 22 trading days in March and the 10% target reached without great efforts and plenty of excess time to write my papers for the university.

H. Rearden
Sir It seems you are using a 5 minute chart to trade. may I ask your signals/ system? I would like to try that. Thanks.
  • #384
  • Mar 26, 2009 6:09am Mar 26, 2009 6:09am
Behman8850,

Please read the thread from post #227. It will show my approach

H. Rearden
  • #385
  • Mar 26, 2009 4:42pm Mar 26, 2009 4:42pm
Quoting SmoothTrader
I have personally done it twice in my life.

Once starting out in the trading pits in 1981 with just $2,000 trading capital, I managed to grow well into seven figures within five years while still living off the income, and again in 1994 after my stupidity in allowing a partner to embezzle most of my wealth. It cost me my business, my house and my marriage, but I was able to do it again.

I'm not saying it is easy because it is not, but I am saying it is possible.

GREEN PIPS to All.
Hello Smoothtrader
Thanks for sharing your story with us. It's highly motivational.
Thanks for your help, warmth and straight talking Heather.
  • #386
  • Mar 26, 2009 10:06pm Mar 26, 2009 10:06pm
The question is not, can this be done, the question is can YOU personally trade well enough and consistently enough to do this ??

IF you can do this then your account growth over a relatively short period of time can turn a small account into something you can take a wage from while still letting the account grow and unlimitly bigger and bigger profits / wages.

Its a big IF, most fail 98% possibly, so you've got a 1 in 50 chance of retiring and doing what ever you want and people buy lottery tickets with a 1 in a million chance.

I'll keep flipping my coin and taking my chance until it's cracked!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #387
  • Mar 27, 2009 1:54am Mar 27, 2009 1:54am
Quoting SmoothTrader
I have personally done it twice in my life.

Once starting out in the trading pits in 1981 with just $2,000 trading capital, I managed to grow well into seven figures within five years while still living off the income, and again in 1994 after my stupidity in allowing a partner to embezzle most of my wealth. It cost me my business, my house and my marriage, but I was able to do it again.

I'm not saying it is easy because it is not, but I am saying it is possible.

GREEN PIPS to All.

SmoothTrader,

This is motivation at its best. It really shows that the human spirit can triumph over all difficulties however low one gets.
  • #388
  • Mar 27, 2009 8:14am Mar 27, 2009 8:14am
Good afternoon from the UK, good morning US -

It's almost the end of the week as well as the end of the month, which means time for a little update on the test-account.

We are at day 20 out of 22 trading days and the account stands at a little over +12% for March.

For me it was a turbulent month with lots of volatility including the exhaustion of trade as well as daily limits on 2 occasions. Nevertheless, by observing the limits and taking subsequent new opportunities the account grew at the usual and expected pace.

Someone mentioned a few posts back that it is of course possible to do what I am suggesting in this thread, and still, the majority fail to do it on a continuous basis. I suppose there is always the case of losing trades (which I can only stress again, are inevitable) causing traders to either abandon or alter their methods without good reason. Knowing how many losses on average are to be expected in a method let's the trader plan for it - technically and psychologically. Technically by adjusting the model in order for the account to cope with it, psychologically in order to not lose one's head and carry on trusting in the model, even after a string of losing trades.

Some traders have of course an aptitude to cope better with such situations and it is all a matter of balance. If you are a trader who can stay in a wining position for stretched periods of time to really exploit the opportunity, you are most likely better off since you (and your account) can withstand times when your system proves its downside to you.

I am a trader who can't stand much risk, which also means that I am not able to stay for very long in winning trades either, because I class 'exposure' as risk too. I am balancing those shortcomings of mine by using a method that provides a higher frequency of smaller (faster) opportunities. The reason that it works is that I KNOW and TRUST my method. Building your own method based on what should be 'easier' for you to do is imperative. You cannot copy someone else's methods if the methods are not compatible with your fears and strengths. Know these first, then look for the right way (for you) to trade.

Have a great weekend, all.

H. Rearden
Attached File(s)
File Type: doc Interbank FX Mar09.doc   258 KB | 391 downloads
  • #389
  • Mar 27, 2009 8:25am Mar 27, 2009 8:25am
Quoting H. Rearden
.

I am a trader who can't stand much risk, which also means that I am not able to stay for very long in winning trades either, because I class 'exposure' as risk too. I am balancing those shortcomings of mine by using a method that provides a higher frequency of smaller (faster) opportunities. The reason that it works is that I KNOW and TRUST my method.
Good afternoon HR,

It sounds like you and I are cast from similar moulds, I'm not sure if it's my fear of loss or just impatience, but I like to be in and out of a trade as quickly as possible. As soon as I have got my 20 pip daily target, I'm done. I read somewhere, and it has become my mantra, "I'd rather be out of a trade wishing I was in, than in a trade wishing I was out"

Have a great weekend everyone, and good trading next week.
If it is to be - it's up to me
  • #390
  • Mar 27, 2009 8:32am Mar 27, 2009 8:32am
Just something to start your weekends with a smile.

Inserted Video
If it is to be - it's up to me
  • #391
  • Mar 27, 2009 8:36am Mar 27, 2009 8:36am
Yes,

I will most likely have to work on my ability to stay in 'good' trades for longer until my last day on earth.

It is not uncommon at all, since nobody can for sure tell you if remaining in the trade you're in will make it become more profitable or not - regardless of time frame.

The 'free-trade' option is often available though, and one can adjust a stop (whether mental or physical) as soon as a trade has advanced enough to do so, creating a possibility to let it run with the worst case scenario of losing nothing except the 'not yet banked' profit on that particular trade.

The upside is of course the possibility that you have hit a home run (whatever that means in terms of profit in your particular time frame).

H. Rearden
  • #392
  • Mar 27, 2009 8:37am Mar 27, 2009 8:37am
Quoting pipintime
Good afternoon HR,

It sounds like you and I are cast from similar moulds, I'm not sure if it's my fear of loss or just impatience, but I like to be in and out of a trade as quickly as possible. As soon as I have got my 20 pip daily target, I'm done. I read somewhere, and it has become my mantra, "I'd rather be out of a trade wishing I was in, than in a trade wishing I was out"

Have a great weekend everyone, and good trading next week.
I have a similar mantra...

"It's better to be wrong with a profit (price continues in your direction) than wrong with a loss (price goes against you)."
TRO
  • #393
  • Mar 27, 2009 9:40am Mar 27, 2009 9:40am
Quoting SmoothTrader
I have personally done it twice in my life.

Once starting out in the trading pits in 1981 with just $2,000 trading capital, I managed to grow well into seven figures within five years while still living off the income, and again in 1994 after my stupidity in allowing a partner to embezzle most of my wealth. It cost me my business, my house and my marriage, but I was able to do it again.

I'm not saying it is easy because it is not, but I am saying it is possible.

GREEN PIPS to All.
that's pretty amazing SmoothTrader, I can only imagine the heartache of the 1994 circumstances. In any event, I guess that your Money Mgmt was very risky. I suppose that you risked more than 2% or so of your capital per trade. I would think that many of your trades had more than 10% of your capital at risk. I guess if your probability of a positive outcome is high, then it may be worthwhile to take that chance. Afterall, I'm pretty sure that John Arnold risks more than 10% of his capital per trade. How else, could he have grown $8M to about $2B in six years.

Walt
  • #394
  • Mar 27, 2009 2:14pm Mar 27, 2009 2:14pm
Quoting jones247
that's pretty amazing SmoothTrader, I can only imagine the heartache of the 1994 circumstances....
This is one reason why I like FX so much. In the beginning, while trading futures, I had to always worry about where I could get out of my positions quickly. Potential slippage was relatively high when compared to my equity base, so it was much more important to me to know where I could get out with a small loss than where I was going to get out if it was a profitable trade.

Once I mastered my trading style and began to make consistent money, I had to determine how I could scale up my trading. Unfortunately, the markets I was trading at the time were not liquid enough for me to just increase my trade size by a factor of 5 or 10 to increase my income by 5 or 10. I had to learn a new style of trading for each increased level of trade.

Many times during the trading day, 9:30 to 1:15 only, I would have 100% of my trading equity at work in a position. Non-trading friends and family thought I was crazy for doing that, but what they didn't realize is that I ALWAYS ALWAYS ALWAYS had an exit available with a predefined loss limit, which was relatively low. At the first hint of trouble or indecision, I would GET OUT.

For my first 3 years of trading I took a small loss on about 42% of my trades, on 30% of my trades I made small gains, on 19% of my trades I broke even, and on 9% of my trades I made a killing.

As my trade equity grew, I still made sure that I ALWAYS ALWAYS ALWAYS had an exit available with a predefined loss limit, even though I had the capacity to accept larger losses. This was the best advice I was ever given.

Now in FX, it is easy to scale my trade size to fit my ambition because even if I want to trade 100 full units at a time (very very very seldom), it's not going to knock the market around, and with good brokers the slippage is very acceptable, meaning that it is easy to define risk tolerance levels. It is also a great place to learn to trade because the unit sizes are so flexible, and Demo accounts are common.

Hopefully, someone will find this informative and if there is one thing that I would want to stress, that is ALWAYS ALWAYS ALWAYS have an exit available with predifined loss limits, or as my mentor said "Keep you eye on the losses and the profits will come."
  • #395
  • Mar 27, 2009 3:54pm Mar 27, 2009 3:54pm
Hopefully, someone will find this informative and if there is one thing that I would want to stress, that is ALWAYS ALWAYS ALWAYS have an exit available with predifined loss limits, or as my mentor said "Keep you eye on the losses and the profits will come."

My question is do you start over after a loss ( look for another trade in another pair ) or do you look to "make it back" from the pair you lost in?
TRO
  • #396
  • Mar 27, 2009 5:31pm Mar 27, 2009 5:31pm
Quoting Money4Nothing
Hopefully, someone will find this informative and if there is one thing that I would want to stress, that is ALWAYS ALWAYS ALWAYS have an exit available with predifined loss limits, or as my mentor said "Keep you eye on the losses and the profits will come."

My question is do you start over after a loss ( look for another trade in another pair ) or do you look to "make it back" from the pair you lost in?
Generally, any past profit or loss is history. You make your next trade based on your rules. If that is in the same pair and in the same direction fine. If it is in another pair that is ok too. But you NEVER look to "make back" a loss. Some people call this type of trade a "revenge" trade and it will cloud your judgment. You must only trade on what the market and your plan have to offer at that moment, irregardless of whether your last trade was a profit or loss.
  • #397
  • Mar 27, 2009 7:38pm Mar 27, 2009 7:38pm
Quoting SmoothTrader
Generally, any past profit or loss is history. You make your next trade based on your rules. If that is in the same pair and in the same direction fine. If it is in another pair that is ok too. But you NEVER look to "make back" a loss. Some people call this type of trade a "revenge" trade and it will cloud your judgment. You must only trade on what the market and your plan have to offer at that moment, irregardless of whether your last trade was a profit or loss.
That is generally the difference between novice traders and more experienced traders, the ability to truely understand and cope with the risk of loosing, and the mental approach after a loss has occured.

Far to many traders fall into the pit that if they have lost a trade they have to get back into the markets to recoup that loss. When they are back in looking to make up for the loss, seldom does there mind look beyond that and they will quite often close trades just as they make the loss back or just before out of fear that the market will turn and hand them another loss.
  • #398
  • Mar 27, 2009 8:05pm Mar 27, 2009 8:05pm
Quoting SmoothTrader
Generally, any past profit or loss is history. You make your next trade based on your rules. If that is in the same pair and in the same direction fine. If it is in another pair that is ok too. But you NEVER look to "make back" a loss. Some people call this type of trade a "revenge" trade and it will cloud your judgment. You must only trade on what the market and your plan have to offer at that moment, irregardless of whether your last trade was a profit or loss.
I have the same attitude. It doesn't matter if one or more of the pair totals for the day is red so long as the net profit for the day is green. Mark Douglas stresses the point that the outcomes are random and you can not know ahead of time if the trade you just placed will win or lose.
TRO
  • #399
  • Mar 27, 2009 10:14pm Mar 27, 2009 10:14pm
Quoting Toddfx
I have the same attitude. It doesn't matter if one or more of the pair totals for the day is red so long as the net profit for the day is green. Mark Douglas stresses the point that the outcomes are random and you can not know ahead of time if the trade you just placed will win or lose.
His books have helped change my attitude to the way I approach my trading. Before reading them there would be times where I felt that there was some devine being that would turn the market against me on a regular basis. Instead now I understand and accept whole heartly the risk that is married to any trade I place. He is a legend, along with many others, and his books are well worth the read and a must for novice traders.
  • #400
  • Mar 28, 2009 4:04am Mar 28, 2009 4:04am
Smoothtrader

What you say is one of the more sensible things you'll see on a forum like this and as usual it's one of the most simple things.

Always know your exit

Keep losses small

BUT because it's so simple most fail to see it.

Good stuff.
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