4% A Day Forever

Aww ....man! Here is all the maths you need!
Take your windows calculator (in scientific mode) and enter this:-

1.02 [x^y] 200 =
the answer is 52.484897378708634683391694416503

...which is a little bit more than 52.

What this tells you is if you tighten your MM, and quell your enthusiasm when it is dangerous not to do so, you will multiply your account by 52 at the rate of 2% per day.

Now you know you can do 2% per day, but you've been shooting yourself in the foot to make 4%.

Oh I missed out the time scale; 200 is the number of trading days. That means if you trade 5 days a week, for 40 weeks of a year, you will turn a $10k stake into half a million within a year. All you need is the money to live off in the meantime, and by the way you also get 12 whole weeks of family time along the way.

Speaking as somebody who still has a day-job, I humbly offer my cheek for the impending slap!
...and good fortune in whatever you choose to do.

Well I appreciate that my primate friend. There is alot to be said for remaining independent. But the temptation to jump on a heavy line of OPM will be strong. Then 1-2% per week would be outlandish & quite enough. The up front money allows for less leveraged & more and more selective/conservative & ergo higher probability trades and cuts out some years from the front-end - which at my age is an attraction. And if I don't like it I can bag it & sell out & roll the stake back into prop trading.

If it goes well then let's say I selectively build up a $10-$20 mio AUM in a few years then a 25% performance fee on profits goes into the firm's trading kitty as well as some diversified investments and well-deserving charities as well as rent on posh digs & staff salaries - including a few very smart lads fresh out of the CFQ maybe. Hey, you don't own a business if you are not making money while you are out playing golf - its just another J-O-B.

A few years of double-digit returns - and anything over 20% per year averaged over a few years is liable to be considered stellar - and the client base keeps growing the AUM gets fatter and fatter.

Of course, its probably ludicrous to expect that I could go from trading a 5-figure bucketshop forex account into something like the above. I should probably just get a governmnet job.

hey fool
just checked in.
you got a nice journal.
how is ur trading?
all the best
sho

NOTE: When I say "you" below, I'm not referring to anyone in particular; I'm just being informal.

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I've tried trading with daily profit goals before. I've also tried weekly goals. In my experience, it's better to NOT have a profit goal. Why? Well the main reason is that it often leads you into "forcing" a trade. Maybe one day you've already made 3.5%. Now that's a great day! But then you end up taking a less than perfect setup just to try and meet your 4% goal and you lose.

Having a profit goal is an artificial constraint on the market and on your system. The fact is: it causes you to prioritize profit (greed) over good trading (discipline). People always say, "I have a daily goal, but I won't take a trade if it doesn't meet my criteria. I'll still stick to my rules." Well there's a conflict of interest there. What happens when you haven't met your daily goal, the day is coming to a close, and there are no good setups left? At that point you have to make a choice: Would you rather try to meet your goal with a risky trade, or would you rather maintain your discipline and follow your system?

Some people say, well it's just a goal; it's not a requirement. Well what does that mean? Is it an amount of profit you are trying to get? How can you try to get a certain amount of profit? You have no control over how far the market goes.

It's better to focus your energy on trying to follow your strategy with discipline. Then just see how you do. See what kind of results you get. Don't try to impose a quota. Just as not every trade will be a winning trade, not every day will be a winning day.

http://finance.yahoo.com/news/Papand...n&asset=&ccode=

If the current news of Germany caving in to a Greek bailout holds up at week's start and the Greek treasury auctions fare well then I expect we will see euro rallying. Bears have had some time to do what they could and it seems 1.32xx was the best of it.

hey the fool,

I like your ambition and you shouldnt give up - i havent had time to look as to why you havent yet reached your goal but focus on what you beleive in... I am going to try to set this to be my goal! keep in touch!!

Don't worry he's not given up, the goal 4% was light hearted anyway, why it was funny all the IT'S NOT POSSIBLE Brigade kept on going, he's just reducing his time spend on FF in favour of trading more.

Thanks for your kind thoughts ethanworks. I also believe in persistence but at the same time a dude should have the wisdom to give up when he is beat. I'm not quite there yet but I am thinking seriously about going into small engine repair. People will always need their chainsaws & lawnmowers and whatnot fixed - plus you can pick up the ones people just want to get rid of and fix 'em up and sell 'em on craigslist. Between that and the occasional brick of government cheese a guy can get by.

Hey Fool!

Chin up dog!!!

You're right biz is there for repair and its a good gig. But this game can be beat. Just chill a little and give it some time!!!

Many posters on this thread have said that a 'target' per day or week etc. may not be a good thing and I have to agree! Zoom out to at least 4hr (I know turveyd hates 4hr and up BUT this is not about him) maybe even start looking at daily and see what the market will give you instead of trying to force what you want to take.

JMHO

Dan.

Hey fool,

Nice to see you are doing well.

I see one flaw in your method however. The problem is that I'm not sure if it is scalable for 2 reasons:

1) Psychologically trading intensely with large amounts of money on the line would be extremely difficult.

2) The slippage for larger lot sizes might eliminate your edge.

Those are things to think about anyway.

if you cant lose more than 10 trades in a row then your risk should be 10%?

Hi Ace,

I am still scalping momentum with methods described in previous pages but only a few sessions a week.

re: the psychology of trading larger amounts / scalability:

1) What do you consider large? I have scalped up to $50/pip....

2) By continually scaling up trade size @ 0.2% account risk per pip one renders the growing trade size more palatable. All trades are 'the same" - I am risking at most 1% of the account. With this method it is helpful to hide the P/L data & just think of the percentages. This is an approach that has worked for me & I never found a comfort limit, although $50/pip is probably pretty tiny in the pro trading world. As one trades a larger account one might dedide to back down off the risk with the same method and still enjoy nice returns.

3) re: slippage - if one is trading in high-liquidity windows with a good broker this should not be an issue under....under what $/pip trade size?.....I have heard/read people claim they can move 20, even 50 lot trades with instant fills. (@ Oanda, Dukas, LCG, etc...)

I have been trading futures more lately and experimenting in different contracts there and slippage can be an issue. You just have to know the instrument you are trading and when it enjoys the best liquidity.


Well, it has been almost exactly one year since I began daytrading live. I learned alot by trading alot and losing alot and then clawing it back. One of the things I learned that I did not anticipate is that trading aggressively requires alot of stamina, alot of discipline & emotional fortitude - it is possible to get burnt out on it relatively quickly and that is something I personally must guard against.

Much more attractive to me now is the prospect of trading investor capital. I would much rather try to make 4% per month (or even 1/2 that) from a $1mio account than 4% per day from a $20k account. In all honesty, I am working on trading for an increasing equity curve but I am not so sure I want to show 100% gains per month. That's all good and I know it is possible but I don't think I want to engender that kind of expectation in any prospective investors. So....I have a spot account that I trade in for a few hours a week.

So most of what I am doing now in trading is learning how to trade conservatively from a large capital base. I am spending alot of time learning about options trading, hedging, etc. If it doesn't pan out then I will still be trading aggressively with my own meager funds.

Plus there's always small engine repair. I rebuilt my pressure washer over the weekend. I'm a survivor.

Good luck all.

Good to hear from you TF. I had always hoped to hear you would revert to trading 5mil capital for a couple percent monthly as opposed to stressing over account doubles. Big money is scared of that anyway, right?

Take care over there, enjoy the coming weather on the West side!

Sam

Hey Sam.

Stress is the operative word there. Every trader has to discover what his limts for stress are, what is stressful, etc.

Its kind of odd how I began trading, pretty much the opposite of how the gurus tell you to start - I started out scalping & got comfortable with that. Probably a year from now I will be holding trades for days/weeks & won't be scalping much if at all.

Hey sometime in about a month I will be over there - I have a road job about to be built - maybe we can meet & drink a beer if you'd like? I will PM you....

Happy Trades

yes well i suppose if you can make 100% a month with a 20k account and withdraw it then you are laughing. What I meant as far as scaling up goes was in the hundreds of thousands range.

Making 5-10% a month on a 200K account is the same as making 100% on a 20k account though the 5-10% might be a bit easier to do especially with investor money.

If you can reliably make 100% a month then you could just compound it until you reach the limit of your broker's execution abilities and then spin your profits off into a different account deploying something a bit slower like swing trades. Well thats what Id do anyway .

It is doable, I have done it, but not for more than a couple months in a row.

There are lots of 3-5% days & some 8-10% days but there are break even days and there are -3% days and eventually there are runs of BE and minus days and the best thing to do then is take a break, stop or do some mellow low-risk trading - but there goes your return profile.

I know there are guys who are doing 500%+ a year on smallish accounts but its a job. When I was really pushing it I tried to catch the best of each session - all opens - and that really f*cked with my health after some months. I don't think there is any way I could sustain it over time, so the answer for me is to seek greater capitalization.

If I were younger it might be different - I might be content to trade for an hour a day while working a normal job. But I'm running out of time. We all are, really - you just become more cognizant of that fact the older you get....

yes well the swing trades you really only need to look at your screen every hour or 2 so its pretty laid back.

I think its quite easy to pull 10% a month any only being "around" the computer for 6 hours a day (London session). That's with 10% being equal to 500 pips. You dont even need to be at the computer, you can monitor the charts on a cell phone.

Anyway that's the conclusion I have come to after a year at this. Scalping is doable and potentially more profitable due to the frequency but its much harder and a higher capitalised swing trading account can match the returns of scalping in a small account in terms of dollars.

notes to self....

http://www.forexfactory.com/showthread.php?t=206555

Yeah, we'll make sure to schedule some rich farmer hunting while you're in the area...

believe me amigo, I got that covered....