I trade my own account for a living. Tell your story

No worries. Just trying to help people make full time trading more of a likely reality. As you alluded to, everyone will walk their own path. Not every path leads up the mountain though...

Cool! Without regard to the actual tools that each of us use to make our way to the mountain top, feel free to keep posting your thoughts, challenges and how you go on overcoming them while climbing your own way up!!

Everyone's point of view in a respectful manner is welcome.

Anything close to 50% per month, is a short term illusion. Not saying it's impossible, just short term.

To be positive and realistic, 20% to 50% average per year over a long term should do it.

Now, let's reason backward. What do you need to live on for a year, 30k?

If you do need 30k per year, 100k in your account are needed and you won't even compound much, just survive, and one day it won't be enough because of inflation...

Being profitable is already an achievement, doing it for a living it's a different story.

Well as for non-method things that I have come across that helped:

BOOKS/AUDIO
-Trading in the Zone by Mark Douglas
-Psychology of Winning by Denis Waitley
-Some of Adrienne Toghraies stuff
-Mind of a Trader podcast, Steve Croft

PERSONAL
I have done a lot of personal development over the years. Needless to say all of this is important. Im also into a lot of Law of Attraction (Abraham-Hicks) stuff.

I would say PERSISTENCE and DETERMINATION is of course fundamental. How else are you going to ride the rollercoaster of torture that the learning process often is??

I decided that I MUST and WILL be rich. I dont want to live any other way! And I wont stop until I have achieved that goal. So I will do whatever it takes. I have that motivation. I have wanted to quit many times in the past. In January I said if I wasnt on track by mid 2012 i would give up. Luckily i just made that deadline!

CONFIDENCE
This is an interesting one. We all hear this is key. Well yes, but how can you build confidence if your strategy doesent work? Youre told you need to be confident first and then it will all work out. Well i think thats bullshit. You being confident doesent make your strategy work. How can it?

You cant fake being confident if youre really not. You cant convince yourself somethign works if in your experience it doesent. If your method is hit and miss, or lets face it, mostly miss, how can you choose to have confidence in it? Your mind needs to KNOW that your method works. Until then you wont be able to pull the trigger when you need to.

I turned a corner when I started to get results. Martin's method transforms the market from seeming random and chaotic and unpredictable, to being logical and understandable. (as logical as any market can be anyway) That is what is so good about it. Once I was able to read it (and yes you can read it with his software in a way that you cant with traditional charts) and see what was going on and likely to happen next, I finally had a solid foundation under my feet that I could stand on and build on.

Then my actions had a cause and effect relationship and I could move forward with confidence. (Im not sure T/A can give you that but if it is for some people then great).

The other effect of Martin's method is that to a large extent it nullifies all the talk about psychology we are bombarded with. Yes that plays a role, but nowhere near as much for me now as its made out to. If I see a good entry, I take it. If not, I dont. Its not mechanical, its informed decision making.

EXPERIENCE
The more of this the better. You could read every book about golf theory there is but does that mean youll walk onto the green and play like Tiger Woods? Of course not. You need that time to know how things work, get burnt a few times, cut your teeth as they say, and get a feel for the markets and how you should respond to different events. You need to build up your skills in all the areas and develop knowledge. No getting around that. Not that its super complex but you still have to do it. Any time spent to give you a skill that can give you access to unlimited money for a few hours a day spent doing it seems worth it to me dont you think?

Thats about all i can think of for now... Hope that helps

Please review "EurAnalysis" thread under 'Interactive Trading' Forum in FF.

You will discover that some of the posters in that thread do earn their living only by trading Forex (btw, I am not one of them, yet).

Keep faith in your ability, Trade diligently, be patient, supress greed and in due course you surely will succeed.

Good luck.

I am currently having a blast reading "The Millionaire FastLane" by MJ DeMarco... wondering if anyone else has read it and tried to apply the concepts to trading as a business?

meet cherrycoke and she's trading for a living. she's my inspiration that i can also trade for a living. visit BOD and you will see...

Hi, Botsog

I've read cherrycoke's complete thread and was absolutely amazed !! Do you trade binary options too?

$1K to $10K in a year? It may be possible for a few due to survivorship bias but you'll probably blow your account in a year or two because of excessive risk.

If you guys would take the time to read Market Wizards you would see that some of the best traders average about 20% a year and manage millions of dollars. If you could average 20% a year for 5 years straight you would have investors throwing money at your feet. I think the average is about 11% a year and that's considered to be a respectable return. Ed Seykota himself averaged 60% CAGR for one of his clients and turned $5000 into 15 million in 16 years executing a trend following method. He said himself his first system was an EMA crossover system and that systems don't need to be changed - the systems themselves just go from period of flat returns to high returns and traders dub them obsolete right before their systems take off and make a killing. Run some backtests. You'll see what I mean.

The point is this: Trading is not a get rich quick scheme. You have to put the time and preparation in to make the business work and let compound interest grow your account.

If you could manage to somehow get a 50% return a year after slippage and commissions while consistently adding money to your account with your stable full time job then you can reach a million within 8 to 15 years depending upon your yearly capital contribution while starting with a 10K account.

One of the previous posters mentioned opportunity costs and I think he made a great point. You really have to consider how much time and effort you put into your daily trading as well as your overall capitalization and figure out how much money you could make relative to your salary.

If I made $30K a year working 40 hours a week and only made $20K working 40 hours a week being a discretionary trader I don't think it would be worth it. That would result in $10K worth of opportunity costs plus a lot more stress ( especially if you day trade).

On the other hand if I made an extra 20K a year on top of my salary while putting in minimal effort position trading or using an EA to automate my system then it would definitely be worth it.

It's obvious why 95% of traders lose. Take a step back and look at all the posts on FF. 95% of the traders here have unrealistic expectations, are undercapitalized, and risk way too much. If you act like 95% of the losing traders ( no offense guys ) and follow the herd then you will be a loser. It's inevitable.

I'd recommend reading Trade Your way to financial freedom by Van Tharp. It's the best book I have read that helped me with system development along with books on / by Jesse Livermore and Market Wizards. If you don't read any other books but these I think you'll have the necessary skillset to build a system and a set of objectives that will help you achieve your financial goals.

Just my input...as most of us, including myself, are beginning traders I think we need to rationally look at what is being preached here on FF and assess the strategies here with objectivism. We all want to be successful so lets do it the right way to make it happen.

Another food for thought...

I remember browsing through the FX Articles named The Power of Compounding Interest.

I think if you take $ .01 and doubled it everyday for 30 days it would be the equivelant of 10 million dollars. Do the math. The formula looks like this...

(.01)(2)^31

so just double up a few times and within a decade or so you'll be where you want to be.

OK... I think at the end of the day. Money Mangement & Risk Reward are all good and well, but if you are relying heavily on them you perhaps don't have much of an edge.

Whilst the previous posters post was probably a bit tongue in cheek - they do have a point. you CAN make money this way.

I recently changed over to trading Binary options from spot FX, and feel I have a significant edge......and am therefore taking a different approach to exploiting that edge.

similar to Cherry Coke, I'm starting with small $'s but trading very aggressively ( 50% to 100% risk at times ). I then bank what I have after a day, or couple of days. I have to do this because returns on Binary options are 0.8R, so I rely on aggressive compounding and consecutive wins to make money.

initially I'm risking my starting capital ( which is in itself a small% of all funds available), but after that, I'm only risking the market's money. I also have an edge, so I'm not going to sit around waiting for a year to turn $1k into $10k when I can turn $50 into $1k-$3k in a few days and then start again.

Sure I bust out some days, but who cares, I have enough runs where doubling up gets me significant returns......and they more than make up for the odd occasion i lose my $50 or heaven forbid $100.

If I used conventional 1% risk on each trade, a few losers would wipe me out. I need to exploit my edge and make hay while I have a series of winners.

I guess you need to think that 95% of traders probably also DO try to quite diligently stick to risking 1% and shooting for 1:2 or 1:3R etc........all this does is help them lose money more slowly, and psychologically when you are winning 30% of the time, only the most disciplined can stick it out and let a trade run to 1:2 or 1:3 without closing early.

My 2c is find an edge and trade the f#$@ out it.
I do this by patiently waiting for very high probability setups that I like and off I go.

you DO need to have an actual edge though IMHO. and by edge I mean > 70% of the time.

anyway, I know all the above flys in the face of much common wisdom out there - but then, where has that gotten 95% of people?

anyway, probably a bit off original topic, but seemed relevant in the context of the current few posts.

I await the naysayers and those that think i'm complete batshit crazy, but I'm making more money, more consistently doing things this way, than I ever did trading conventional spot fx.

anyone here remember Larry Williams? He re-invested / risked the 'markets' money in his trading too......thats how he turned $10k into $1M in a year ( twice ).

but you need an EDGE.

and before people ask, I don't trade a 'system' It's just simple S/R - Supply Demand and very reliable PA in these areas. Nothing more. Have spent years looking at it, and it's finally paying dividends......and I don't intend to wait a year to turn $1k into $10k.

EDIT: of course it goes without saying that once you reach ridiculous lot sizes etc, things get harder............this kind of compounding works for relatively small amounts of money.

I have no doubt in my mind that some individuals make outrageous returns with their "edge". These individuals are elite and they know when to double or triple their position sizes when probabilities are in their favor. It's akin to counting cards and betting the maximum bet when you are certain of a positive expectancy. With that being said, after reading the previous post I noticed some things I just thought you could clarify for me if you have the time.

First of all, you say that your system has an edge. You said,

"If I used conventional 1% risk on each trade, a few losers would wipe me out. I need to exploit my edge and make hay while I have a series of winners."

Im not sure I understand what this means. If your system has an edge then 1% risk on every trade will ABSOLUTELY make you money - that's undeniable. Saying you have an edge and saying that 1% risk per trade will wipe you out is a contradiction. Shouldn't risking 50% to 100% risk per trade wipe you out faster then 1%? I'm missing something here.

Second, I agree that much of the common wisdom has left many aspiring traders unsuccessful but that doesn't mean the wisdom doesn't work. A lot of traders probably don't have an edge and if they do then most of the traders who actually lose don't follow their own proven method. It's human nature. We all know smoking cigarettes is bad, yet, so many people still do it.

Lastly, I am very familiar with Larry Williams and have read his book as well. What you failed to mention is the ridiculous drawdowns that Williams' is susceptible to because of the large amount of risk he takes. He acknowledges this in his book. It's easy to trade a small account but could you honestly tell me that you would risk 50 to 100% of your account if your account size was $100K? You might, but most people, including myself, would not dare attempt that feat. To lose on a trade and risk half or all of my account on one trade while being largely capitalized would leave 99% of traders emotionally devestated and probably cause them to check out of the game. I think Larry Hite said it best. At least I think it was Larry Hite...someone correct me please. He said,

1) If you don't bet, you can't win.
2) If you lose all your chips, you can't bet.

I'm not trying to engage anyone in a flame war but the math don't lie folks. Your risk of ruin with 50 to 100% risk of your account on any single position size is extremely high and I doubt PROFESSIONAL traders who manage millions of dollars - whether that be OPM or their own money - would even attempt to do so.

But hey, if you're making money this way - to each is own but to be honest, I highly doubt you can sustain those type of returns with an account > 100K for a whole decade. I believe consistency is the name of the game. It's a marathon not a sprint.

Hey Dpen,
Apologies for a poorly explained sentence there regarding the 1% thing, that didn't quite come across how I intended.

My intent behind that statement was that if i risked 1%, or for that matter any fixed % amount then I found it was easy for my account to go backwards quite quickly..........this is mainly applicable to the fact that with Binary options you are always risking more than your potential profit. With binaries, my payout if I have a winning trade is 80% of the amount I risk i.e. If I risk $100 I only make $80 if I win - but lose $100 if I lose..........so for me, aggressive compounding is a must, as well as having an edge that allows you to have strings of consecutive winners. Edge + compounding overcomes that negative R issue.

Does that make sense ( from an explaining point of view ) - hopefully that conveys more of the point i was trying to make.

Don't get me wrong, I do have times when i lose a few trades in a row, but then when i have 3 to 7 winners in a row, the gains made from the aggressive compounding more than make up for it..........if I was more conservative, it would be a far slower journey.

Regarding Larry Williams and the massive drawdowns..........agreed....as your account grows, psychologically this will get harder and harder.

I have a money management mindset that is something like this.

I'm risking $x ( say $100 ) BUT whilst i am on my trading run exploiting my edge, that money is not yet mine! It's my bank roll, it's the tool of my trade that I'm using to make even more. Either I'm going to lose my $100 or make $1000 for example.

This works to a point, and for me, once I hit a few $k anywhere from $1k to $3k I get more concerned about the next trade being a loser..........once that happens, I bank the money, and start again with $100 or $200.

That $100 or $200 is now a far smaller % of the money I've made over the preceding trading sessions.

I have made $10k in one night doing this ( starting from $300 ), but the last few trades were starting to affect me psychologically ( was risking 50% at that point ).

I think Larry handled his drawdowns in a similar fashion.......by taking the mindset that much of the money that had been made was not yet his. He was 'playing with the house money' so to speak.

Again, this might not be something that suits everyone's personality, but for me, it's fine........I also think that 'banking' after a good run is something that helps me manage this.

Once my bank roll gets much bigger, I may start with $1000 instead of $100 and so on.

I think the other thing you need to factor is what exactly works for your personality.

Many people say you should find a way to trade that suits your personality.........well, for me, this is it. For others, being right 30% of the time, but averaging 1:3 or 1:4 RR on the winners and using Money Management to make profit might be another way to do it.

I'm not very good at picking where the market is going to be in a few hours from now..........but I am very good at picking price levels and PA that will ensure a reaction long enough for me to take a 5 minute binary trade and make my 80%.

hope that helps.

and what a great discussion

Seb

Yes you can trade for your living but only if you follow the rules.
Rules are
1>Trade with the trend it can only be know if you are trading for a while new commers are difficult to know.
2>Trade according to your account(i mean your account size)
3>First set your daily goal.
4>Once the traget is hit get out of the market donot sit for more control your greed.
this is the ultimate for your sucesss.
Then only you can be sucessful trader .

I agree with only one of those points - the trade relevant to your account size. But even that is different for different people.

But as to the other points?

what are the rules?
How do you know the trend will continue, and you are not just buying the very top of it?
The daily goal you set yourself is irrelevant. The market will give you what it has depending on the day.

Sometimes I have several setups a day. Sometimes none. I don't believe in setting daily goals, I'd rather trade good setups when they happen.



The stuff you just listed is all the same 'common wisdom' that is spouted in books and all over sites like FF.

Think outside the box

Don't forget you need to factor in soft factors like time, freedom, stress, enjoyment levels, travelling time etc. So $125K per year trading a less hours from home might be preferable to $250K per year working 10-12 hour days at an office.

Don't forget to factor in the risk of your winning strategy going moot. Even if you are in the 0.00001% of retail traders who discovered a trading system that actually works, there is absolutely no guarantee that it will not stop working in 5 years, or 1 year, or 1 month time. You have to constantly do research for new systems to diversify but again there is no guarantee you will find another one or more profitable systems

Oddly enough I have never seen the markets change such that real price analysis fails and tried and true price patterns no longer work.

Do you really think a professional trader can put in less than 10-12 hours per day and still compete?

My story so far and I do have over 5 years of trading experience,is that I am still recovering all the school fees I have lost in the learning curve.I do feel a certain level of consistency and more importantly feel I have overcome my emotions and thus have a far greater level of discipline.All in all I am fairly confident that I am heading the right way.
Do I believe its possible to live off fx trading? Absolutely, but you have to be in it for the long run and never get greedy or intoxicated with any get rich quick ideas.
I have found that the key is to build up your portfolio to a sizable amount so that positions opened account for a very small fraction of the total equity. I set myself very humble targets for now as my current priority is to build the portfolio to a couple of 100k,when I am satisfied with the portfolio balance (I would not like to have less than 200k in there before I quit my day job),then I certainly would consider dedication my full on attention to my trading, living off 50% of any profits after my portfolio target has been achieved, the other 50% stays in the account so it can further enhance my equity.
So question is how much money does one need to live off. Surely someone who has Millions will question even bothering with FX trading as he can invest elsewhere, but someone who starts off small and builds a portfolio to say(wishful thinking ,I know) a million should be fairly happy to make say 1k a day and that is very easily done with minimal risk 1k accounts for 0.1% of the account size of one million, and works out to about 25% return annually .
So yeah I am a definite believer and will keep at it as long as it takes to get there.