Does having adequate account size help make a success?

Money does not makes pips , but pips makes money

that being said... a good capital base is required... coupled with good risk management

Only good money management. Not to count money and not to count profits. Only parcentage and discipline.

It is very possible that your account size contributes a lot to your success on your trades. But one thing that I have seen among traders who trade big positions is that they are too emotionally attached to the trades they open with big open. Some can barely think logically and analyze the trade as the fear of losing their money on the trade makes them rush to rash decisions. So it even becomes better to open big positions with bonuses rather than real deposits. Like me, I prefer using the bonus program from Profiforex broker where I can have 1USD for every 1 lot I trade in a 500% bonus program.

I am a professional FX Trader, so I think i can speak with some authority on this issue.

I am have been fulltime trading for 12 years I am involved in other businesses but dont actively work in them anymore. I have been involved in trading in other markets for approximately 30 years since my teenage years.

When I first started in fx i traded some accounts a few hundred dollars risking pocket change size trades, their is a myth which says risk a few percent on each trade, and for some that might work, for me it was useless cause it encouraged me to keep losers.

One of the ways you become a pro is to become a great money manager, the only way to do that is too risk real (i would miss it) money, when you start doing this it really focuses you on:

1. Really learn how to read charts
2. Really learn patience
3. Really learn stop loss and money management

I can still remember having an account balance of $500 and risking like $60 and $80 per trade but looking for wins of $180 and $240,

You might get your account wiped out 5 to 6 times before you really start to focus but this helps.

Failure real failure if you look at it the right way makes you better.

Take my advice - dont listen to the herd most of them fail.

Simon

Someone got out of the wrong side of the bed Tim, and it wasn't me.

It would have been more profitable and interesting if you had kept this thread on topic, rather than seek to slander. But it is what it is.

I just checked my PM inbox and sent items. I found a PM by you to me 2.5 years ago with intelligent questions - and that's how I know your name is Tim; but no trace of any reply. That's not unusual for me; I tend to get about 50% more PMs than I reply to.

And on that subject, there's about 100 members here who KNOW from their own experience, that I quite often don't reply to PMs for up to 1 month; hardly the mark of a person indirectly prospecting for students for some pocket change. If I accept someone into my group, then I am very committed to them. Geoff has been with me for 3 years, and he and I have exchanged more than 1,000 emails plus countless Skype messages. Many hundreds of emails between me and a student I mentor is very normal, typical.

But it seems I didn't reply to you all those years ago. No big deal there.

A review of your own posts have actually been almost entirely devoted to my defense against the trolls.

That you don't give a shit that I (REALLY AM) a male slut. That I did contract writing out of boredom with countless hours of chart time MANY years ago, you quite rightly pointed out why should that matter. Etc. You have me as one of your only 2 subscriptions. And as I have just said, most of your posts at least in the last 12 months (I didn't check any earlier) have been as a staunch supporter of ignoring the troll's crap and to focus on TRADING STUFF.

My posts here on the forum side of things have been rare, often 6 months apart. And they have been very trade focused. Most of my time is spent on the news story side of FF, where I have never mentioned having students etc. All of my news story posts are, again, purely trade focused. And as all REAL traders know, the forum side of things is for plebs, and the news story side of things is where SOMETIMES things get learned.

Anyway, with your post here that I am replying to now, you have slipped into the category of TROLL.

And it has always been my policy to ignore trolls. Trolling is part of the lonely human spirit, it is the nature of failures to troll, and trolls are best ignored. And it was fully my intention to ignore you too; but your post has brought back some memories of a small part of my life's adventure, and I've had a few beers so I am very happy to reminisce.

Facts:

Yes, I am the original founder of My Antenna. I started that business on April 7, 1991 with $Aus1,800 on my credit card.

Over the ensuing 4.5 years, my crew grew out of a small shop in Melbourne's suburbs to a crew of 245 people and into a national organization with teams of people in all capital cities, and most large regional towns. In my 4.5 years, I spent $8,000,000 on advertising it. I had 41 people in the National phone room to capture the advertising's calls. I built my own factory and produced 1,500 TV antenna a week, including the mounting hardware etc. With annual sales of more than $18,000,000, at the time, it was the largest TV antenna installation business in the world (115 vans on the road) - no doubt because America is a cable based country, where TV antenna use is rare.

When I left it, it was the largest supplier of labour to the Pay TV industry that was at the time dominated by Microwave antenna installations.

So what?

Yes, after I left it behind 21 years ago, I took a year off and in 1996, I started an Internet business just before Christmas. Again, I started the business on the smell of an oily rag, which has always been my personal approach to starting businesses. And it grew quickly to circa 6,000 customers with revenues of about $140,000 a month, $40,000 of it profit.

I was in the middle of selling the business around 1998 for $2,000,000 to a small public company, when Telstra without warning shut off all my phone lines - simply because i couldn't read or understand the bill and had refused to pay it until they explained all the charges to me/my staff.

Believe it or not, I was going to buy a prime 1,500 acres of almost always green cattle country overlooking Lake Eildon with the proceeds of that sale, but the fact remains that irreparable damage was done to the company 18 years ago, and about one third of customers were lost.

My contract with the buyer was binding, but yes they would have to pay a pro-rata lesser amount for the business after the damage done by Telstra.

Yes, I launched legal proceedings against Tesltra for the damage it caused, and also this public company that was bound and contracted to buy my business but which tried to extort the price on unfair grounds.

Result?

The result is that I moved the business into the city, and I rented a very sweet apartment near to the Supreme Court so that over the coming years I would only have a short walk to court to give evidence etc.

I spent around $200,000 on lawyers and bankrupted the public company. They appointed Receivers after the Court judgement against them - they couldn't even pay my Court costs. Telstra avoided their day in Court because under their motion, and Australian Law, the case was suspended until I paid $200,000 security costs into Court just in case Telstra won. "Security for Costs" is such a bullshit ploy that big businesses use to shield themselves against small guys suing them, but that's life in the fast lane.

Four years later, 12 years ago, I was fully into DancingPhil mode. I was LITERALLY dancing 6 hours every day of the week, 7 days of every week and I did this for 6 years - all a bit like Forest Gump ran from coast to coast in the USA. I didn't give a shit about the ISP business. I didn't even visit its offices for 3 years; if the staff wanted me for anything, they knew where to find me - my favoured restaurant 150 metres away.

Yes, I bought into a restaurant, and I converted it into a night club. And in this nightclub, I made NO EFFORT to make it profitable. I had a party there with dozens of my musician friends paid to play every night - for about 5-6 months. I was determined to tank the place, and I spent about $300,000 doing just that.

The main owner gave me the keys after I paid $3,500 so he could make payroll. With this payment, I was his partner, and I had the only keys to entry. I paid out the annual leave and staff entitlements of the 2 Japanese Chefs who were desperate to leave the place but couldn't get paid out by this owner. Yes, I got involved with this owner fully intending to destroy him and the business financially. He had sexually assaulted a female friend of mine, and with a wink I set out to have some fun destroying him.

The only person who lived with me at this time was Soleman. He was/is a very devious Russian Jew who I had been warned about by his previous boss. He and his best mate Dave were both paid $75,000 a year, but Dave did all the engineering work, while Solly fucked both their girlfriends - the girls both being sisters.

Whilst I was in mid-party mode, destroying the business of this asshole who sexually assaulted my female friend, Solly put to me a STUPID deal to buy into my ISP business and the night club for tiny cents in the dollar. I refused. A few days later, I learned that all 4 staff had walked out, locked up the ISP servers under passwords that could not be recovered without them.

No staff were sacked. Rather they locked up and closed down the business with no prospects of recovery without agreeing to the extortion bid by Solly. Solly caused 3 otherwise good people to lose well paid jobs and their entitlements. Solly caused thousands of clients to suffer damage and distress while they made other arrangements.

And Solly got no result for his deceit. Oh, and the allegation that I tried to get people to pay bills etc or double charge credit cards is a complete lie.

This was 2004, and I didn't come to China until 2007. And I came for a VERY sexy 39 year old I met and had known online from half of 2006 onward.

I started trading in 2008. And like all businesses I have started, I started trading with a tiny amount of money. The rest as they say is history.

Enjoy your weekend Tim. Avoid future attempts at trolling. It doesn't suit you. Stick with your original ways of seeking real trade related intel.

Its hilarious to me, how so often here, a thread starters initial simple questions get spun into every subscribers pet rant.
So here are the simple answers to your two simple questions...

Your first question.. The answer is NO.
With one exception, in that your choice of reliable broker will be more limited, and as a result your transaction costs (and execution) will be higher as a small retail trader.

Your second question.. The answer is its better to trade small with good account balance.

Any advice to the contrary is misinformation.

/EndOf

@dancingphil
As pointed out by you, i was most of the time defending you in here. Why i subscribe to you anyways? I dont know maybe for the entertaining value.
Personally i found a lot of your posts refreshing but then i am really questioning your motives here on FF. As mentioned before most of your posts point out that you have 80 million $ (or whatever), many kilogram of gold. So bragging with money online in a place where most of the people are loosing is some kind of trolling. You want to upset people, and most of the time you suceed. Also you point out in a lot of posts that you teach people, so whoever believes you will message you and will beg to get teached.
So imagine if i would be super-rich with trillions of dollars on my bank account, would i spent(waste) my time on a forum discussing with people and even try to teach some of them for "Pocket money" ? No, i would be quiet and enjoy my life and dont bother with loosers.
Would i still live in a place where cost of living is low, but air quality is a mess and the political system is at least lets say questionable? I know you want to live 1000 years, but with pollution in china, you will probably wont make that . I would live in a place where taxes are low BUT living conditions are better. NZ, Canada, Monaco..
I would only teach the method to my closest circle (family and friends), not to complete strangers. While your son seems to trade FX as well and you seemed to teach him your methods in the early days (stevehopwoodforum), he is still working in his dayjob in australia and he seems to trade a different method. (infomation easy to find)
I give you props that you are using your real name, and that at least some of the business history of you seems to be valid.
Of course all of what you said could possibly be true, but very unlikely.
You said yourself that you are a sociopath, and considering this, it makes more sense.
"See if the person is constantly lying. Sociopaths are perfectly comfortable going through their lives telling a series of lies. In fact, true sociopaths are uncomfortable when they are telling the truth. If they are finally caught in a lie, then they will continue to lie and backpedal to cover up the lies. If they are really on the verge of being caught in a major, major lie, though, they may then wildly confess everything in order to maintain your loyalty.
Sociopaths love to lie about their pasts, too. Look for inconsistencies in their stories.
Some sociopaths will go to great lengths to make you believe their lies. For example, a sociopath may pretend to leave "to go to work" every single day even if that person is unemployed.
Many sociopaths are delusional to the point where they believe that their lies are the truth. For example, Charles Manson once said, "I've never killed anyone! I don't need to kill anyone!" (He said this in reference to the fact that his followers killed someone and not he himself.)"
http://www.wikihow.com/Spot-a-Sociopath

Yes, "Monopoly Money" and "pyrite".

ROFL

FF is really the place for comedians.

Problem with most (if not all) retail traders is that when (and if) they learn money management, they've already lost good part of their capital. Find a job and work hard for 2 years, but if you were a hard worker you wouldn't be a trader. No one will borrow you money. The only thing left is to become an account manager.... no wait, it's illegal. So here you are with your $200 account ten years later.

AINT THAT THE TRUTH....

Have to second this. Great post.

It is easy to fall into the trap of placing small risk trades. Maybe you have a successful 'edge', but you only win small and that encourages over-trading. You will then begin a cycle of making a little and then giving back twice as much with ill-discipline leading to entering riskier trades.

Whereas, having the req'd discipline and executing only those trades that satisfy all criteria with a larger position, will put a stop to over-trading. As Simon points out above, this focuses the mind and is one of the recipes req'd to beat the system.

:-) nice comments.

Again, excellant post imo.

I can't believe how many people are here saying max 2% per trade etc
This effectively means that you do not have a system, (or a reliable one, one that gives you a true 'edge' at that)
It is all about success rate, not percentage stakes.
If your system has either a win ratio of >70% with 1:1 R:R or >50% win ratio at 2:1 R:R or > 40% at 3:1 etc then percentages do not even enter the equation.

It is possible to return >100% a month, with an edge and the right trading mentality, but not by sticking to 2% risk per trade.

Parlaying profits mean placing trades using profits from previous trade, thus why would you stick to 2% if you have confidence in your system and your system has a favourable reliable win rate?

Do the math. According to the attached table, at 70% win rate you have 91% probability of encountering 5 consecutive losses in any 1,000 trade sequence. And the table considers only consecutive losses; for example, if you have a sequence of L-L-L-W-L-L-L, you're effectively 5 trades down, but there are only 3 consecutive losses in that sequence. Also, the table assumes that all trades are uncorrelated; if wins and losses tend to cluster in a way that's statistically significant, then the probabilities for a prolonged losing streak increase further.

However, as the table shows, the probabilities improve exponentially as you get nearer to 100%. At above 90%, there's arguably a case for increasing risk well above any textbook guidelines.

When considering risk of consecutive losses, RR is irrelevant. The probabilities in the table apply irrespective of RR.

Of course if you're looking to grow a tiny account, the loss of which can be easily shrugged off, then risk is largely irrelevant. The textbook rules arise from benchmarks used by institutional traders.

Interesting graph. It's still morning here and i may not be with it completely, but are you not talking about exponential growth, as per risk to your pot?

If the converse is true that for a 70% success rate having a 52% chance of 6 straight losing trades, there is also a 100% chance of having 10 straight winning trades under that same projection. If the excess capital is always withdrawn, then there is no way this can be a losing strategy.

The only risk can possibly be from as i say, exponential growth where you are re-investing profits.

Even then it is a littler hearsay, a 52% chance does not measn it will happen as it is a percentage chance.

A bit like when they say there is a 52% chance of rain tomorrow! What does that actually prove? It may rain it may not!

That is not to say that i do not appreciate your post in any way, of course, successful trade %'s must be measured over a longer timespan than a few days or even weeks, but to my thinking unless you are risking 16% and start with 6 losing trades in a row with a 70% success rate, it is a winning ratio.

We are not talking about suddenly having an idea and risking so much with an unproven method. We are talking about trading an 'edge' that you are confident and have proved with time that reliably gives such returns.

regards

CG

There have been many discussions in the past on "DancingPhil". I remember his status being changed to Commercial member for some time.
In general I have seen his posts talking about students he teaches.
My assumption : If he can post an account or TE showing astounding returns it would put all his critics to dormant mode.

Absolutely market makers and broker appreciate your "...good account balance..." Deposit regularly to maintain it...

Very informative, thanks!

Another way of looking at it -- I've come to learn that, broadly speaking, there are two types of trader:

#1. 'Forum' traders (and I don't mean the term to sound insulting): these guys tend to start with a tiny account balance, say $200, and look to grow it as quickly as possible. The risk numbers in the graphic I posted are irrelevant to them, because if their account gets margin called, a $200 loss is no big deal, they simply re-fund the account and start over. And if they grow the account to a large amount (say $100,000), and then lose it all, it doesn't really matter, because they choose to view the $99,800 lost as the "market's money". Or, even better, perhaps they withdrew some of the winnings along the way. The higher their win rate, the less luck that's needed to obtain the several consecutive winning trades needed to grow the $200 exponentially, and at maximum leverage, to some life-changing amount.

#2. The 'professional' trader or money manager. They operate large accounts and make their money from substantial salaries and/or commissions. Keeping drawdown within acceptable limits (say 10%-15%) is paramount to these traders, because they can't afford to lose the firm's, or their clients', money. Obviously they don't have the option of withdrawing money from the account to protect it from loss. Hence the "2% rule". And they generally aim for steady and consistent gains, a few percent per month: it doesn't require a 'big' edge, merely a robust one. For example, I know a UK-based trader who's been trading for 12 years, and (when I last spoke to him) had more than 4 million GBP privately under management. In 2015, he made ~ 44% return, risking less than 1% per trade, and without a single losing month. His average monthly take in commissions is > 100,000 GBP.

There are other 'professionals' who, while trading only their own money, have gradually accumulated a decent sum, and to lose a large chunk of it suddenly would undo several months, or more likely years, of hard work. Hence they likewise use conservative risk management.


Trader #1 can afford do everything possible to maximize his return, because drawdown doesn't matter. But for Trader #2, managing drawdown means that he keeps his job, his income, his clients, or simply his account intact. Two completely different approaches to two very different ball games. The textbooks see the 'professional' model as the classical approach to trading. Whereas guys like dancingphil think outside of the squares, which is arguably necessary for the small guy to have any chance of getting rich in the short to medium term. Each to their own.

Sorry if I'm merely stating the obvious, I'm sure that you already know all of this. But I believe it (at least partly) explains the two different viewpoints in this thread, why some folk endorse the "2% rule", and others see it as an unnecessary encumbrance.
___________________________

Here's the XLS file, if it's helpful. You can change the values in the gray background cells.

A very solid post David.

To add my own 2 cents worth to the "Forum Traders" perspective, and to add some weight perhaps to the notion of 2% account risk etc, I took a different approach to the matter.

Yes, I blew 7 accounts before making some decent change. But I was also very disciplined with my Money Management by taking out 20% every time I made 200%. I compounded my trade size like a mad-man; BUT when I got to 500 lots per trade, I never rose above it. I took my $US5,000 per pip out at the end of my trading week, and that cash was safely away from my trading account.

This was many years ago, back in the days when I only traded 1 lot per $1,000 in my trading account. Which later grew to be 1 lot per $400 in my account; but NEVER did I trade larger than 500 lots.

It did occasionally happen that I blew my trading account, but as the years progressed, my bank account of accumulated profits continued to swell.

And my point here is that whist I stayed at the 500 lot level for many years, the percentage at risk of my total portfolio (external bank account of accumulated profits plus my trading account at risk) began to shrink at a great rate of knots.

Lets do the maths. I've made $US88,000,000. BUT when I trade at 500 lots; 1 lot per $400, I only have $US200,000 in my trading account.

$200,000/$88,000,000 = 0.227% at risk. NOT 2%, but 0.227%