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Does having adequate account size help make a success?

  • #61
  • Apr 10, 2016 4:46am Apr 10, 2016 4:46am
Quoting dancingphil
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...
I have a small query dancingphil.
2 years back I read you had made 88 million dollars. From that time to now you still mention 88 million.
Have you stopped trading?
When the going gets tough , the tough get going
  • #62
  • Apr 10, 2016 5:00am Apr 10, 2016 5:00am
Quoting Stubborn
{quote} I have a small query dancingphil. 2 years back I read you had made 88 million dollars. From that time to now you still mention 88 million. Have you stopped trading?
I haven't traded seriously in nearly 3 years. I can't think of what I can/want to spend/invest $88,000,000 on, and so making a Billion isn't (yet) a motivation for me; and it is part of my nature that I often think for years at a time before I get off my ass and take action.

I am very pessimistic about the Global economy; but I have that issue covered with the 386kgs (12,400 ounces) of gold I bought a few years ago. That gold is under-water $150 an ounce, but I don't give a shit; it was always a "10 year hold".

I do have my charts constantly on, and I do constantly seek to refine and develop my trading system; so I am always testing ideas with $200 accounts etc. Having students has never been a revenue item for me; the crew know that when I walk away from teaching, that I will refund their monies as my final good bye to them.

Having students has caused me to become a better trader; as the age-old wisdom goes, the teacher always gets the best of the lesson. Plus they are a great bunch of guys and (2) gals, and a lot of fun to interact with. It's great to associate with smart and driven people, and their questions cause me to be more clear headed and focused with my replies.

Will I return to trading large lots? Probably. Definitely. I love the hunt for pips. And if/when I do, it will not be limited to 500 lots.
  • #63
  • Apr 10, 2016 5:28am Apr 10, 2016 5:28am
Quoting dancingphil
{quote}. I can't think of what I can/want to spend/invest $88,000,000 on, ....
This is what you have always advertised. That you made 88 million dollars from $200.
This is a eye catcher for newbies/unsuccessful traders.
People who want to literally mint money without any serious hard work or putting effort.

Quoting dancingphil
{quote} .... Having students has never been a revenue item for me; ....... Having students ....
This is the bait to lure them to you.
Hidden message(advertisement) that you are open to teach for a fee.
When the going gets tough , the tough get going
  • #64
  • Apr 10, 2016 6:02am Apr 10, 2016 6:02am
Quoting aviz12
Hello Friends, Especially Professionals. Do you think having a good account balance helps alot in the long-run ? Do you think its better to trade small with good account balance.. than rather trading huge with less account balance. I would appreciate your advises. Thanks.
​not necessarily, trading with a small account, lets say less than 100 pips, you will have a lot less attraction to the trades in terms of less fear... you can test strategies and lets say your account grows to 2k... that's not a bad place to start as an initial investment, but you've already traded your way up to that amount, you know what your doing, you have a strategy that clearly works, you can train your sub conscious mind so that it becomes natural... tony Robbins uses the example of driving a car, there are so many things to remember at first its natural to think holy shit how am i going to remember this? but after a few months of driving/passing your test you do all those things sub consciously most of the time...

on the other hand, a larger account size means that you make more, your risk can be greater and you can trade with a set stop loss, on a small account, some say you cant risk £1 in trading from lets say a £100 account because you'll be stopped too much... perhaps its good to have both? that's what i do anyway
  • #65
  • Apr 10, 2016 6:02am Apr 10, 2016 6:02am
Quoting Stubborn
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.
This wont happen. He has been asked about this many times but he always refused claiming that he doesnt need to prove anything to anybody and he is not selling anything. But it was pointed out by one of his former students that he didnt even showed proves to them.
I pointed out that he living of his students/teaching fees is far more likely than he living of his trading success.

Of course he could be a multimillionaire living in a cheap apartment in China doing contract writing just out of boredom and teaching his methods to strangers for just "1000$", pocket money for a multimillionaire.

Likely? Judge for yourself.

While DancingPhil as a person and whether his success is true of not is a big question mark, his posts are often some kind of "out-of the box" thinking that is refreshing to read.


As pointed out by hanover, i think the assumptions about two different kind of traders are correct. To accumulate significant wealth in a short period of time, i think its the way to go. But then it has been tried by many people on the "Rags to Riches"-thread. How many suceeded?

Apart from a method that gives you high-probability-trades, you also need balls of steel (as you are trading with significant size).

If one has a trading method that gives you >90% profitable trades, of course you could scale it up pretty fast.

Also the overall risk when you take out your gains significantly decrease after time. I just put up a small spreadsheet with phils assumed winnings ($500,000/weekly profits, $200,000 trading capital).
While it started out with relatively high risk 40%, after 10 profitable weeks the overall risk decreased to 4%, after 20 weeks to 2% and so on.

In theory easy IF you have a high-probability method, which is the most difficult thing.


spreadsheet:
http://s17.postimg.org/shyou6rjz/phil.png
  • #66
  • Apr 10, 2016 8:02am Apr 10, 2016 8:02am
Quoting dancingphil
{quote} I haven't traded seriously in nearly 3 years. I can't think of what I can/want to spend/invest $88,000,000 on, and so making a Billion isn't (yet) a motivation for me; and it is part of my nature that I often think for years at a time before I get off my ass and take action. I am very pessimistic about the Global economy; but I have that issue covered with the 386kgs (12,400 ounces) of gold I bought a few years ago. That gold is under-water $150 an ounce, but I don't give a shit; it was always a "10 year hold".
What is the cost of holding such large amounts of gold? Not sure if you meant physical or paper?
Its a good hold for long term diversification but I don't know how you would justify the cost of holding unless Gold of course sky rockets in price.
All posts are my personal opinion
  • #67
  • Apr 10, 2016 8:10am Apr 10, 2016 8:10am
The holding costs are ZERO.

With physical gold holdings, it can be "allocated" meaning that it is bars stamped with a number and held specifically aside for you. This form of physical gold holding normally costs 1% per year.

And then there is "unallocated" gold, meaning that your place of storage uses the gold for its manufacturing needs of coin production etc. That your gold is NOT numbered or allocated; yet it is fully accounted for.

My gold holding is physical, UNallocated gold, Govt guaranteed and available for sale as allocated gold any time I wish.

Paper gold is a very dangerous way to hold gold.

Where I hold my physical gold, my costs are zero. By the bullion house being able to use MY gold as their working capital for the products they make and supply, they offer free storage to UNallocated gold holders, like myself.

Quoting Rtm
{quote}What is the cost of holding such large amounts of gold? Not sure if you meant physical or paper? Its a good hold for long term diversification but I don't know how you would justify the cost of holding unless Gold of course sky rockets in price.
  • #68
  • Apr 10, 2016 8:15am Apr 10, 2016 8:15am
Quoting dancingphil
The holding costs are ZERO. With physical gold holdings, it can be "allocated" meaning that it is bars stamped with a number and held specifically aside for you. This form of physical gold holding normally costs 1% per year. And then there is "unallocated" gold, meaning that your place of storage uses the gold for its manufacturing needs of coin production etc. That your gold is NOT numbered or allocated; yet it is fully accounted for. My gold holding is physical, UNallocated gold, Govt guaranteed and available for sale as allocated gold any time...
Makes sense I guess, they should be the ones honoured that you entrusting them with such rare metals. Very good to know though! And a wise investment I do say, thank you for teaching me something new today!
All posts are my personal opinion
  • #69
  • Apr 10, 2016 8:27am Apr 10, 2016 8:27am
Honest questions get an honest answer; so you are welcome.

https://www.perthmint.com/storage/pricing.html

Quoting Rtm
{quote} Makes sense I guess, they should be the ones honoured that you entrusting them with such rare metals. Very good to know though! And a wise investment I do say, thank you for teaching me something new today!
  • #70
  • Apr 10, 2016 9:02am Apr 10, 2016 9:02am
Quoting dancingphil
The holding costs are ZERO. With physical gold holdings, it can be "allocated" meaning that it is bars stamped with a number and held specifically aside for you. This form of physical gold holding normally costs 1% per year. And then there is "unallocated" gold, meaning that your place of storage uses the gold for its manufacturing needs of coin production etc. That your gold is NOT numbered or allocated; yet it is fully accounted for. My gold holding is physical, UNallocated gold, Govt guaranteed and available for sale as allocated gold any time...
That's a post just over one year ago.

Quoting dancingphil
Dickhead, I do NOT have $88,000,000 in gold; I have 12,400 ounces of physical gold held at my bank in Hong Kong. I have had these 12,400 troy ounces for more than 18 months. {quote}
Call me a troll, i am just looking to find inconsistency in your stories...
  • #71
  • Apr 10, 2016 9:19am Apr 10, 2016 9:19am
Dude, you are starting to STINK like an obsessed stalker with some kind of sexual disorder.

Sorry, but I am neither gay nor bi.

How is quoting the price list of the Perth Mint for RTM - an intelligent and REAL trader, a contradiction of what I said years ago? How is it so difficult to understand that I might move my gold to lower my costs?

The Perth Mint is neither the only Govt secured and backed user of unallocated gold principles. Such principles are in fact quite wide spread.

H69, you really have now shown yourself to be a dickhead.

Quoting h96
{quote} That's a post just over one year ago. {quote} Call me a troll, i am just looking to find inconsistency in your stories...
  • #72
  • Apr 10, 2016 9:35am Apr 10, 2016 9:35am
Quote
I made my first millions at 1% profit/loss per pip of price movement; and then migrated to 2.5% profit/loss in later years. That is, I started out at 1 lot per $1,000 of equity in my account. But then I moved to 1 Lot per $400.
2% account risk is simply stupid. It is a silly idea promoted by brokers because it means you will open more trades while you have an account, making the broker more profits.
Of my 39 students, none of them are allowed to start trading live with more than $200.
Do the maths;
At 2.5% profit/loss per pip, 80 pips makes you...
Thanks for the insights Phil (and everybody here btw).
I tried to understand what you said on the quote above, but I especially can't comprehend these 2 parts when you say:

Quote
I made my first millions at 1% profit/loss per pip of price movement; and then migrated to 2.5% profit/loss in later years. That is, I started out at 1 lot per $1,000 of equity in my account. But then I moved to 1 Lot per $400.

What do you mean exactly by "profit/loss per pip movement" and "1 Lot per dollar amount"

And

Quote
At 2.5% profit/loss per pip, 80 pips makes you 200% profit. BUT, 5 x 10 pip profits makes you 205% profit, because you are compounding your profits.

Quote
$200 at opening balance, making 5 x 10 pip profit trades a day/week, and taking out 20% of the profits from day/week 2, your account grows to $75,000 by day/week 6. And of that $75,000, you have already taken out $22,000 profit.

Could you make maths more explicit here?
  • #73
  • Apr 10, 2016 9:48am Apr 10, 2016 9:48am
The maths are already explicit.

I began my trading with $200, and I did this until the 8th refunded account made me money. At that time, with my $200 account, I traded 0.2 lots (1lot/($200/$1,000). And when I got to $600, I took out 20% to a holding account with my broker. When the holding account was sufficiently large, I withdrew it to my bank.

This risk profile gave me 1% profit/loss per pip of price movement.

Later in my career, and with better brokers, I raised my risk profile to 1 lot/$400 - 2.5 lots per $1,000 of account size, otherwise stated as 2.5% profit/loss per pip of price movement.

But this time, I was already trading 500 lots, and so my account size at the beginning of the week was $200,000 and I did NOT compound my trading lot size thru the week; I simply took out my profits on Fridays.

Don't be confused by the lemons who risk 2% per trade, with my making 2.5% per pip.

Quoting Valilutzik
{quote} Thanks for the insights Phil (and everybody here btw). I tried to understand what you said on the quote above, but I especially can't comprehend these 2 parts when you say: {quote} What do you mean exactly by "profit/loss per pip movement" and "1 Lot per dollar amount" And {quote} {quote} Could you make maths more explicit here?
  • #74
  • Apr 10, 2016 10:01am Apr 10, 2016 10:01am
Quoting aviz12
Hello Friends, Especially Professionals. Do you think having a good account balance helps a lot in the long-run ? Do you think its better to trade small with good account balance.. than rather trading huge with less account balance. I would appreciate your advises. Thanks.
For a professional trader, and by that I mean trading is your main or sole source of income, pays the bills and puts food on the table, the capital in your trading account is no less important than the location, maintenance, cash on hand, cash in reserve, inventory, and the clientele of a physical business. Your working capital is your business. It's not something you treat like beer money. Successful business is about consistent profit, but the success or failure of a business depends on many non-monetary variables. A business can be highly bankrolled but wind up going bust for an encyclopedic list of reasons.

But, just for the sake of argument, let's say one has the necessary experience and skills needed to make sound trading decisions and has developed what most would deem a responsible trading plan. Trading and money-management skills aside.....What is the situation? Time, availability, commitment, personal relationships, personal habits, personal problems, living situation, financial health, physical health, etc. will at least cause some ripples in your business life. Even though the working capital is needed and it's very important, it's only one aspect of the whole picture.

Does having a large account enable a trader to make larger profits? Sure. Does it ensure that a trader will make consistently larger profits? No. What a larger trading account enables, but not ensures, is the ability to increase profitability without increasing the workload. It's the same old story. Money makes money. Is your present trading strategy producing desired pip totals? Do you have confidence that you will produce a positive number of pips on a consistent basis? If yes, increasing working capital will enable you to increase exposure at responsible levels with confidence resulting in larger profit. If no, don't invest more funds until the consistency of the strategy and the confidence in your ability are there.
  • #75
  • Apr 10, 2016 10:06am Apr 10, 2016 10:06am
I don't think it can make you a better trader directly, but with proper risk and money management, a big capital can tank more losses than less capital. That's all there is to it.
  • #76
  • Apr 10, 2016 11:22am Apr 10, 2016 11:22am
Quoting jls
{quote} If you can't trade your system successfully using mico lots and a few thousand dollars then having $20,000,000,000,000 will make no difference employing that very same strategy. The odds are identical. If you have a win rate of 68% with micro lots, employing the same strategy with standard lots your win rate will be the same 68%. If you have monthly returns of 35% using micro lots you will have monthly returns of 35% using standard lots. The amount of money returned will be larger with a larger sum of capital but the success or failure of...
true difference is psychology.
You may risk more on 5k account but not willing at 50k same risk.In general greater the account is less risk is employed because one is not desperate.
I risk more now because I like to build my account fast but once I hit the number I want I will reduce my risk.
In my view it is whole lot easier making money on large account then smaller one.
Forex is 70% in range specially pairs like AC AN UC and one can employ strategy which I have trading range with position building.Larger the account less stress about DD provided one understands MM
In trading, you have to be defensive and aggressive at the same time
  • #77
  • Apr 10, 2016 6:23pm Apr 10, 2016 6:23pm
A 1.36 Profit factor over 1000 trades can return 650% on average by just risking 1%, saw the graphic on twitter the other day.

Attached Image (click to enlarge)
Click to Enlarge Name: Cfkcem4UYAA2u5m.jpg Size: 89 KB


Question then becomes, how can you maintain a 1.3 profit factor for 1000 trades or more, and how long will it take you to make that many
number of trades.
  • #78
  • Apr 10, 2016 9:48pm Apr 10, 2016 9:48pm
The objective, which takes away the account size factor... That is, how much am I psychologically bothered by how every win/loss bears as a factor, in the zero sum game... Is Compound Interest. If you're able to increase your account size by, say, 5% each month... This is an excellent step toward a (5% x 12 =) 60% gain, on the year. You can play with the numbers...
  • #79
  • Apr 11, 2016 3:07am Apr 11, 2016 3:07am
Interesting schedule, MoneyD
It is necessary to remember for the overall development.

Except that, it seems to me you are focused, not on. Risk - is not just a number. There are many factors that affect it from correctly put a stop-loss to the volatility of the market. I think that is more correct to think of working strategy and then adjust it at interest risk from 1 to 3%
  • #80
  • Apr 11, 2016 5:14am Apr 11, 2016 5:14am
Quoting Don M
Give a successful trader $200 account and he can make money. Give an unsuccessful trader $100,000 account and he'll blow it. Obvoiously then it's not the size of the account but the skillset.
Absolutely correct. I think that even if you give a bad trader is also a good strategy, it will still be able to drain account
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