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I'm in one of their combines now and the only (as of now) issue I have with TST is (my) perceived contradiction between them saying all their rules are "risk" related yet the trailing drawdown is so tight you have to violate per trade risk management rules by nearly 2x. They're in a win win business for themselves. Many people will shell out thousands for the monthly payment and never pass and those who do pass have the potential to return them 20%. I believe they can open up the trailing drawdown without significantly increasing their exposure given the number of monthly contributions they receive. My guess is many people who pass the combine withdraw and close their accounts as fast possible given this obvious limitation and the fact they deem you a "professional" when that couldn't be further from the truth. With that being said I do believe $8-10k per contract is a reasonable balance to start with.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
All depends what Percentage Risk of Ruin you are comfortable with. The lower that percentage is the greater the amount of money you will need.
This is actually very simple to model, the chart below is something I quickly put together in excel. Obviously 250 simulations isn't enough but you should get the picture. With a 55% win rate, after a 100 trades this says you have a 25% chance of being ruined, with ruined defined as having had 10 more losing trades than winning trades. With a little more effort you could expand this to actually calculate your actual PnL rather than track winners/losers. All you would need is the average and standard deviation of your trades and replace win/loss (+1/-1) with the expected outcome.
And that completes my early Saturday morning 'Math Fix'!
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
And for Sunday's 'Math Fix' I first created a Pokemon Logic Problem for one of my kids....
Then I built a quick Monte Carlo/Risk of Ruin spreadsheet. The spreadsheet calculates 500 simulations of 100 trades. The two illustrations show the impact of starting account size of a theoretical trading system with an average trade PnL of $500 and Standard Deviation of $1500. Notice how better the starting account size of $10k is than $5k. This is driven by the much lower number of simulations that get 'ruined'.
Thanks a lot for the info from your Monte Carlo/Risk of Ruin spreadsheet. It is superb and extremely useful. It’s exactly what I’m trying to build, but I’m not well versed in Monte Carlo and Risk of Ruin calculations. Would you mind sharing your spreadsheet, please?
The smallest I would start trading 1 ES contract with a 2pt stop would be $5k but I would like more. The big question is how disciplined are you? Are you going to move your stops? Are you going to have your stop trailing close behind?
Why not just trade 5 MES and start at half the size, yes commissions will bite into your profit but you would get comfortable and be able to size up once you have shown to be profitable
