Ok a recent discussion with @josh in my journal bc of a spreadsheet I posted showing making 2 pts a day how ones account could grow. Ok I agree with him that that spreadsheet isnt realistic but today i did this quick one. Who thinks this is possible. Doesn't matter style of trading only bank +4.5 pts a week, manage risk to reward, and grow a account as I listed> Really give this some thought before one answers. Also im not talking about a new trader either lets be real. Curious what majority is going to say
also a comment was just made so Im adding this revision in-we all understand having losses this is already figured in
My journal is -ES entries/targets & risk/rewards
also Im not looking for comments directly to me, just about the spreadsheet, bc people seem to respond directly to me, thx in advance
Last edited by Rad4633; September 22nd, 2012 at 04:20 PM.
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You're not going to like my reply. You might want to consider how much you could lose per week and do a spreadsheet on that. When I first started trading I did exactly as you are now. Your effort and thought is better spent in managing your risk and learning how to trade.
Focus on your risk.
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If you have a system that will give you these results its completely plausible, but most people aren't successful at trading, so if we look past that, it is absolutely possible. If you truly can manage that win rate per week, your contracts added would probably be a bit slow in my mind (for a good proficient trader). To add contracts it relies a lot on your risk tolerance (I am sure people are going to say it depends on your accnt size, %'s, etc., but it really is your risk tolerance if you are a good trader with a good system).
Assuming you have a good system, I would focus on actually making it happen (consistent implementation is one of the hardest parts), preferably in SIM before you put real money on the line.
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Let's say you start with a $30K account. Those numbers look doable. Starting with much less, the risk per trade, assuming small stops, is pushing too large by week 30. At the end with the most risk, you are trading 12 contracts. By that point you have almost doubled the $30K in 7 months, and so you are risking $500 per ES point at week 30. It is at least more plausible than the 2 points per day, going to 20 contracts in 9 weeks stuff.
Just taking the spreadsheet by itself though, it says nothing about risk. You mention that the trader should already have that under control, but your spreadsheet does not address it. Making 4.5 points means very little if the drawdown was excessive, for example. Take into consideration your max stop size, max risk %, max drawdown, and many other factors other than profit. I would rather gain 50% with a 10% drawdown and a profit factor of 2.0 over a period, than a 100% gain with a 50% drawdown and a 1.2 PF.
So in short, it's better than before, but in itself, it means nothing. Risk-adjusted profit is king, not just profit, which is all the spreadsheet takes into account. I agree with keymoo--the spreadsheet is nice to think about, but risk should be the primary concern, not profit potential. Said another way, consider why so few are successful--is it really because it's that difficult to make 4 ES ticks per day? Heck no... it's because people do not understand how to make 4 ticks per day while risking an appropriate amount to do so.
One final thing: on paper it seems easy and logical to go from 1 contract to 12 in 7 months, but in practice it is far more difficult to do, no matter the profits, for one simple reason: trading larger size affects behavior. Just go read GaryD's "Catching big waves" thread for an example of a great trader who has had trouble scaling up in size. He makes thousands of dollars per week, but still faces the challenge that all traders face when increasing from just one to two or three contracts. Place a balance beam a foot off the ground, and it is easy to walk across. Now put it 200 feet high with no net, and see how easy it is to walk. Logic says it should be the same, but practical experience says that it is not. Trading 1 to 12 should be so easy, mathematically, but practically, due to our minds, it is not.
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And yes i was bored today, your dead on with all your comments. especially the last one this is the hardest and one has to gain experience so that the emotion goes away its just a job. Money is 2nd (this is why I never show PnL in money in live trades always in ticks bc one will see that and make a decision off the $$$)I do agree for a scalper. its more difficult for them but still in the end 4.5 pts honestly I was playing around when I put this together. Because think about daily range if one cant net 4.5 pts a weeks more time is needed to learn or control something that is missing. Alot of traders have a system that will work in one type of market but give it up in another(trending,sideways etc that is where understanding the market comes in to play IMO)
revision-the spreadsheet is noting net pts, risk to reward has to be managed to achieve pts they go hand in hand....If one doesnt show PnL in $$$ but rather ticks and you have your Risk to reward in place you see the same numbers displaying in PnL where if you show dollars everytime you increase size this changes and will cause a mental handicap
Last edited by Rad4633; September 22nd, 2012 at 05:34 PM.
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I guess since we are talking the theoretical ideal situation, then yes, I partially agree--you would keep doubling until you were getting partial fills, the market was moving by you all together, or you were, yourself, moving the market (yea, I wish lol), but if you had a system to do what you want in your excel sheet, on the ES you would definitely not stop at 12 contracts, you would probably go to 200-400 and then think about more advanced ways to enter in the market (a non ninja platform makes that easier), or at least that's how I see it. I don't know what you mean by preserve capital because I am assuming you are risking the same amount per contract, so I don't really see how that comes into play if you have a winning system.
If you have a winning system you don't cap how much you can make because you know at some point your system will most likely not work as it once did and therefore you should capitalize when the "getting is good"...that is why a lot of automated trading systems (this is just an example, I understand discretionary is adaptable, so please don't get caught up on this too much, but the general idea of changing market conditions) I have seen some "big boys" use only run them for part of the year--they run them, make lots of money, take some loss and then stop trading that system and then move onto the next, or at least that is what we have seen a lot of automated guys doing, successfully (I work for a large company that part of our business is performing advisory services for those type of shops).
I like @josh's advice...stop the spreadsheets and work on your consistent mental implementation game
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