I guess I should have clarified, you need to allow an account to grow exponentially at first.
Withdrawing funds is inevitable, you just have to realize that for every $ you're withdrawing, it's costing you more than that in potential returns.
Eventually, you grow an account system to "saturation." Most of my scalping approaches saturate very quickly, where adding more positionsize is either diminishing ROI or even negative. It only takes a small positionsize to fully saturate the approach. In that example, once you've capitalized and saturated the system, now the profits are either ripe to be used at your discretion OR you have to seek other instruments/methods for putting that capital to use.
The Time Value of Money concept was beaten into me by a guy who started investing when he was 35. At the time he was like 61. He showed me that had he simply started when he was 25 it was multiples more money for his retirement. His emphasis was on the early period of an investment (or trading) strategy. The early money is the most significant and powerful....because it has the longest time to take into account the compounding.
The other thing my buddy tried to explain to his client was that taking a $40k account to $100k requires 250% yield. Taking a $60k account to $100k only takes 75%. So a simple 33% reduction in available capital needed a 333% increase in yield in order to make the same target amount.
He told her, if you'll wait a year, you can buy 2 cars and take 2 trips and have way more money leftover than by choking me out now.
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
6 Months is a not enough of a period to measure whether you can survive in trading.
Methodologies at times can can work for prolonged period and then don't stand a chance in some new market environment.
2-3 years is a much better measurement.
Earning perception is individual. The focus should not be nominal.
What matters is the risk to reward you have taken during this period and how you achieved your success.
What risk did you take? how frequently did you trade? What volatility has the instrument been through and it is typical historically?
One point of reference are any professional money managers like fund managers, CTAs, etc.
Some funds who have increase in their size can't match their performance when they were small.
This is a not a psychology factor, rather now they have to scale their position into the market which is a lot harder.
A discretionary trader that increase size could find himself with this challenge as well.
Last advice: Think, Plan and have a Strategy. Quitting your job is neither of those.
I trust that decision of changing things will come naturally as you trust your method over a long time.
I hope this helps you in your evaluation.
(The is a substantial risk of loss in futures trading).
PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
The following 5 users say Thank You to mattz for this post:
Nice question and great responses... one thing is if your making your NUT in the volatility of the current market and then you get hit with ZERO VOLATILITY and an ES that moves 4 pts in a day... then what? Remember last summer? Market conditions will effect your daily take.
I guess then the Condor would fly again, ah how I miss the Condor, an endangered species now a days.
The great thing about a job is it is a hedge against bad trading.... presuming you don't trade more than a few hours a day.
The following user says Thank You to mainstream for this post:
I always give Mattz a thumbs up. Most brokers know that traders fail, but they open accounts anyways with a 2500 deposit and 500 day trade margins so they can get as much as they can in commission. Matt at least is honest. He doesn't try to churn accounts.
Indeed, and this is why one should constantly filter markets for volatility. Change is the capital accumulating mechanism. If there isn't sufficient volatility in one's market(s) of choice, it is then time to move along to greener pastures.
I was surprised at some of the responses on the topic which geared toward a different direction which I originally intended. But nevertheless there were many great responses to help me think through the issue and the responses were pretty revealing about the individuals who posted.
The way I trade generally would have low risk and higher consistency in a non-volatile market and smaller profit per trade, this generally means a steadily up-trending market. My sizing per position would be much larger as well.
However it is when there is high volatility that huge profits per trade comes in.
Currently my job is limiting the time I can trade. I guess I should do better if I can focus more on trading.
You are right about the job as a hedge, I do not assume and is not complacent to think that a few months later I would for sure be able to keep up with the same results. Since I have no idea what would happens in a few months, what's more a few years from now? I know good risk control/management is critical to successful trading and most certainly success in life.
If I could earn 500 per day I would quit my day time job. I currently get a pension from the military and also get my health insurance for me and my family from the military (Tricare an HMO). Now I just need to learn how to trade and be consistent.
The following user says Thank You to slagzone for this post: