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Can a $10,000 investment yield $1,000,000 in a year? In five years? If so, what is th
Can a $10,000 investment yield $1,000,000 in a year? In five years? If so, what is the risk involved?
A Brief instruction on the matter
These are the kinds of questions to which my research work is addressed. Such fantastic results are possible in the stock market. Individual issues fluctuate widely enough and often enough to permit this and more. Techniques are presented here that put an average yield on invested capital of 10% per month, well within the realm of possibility. Compounding profits at this rate, such a yield can return $1,000,000 on a $10,000 investment within 50 months.
An actual trading experiment will be described using these principles which produced an 8.9% yield per transaction--every 9.7 days. Such a yield, if continued, compounds $10,000 to $1,000,000 in 15 months. If such results can be attained in the market -- why isn't everyone doing it?
The answer is complex, but the elements are simple: effort, knowledge and psychological barriers. Any goal this worthwhile requires time and effort. Most investors, amateur and professional do not have the kind of analytical background needed to shear through rumor, opinion, and adage to get at the basis of why stock prices change. And finally, even with knowledge in hand, many investors lack training in the emotion-logic balance required for success.
The mathematics involved in my work are a bit beefy, the use of Fourier Analysis or some other advanced maths are a daily routine in my world. Some of my students don't get it even after a semester or two in the topic.
Many people still don't understand what I do nor they understand the nature of my research. They compare it to already beaten channel analysis or moving average analysis. As an example, it isn't what Hurst used, it is how and why he used it is important. Hurst was the first to point the relation of proportionality of time/price swings with the periodicity of indicators as well as synchronicity of time cycles and he laid out mathematical foundation for computerized measurements (some of what I teach). This requires some technical/programming skill and what's more important good sense of proportion.
I had recent a chat with a software vendor that is quite raved in this forum, and I'm so afraid for the people that buy into ideas that are per-boxed. It's rather common sense - if the software in first place, system or whatever magic will work wonders... there were no need to sell it in first place, in specially to small Joe's (don't worry I'm also a small Joe) for a price fraction, but it's also basic math that many fractions together make a decent piece of money, that probably trading with such software's never made! But I'm a critic by nature, nature of work and nature of personality! So my opinion is a good as anyone's else.
Also had a chat with a young fellow that represents an introduction broker in Florida, also present in this forum, absolutely fascinating the amount of of non-sense that I was able to grasp... such as "the serious traders with us... do an average of 5000 RT trades a day"... again in the context of selling RT trades, like tickets to go to the zoo, the more the better, more commission money and so on! I f you trade 5000 Rt a day... you are a HFT and therefore a computer not an human, please be aware of this sort of "friendly" friends that have no idea about what they are talking about or they talk up they back side, this fellow should be nominated to be a trading/strategist/developer/teacher/preacher/curator/sales man of the Century! the only problem is that there is a long waiting list of candidates.
In fact you don't need to have accounts in the millions and above regions to make money in the markets, you don't need some ubber duda software that will cost you a fortune (with limited support or education, if any!), that probably will do things that you probably will never understand nor you need to trader > 5000 RT a day... in fact you need to stay away from those concepts as much as possible. Do you remember the turtles way?
The first reaction when I started to see some of my students trying to develop ideas around trading black boxes and automated trading - I was amazed and I'm quite sure that Professor Frankenstein would be as well - gluing bits of code collected from here and there - back-testing to try to curve fit until in theory the system is a winner, well what else can I say about!
That's the reason why I started this thread, in order to open public discussion on the matter, ideas are quite welcome!
NOTE: Just in case you wonder, I'm not a software seller, a retail indicator developer or seller or a internet based "teacher/preacher/curator ", or associated with anyone in this forum or any-other forum for the matter, actually I'm not selling anything.
You piqued my interest when you wrote: "An actual trading experiment will be described using these principles which produced an 8.9% yield per transaction--every 9.7 days.", but then did not offer any description on how you intend to achieve this spectacular result.
Also who are your students? Are you a college math teacher?
If I understand correctly, 8.9% every 9.7 trading days only compounds to approximately $345,883.32 (estimating 250/365*30 trading days per month). So I assume this requires 3 trades every 9.7 days? It seems like your strategy has minimal market impact or slippage.
Which means, I understand you will only need ln(1e12/1e4) / ln(1.089) * 9.7 = 2095.2 trading days < 8.5 years to turn this $10,000 into $1,000,000,000,000?
I am seriously impressed. I definitely recommend you to keep the details kept closely to yourself instead of sharing it on this forum. I think this black box has the potential to corner the market. I agree that this is not easy for the average person, but it is definitely possible with some effort, knowledge and psychological discipline. Moreover, it sounds like your mathematical abilities are extraordinary.
You have definitely piqued my interest. I co-founded a hedge fund in West Africa and have $152 million of assets under management. Our clients consist of several high profile political leaders in the region and a few large institutions in Nigeria. We have been looking for a person to replace our interim Head of Trading at our New York trading floor and believe you to be an ideal candidate. We want to offer you this position and a base salary of $900,000 per year together with a bonus package consisting of 55% of all our profits.
Please respond to this offer immediately. I have left my phone on 24/7 so we can discuss this in better detail.
To show you our sincerity in hiring traders with your talent. I will like to wire 25% (US$38 million) of our clients' funds into your bank account by Monday morning, when the bank opens, so we can begin our partnership and your black box trading immediately. We will fund your account with the remaining 75% once we have flown you to our office in New York. Please email me at [email protected] with the following details:
- NAME
- ADDRESS
- TELEPHONE NUMBER
- NAME AND ADDRESS OF BANK
- SWIFT CODE
- BANK ACCOUNT NUMBER
- TYPE OF ACCOUNT (Savings? Checking?)
Our Swiss bank requires the recipient to credit a wiring fee of US$300 to its account for security purposes (as an acknowledgement that you are the beneficiary of the account number provided) before the bank can initiate this wire transfer. I will email you instructions to transfer this US$300 to our bank via Western Union.
With our additional $152m, it will only take 4 years for us to make $1,000,000,000,000. I strongly hope that you consider this offer. Hope to hear from you soon!
That's very unfortunate at the place that you teach. I'm very sure that Fourier analysis is never bundled with "advanced mathematics" by any means. Some of the material is bundled in the middle of your average ODEs-for-engineers textbook, which makes it elementary material for a freshman class. At the college that I went to, most of my classmates had a 1-2 years of undergraduate mathematics foundation before they were admitted. That places Fourier analysis in the same category as high school mathematics. I will like to hope that high school education has improved since my time.
Interesting! Please don't let them discourage you.
I partly agree.
I don't like being picky with spelling, but I think some of your choices of writing have really undermined your credibility. A "HFT" is not a computer; Fourier analysis is spelled with a lowercase "a", just as you would in "functional analysis"; "non-sense" and "introduction broker" are odd misspellings. And it doesn't set a good example for your students if you capitalize, use ellipses, and skip apstrophes with alarming irregularity. But this is OK for a man of your stature.
However, I get the figure of speech and support your fundamental point that a trader should do his due diligence before picking a broker.
Well, I agree.
This is an unusual approach. Most would view curve fitting as a detriment to the design of the system, rather than a good thing as you are implying here. The majority will also disagree with combining multiple strategies into one, though your mileage may vary.
Thank you for you extensive reply and most kind job offer.
I am not looking for a Job at the moment. I actually like my lousy pay as an academic, it has it's own particular compensations, it allows me to recognize smart a$$e$ at the distance, not saying that you are one, although your message points in that direction.
I'm quite sure that trading for you Company it's a serious business, are you looking for "black belts, I'm quite sorry, "Black Boxes" for trading - Wise NOT!
But I must confess that you actually took the meaning of the discussion topic all wrong, therefore setting the outcome moto. (to not be confused with the Moto Restaurant in Chicago, just in case!)
A brief note on the spelling on a particular paragraph, I have trouble typing without my glasses, you see I have a little chimpanzee in my lab and some times it takes them away, he gets mad at me because I try to teach him Fourier Analise, he complains that is a thing for primates. I'm quite sorry about that!
The matter is about Risk taking, so lets go by parts:
The thread title: Can a $10,000 investment yield $1,000,000 in a year? In five years? If so, what is the risk involved? - That's what this thread is all about.
I have no idea where you got that there were a system, in particular a black box one involved in this?
It's a very generous offer that you made - but you can save the money and stick it up your as... I mean, add to your fund - Do you want to know more about the mentioned experiment (the voodoo black box, you are amusing, I can tell!), it's actually a quite old description and deduction, you can achieve such by reading this book: Profit Magic of Stock Transaction Timing, published by Prentice Hall Trade (January 1973).
Et voila, no need to hire top gun type of traders! Simple works always wonders, don't you agree!
I also admire your capacity and audacity (ignorance most likely, one could argue!) to treat Fourier analysis as basic introduction mathematics, suited for fresh man engineers. A German actually would had to add "ficke diese Ingenieure sind in out tag clevere!"
In mathematics, Fourier analysis is the study of the way general functions may be represented or approximated by sums of simpler trigonometric functions. Fourier analysis grew from the study of Fourier series, and is named after Joseph Fourier, who showed that representing a function as a sum of trigonometric functions greatly simplifies the study of heat propagation.
Today, the subject of Fourier analysis encompasses a vast spectrum of mathematics. In the sciences and engineering, the process of decomposing a function into simpler pieces is often called Fourier analysis, while the operation of rebuilding the function from these pieces is known as Fourier synthesis. In mathematics, the term Fourier analysis often refers to the study of both operations.
The decomposition process itself is called a Fourier transform. The transform is often given a more specific name which depends upon the domain and other properties of the function being transformed. Moreover, the original concept of Fourier analysis has been extended over time to apply to more and more abstract and general situations, and the general field is often known as harmonic analysis. Each transform used for analysis (see list of Fourier-related transforms) has a corresponding inverse transform that can be used for synthesis.
With the due respect, you are the one actually that don't show much credibility if any. Criticizing it's easy, coming forward with fresh ideas, not necessary news it's quite a different issue, or isn't not!
The mentioned experiment it's a classic one used in Finance MBA's and like as well pointed one that can be easily understood by any high school kid (assuming that one had the luck to attend schools such the ones you have).
On the other hand, I would like to invite you to deduct in this thread the following basic stuff, regarding Fourier Transform, and if possible whit a brief explanation of your deductions. - Bearing in mind that this is a forun regarding financial trading, I would like to ask you if possible - can you explain why is Fourier Analises so important in the financial/trading world? Could you shed some light in the matter? That's the kind of contribution that we all (members of the Big Mike Forum, $50.00 can be quite a lot for some of us, the quality of the content must come accordingly!) would like to see from a highly intellect such as yours (apparently! and we all know that apparent is the first frontiers of illusion, it's actually mathematically explained, but lets not complicated! )
The proposal, let’s say I have some signal x(t): (see attached pic of signal 01)
…in this case I made x(t) a bunch of sinusoids added together, to make this more clear. x(t) happens to be three sinusoids with frequencies of 2Hz, 3Hz, and 5Hz and amplitudes 7, 11, and 13 :
7sin(2π • 2t) +11sin(2π • 3t) +13sin(2π • 5t)
I open my favorite library (my personal favorite library is Matlab) and call fft(x) (actually I do a bunch of other stuff to handle Matlab conventions, etc., if you are interested just ask), which essentially applies the formula I wrote up above, and I get back a magic table telling me “how much of each frequency” makes up my original signal. Clearly in this case, I should get back the three frequencies I put in. What does Matlab show me (would you be so kind to deduct the code)?
Looks good, I see the exact same three frequencies and amplitudes that I put in. Great… so this is a pretty good demonstration of the FT’s core property: it tells me how much of each frequency “makes up” my original signal. Now again, we ask, how does this formula:
"Place for the formula to be written by you"
…do all that magic? Let’s now jump into the limited mathematical background required for my unsound FT intuition: the complex exponential.
Okay, least deep and most incomplete explanation ever proposed on the complex exponential.
The term eiωt appears all over the place in signal processing; we call this the complex exponential. What I’m going to do now is try to convince you that this term – eiωt – is a cosine wave in t where ω determines the frequency, i.e. it’s more or less like cos(ωt). While this is an awful simplification that throws out the complex part of our exponential, it’s really helpful to just sell your brain on this concept, which I’m going to try to do now. If you already believe this and want to move on to the Fourier Transform, Just demonstrated the formula and we are done!
Other wise, first of all there is one thing we have to take on absolute faith, namely that the most magical
formula in all of math – Euler’s formula – is true: (can you tell us what this magical formula is and why is so magical, and finally why is deeply connected to the simple Fourier analyses... hold on a second... it's not that simple any more, or it is? Please be so kind to come forward and explain it for us, after all introductory math courses explain it everyday, of course except in my Institution.
Dear Sir, actually I'm the one that would like to hire you to become my assistant at the institution that I teach, after-all we have been wrong all this years teaching our post-graduate students 'basic things' . The only problem is that I can not match the offer you made me for 900k/year, plus bonus and benefits under the table, etc.... actually will have to be more around the 100K/year, no bonus, no benefits under the table and that's assuming that you can prove all your extraordinary (and sarcastic) speech.
By steps, first be so kind to come forward with the formulas and a brief explanation of your deductions, second you can send your resume to: [email protected] ( subject: to the attn: Prof. Javou - The brilliant one!, I'll know who you are!).
I spend some holidays in Brazil and in a case like yours I thing they would say: ' O amigo e uma besta do caralho!"
Regards,
Note: having had a close look at the nature of your posts/reply's and threads, you are quite up your back side aren't you?
Note2: How could I forget about my bank details for you to pass along the $$$, I see that we both have banking accounts in Switzerland, so no worries!
- NAME: Mr. P. Aguenta K Javou
- ADDRESS: 13 zurück Verbündeten ohne Licht
- TELEPHONE NUMBER: 877-359-7947
- NAME AND ADDRESS OF BANK: AARGAUISCHE KANTONALBANK
- SWIFT CODE: KBAGCH2254A
- BANK ACCOUNT NUMBER: KBAGCH2-998-2356AB
- TYPE OF ACCOUNT (Savings? Checking?): Neither (special type - like yours)
Ok after your last reply, what will you share next?
I know taking a small account and making millions in a year is possible, the risk are only the initial amount. Maybe you can explain a little more because Im slow at understanding complex things as you stated
