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10% per day, no way
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10% per day, no way

  #51 (permalink)
Market Wizard
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sysot1t View Post
says who?

first of all, $300K in the bank and $3K on the account is not under cap... heck, personally I split my accounts across FCM's and I dont keep all my capital on those accounts... if you look at one account, you might think I am under cap, but the reality is that I am not. The whole point of being properly capitalized is that you wont be out of the game with a streak of bad losses, even if you have to transfer more capital to the trading account, the trader with $300K on the bank is not undercap..

so not following your logic... and more importantly, if the trader is ok with the risk, then what is it to you?

you make some good statements, but you are still not getting the point... as TMFT stated, and I have stated before, you are attempting to impose your opinion that could be right or wrong...

I have a few friends that run hedge funds, and plenty of them that trade for hedgefunds and those that run technologies for hedge funds and the reality is that they would certainly laugh at 10%per day because though they take risk, they have investors to account to and wont risk more than what they should... besides HF deal with way different strategies from those in this forum...so let's not necessarily compare the wanna be trader (ourselves) and the true professional trader that is Series 3 & 7 and has been properly trained and funded to trade with firm capital...

still, in the end that it cant be done is your opinion ... and you seem to hide behind the "it is proven because of risk, your account would be blown" ... which is not crazy, but again, your opinion and nothing more... just like the myth of 99% of traders fail... when in reality it is 99% of undecapitalized, unpreppared, uneducated wanna be traders that fail... but every one out there without the brassballs will say that everyone fails because they failed...

what you seem to miss as well is that one can actually trade all day across multiple markets, focusing on one at a time, and actually average that 10% per day .. when starting with a small $3K account (and to me small is $50K fYI)... there are so many ways to skin the cat if as stated as well one exercises proper money/trade management, that it can lead to averaging 10%... over the very short term.. over the long term, that is another thing... but as I stated before... not impossible..

it is easy to get on a soapbox and claim facts without true scientific measure, and it seems to me that you are more interest on arguing your point than debating your point... so this thread is now getting unproductive...


There are people out there that think they will make a living off a $5k stake. They are undercapitalized. This is the reason they look for ridiculous returns and blow their accounts doing so. This is the reason that the internet is full of 10% per day nonsense. It is the undercapitalization that causes people to seek this stuff and repeat it.

Now - you say there is no scientific method in my posts. On the other hand, I don't see any counter arguments using the same scientific measure you seem to hold so highly. You make not a single point in favour of 10% per day being possible, yet you say it is possible.

It's all nice "having a dream" but you need to trade reality. Trading isn't a mathematical endeavour or a science. It is an art/sport. Making a profit isn't a science. This is why engineers fail at trading. They try to resolve it with math/science.

Now - as for this point:

"what you seem to miss as well is that one can actually trade all day across multiple markets, focusing on one at a time, and actually average that 10% per day .. when starting with a small $3K account"

This is not true - nobody does it. You cant' do it, I can't do it and neither can anyone on this forum. It SOUNDS possible but it isn't. You'd have hundreds of thousands of dollars in less than 2 months and you would not have hit any scalability issues at that level.

Let's take the $3k. There are 2 ways to return 10% per day.

1 - lots of small trades. If you do this with $3k, the commissions/spreads would represent a very large portion of your profits, which in turn would push up your required win rate to lofty levels.
2 - one or two big trades. Commissions/spreads would be less of an issue but your issue would be the amount of profit needed from each trade. It would force you to put on a large proportion of your stake for each trade.

Both options end with the same result on a $3k account - a balance of zero.Now, of course, if 50,000 people tried it - one would succeed through sheer chance. This is survivorship bias at play.

If you think 10% from a $3k account is 'easy' - then why not show us - just 5 days would be enough.

By the way - I hope all participants are enjoying this as much as me....

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  #52 (permalink)
Big game hunter
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DionysusToast View Post
By the way - I hope all participants are enjoying this as much as me....

Completely enjoying it . A good debate always brings light to what should be focussed on .

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  #53 (permalink)
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DionysusToast View Post
There are people out there that think they will make a living off a $5k stake. They are undercapitalized. This is the reason they look for ridiculous returns and blow their accounts doing so. This is the reason that the internet is full of 10% per day nonsense. It is the undercapitalization that causes people to seek this stuff and repeat it.

I dont promote anyone to trade with $5K...as I have said, what I consider a min account is $50K... nothing less. properly cap to me is $100K... however, there is nothing wrong with $5K accounts, as long as one trades and grows the account... $5K to me is basically around what I pay for market data and tools every single year...


DionysusToast View Post
Now - you say there is no scientific method in my posts. On the other hand, I don't see any counter arguments using the same scientific measure you seem to hold so highly. You make not a single point in favour of 10% per day being possible, yet you say it is possible.

English is not my first language, but I think I am more than clear when I state that I am offering an opinion and that you are offering an opinion (that you think is factual)... I dont have to offer prove of opinions unless I claim them as facts, which you are the one doing.. so given you have facts, please produce them.. and please note that what I dont agree with you is on your statement that it cant be done... not going to repeat myself again, you can read the prior posts.


DionysusToast View Post
It's all nice "having a dream" but you need to trade reality. Trading isn't a mathematical endeavour or a science. It is an art/sport. Making a profit isn't a science. This is why engineers fail at trading. They try to resolve it with math/science.

hmmmm.. interesting... art/sport implies luck... trading is not about luck, is actually about having a mathematical edge... most retail traders dont have that edge.. plenty of trading firms do... and btw, the reason that most (not all) engineers might fail at trading is because of money management and because some cant properly evaluate risk.. I am not going to say that a chem eng can trade like a mech eng can.. to me an analytically math inclined mind will make good quants and find math edges that you cant trade because it requires technology that you dont even have access to or cant afford...


DionysusToast View Post

Now - as for this point:

"what you seem to miss as well is that one can actually trade all day across multiple markets, focusing on one at a time, and actually average that 10% per day .. when starting with a small $3K account"

This is not true - nobody does it. You cant' do it, I can't do it and neither can anyone on this forum. It SOUNDS possible but it isn't. You'd have hundreds of thousands of dollars in less than 2 months and you would not have hit any scalability issues at that level.

Let's take the $3k. There are 2 ways to return 10% per day.

1 - lots of small trades. If you do this with $3k, the commissions/spreads would represent a very large portion of your profits, which in turn would push up your required win rate to lofty levels.
2 - one or two big trades. Commissions/spreads would be less of an issue but your issue would be the amount of profit needed from each trade. It would force you to put on a large proportion of your stake for each trade.

Both options end with the same result on a $3k account - a balance of zero.Now, of course, if 50,000 people tried it - one would succeed through sheer chance. This is survivorship bias at play.

If you think 10% from a $3k account is 'easy' - then why not show us - just 5 days would be enough.

By the way - I hope all participants are enjoying this as much as me....

first of all, I dont know what you pay for comms, but I can guarantee you that comms would not represent a "large" portion of profits as long as you can negotiate properly with an FCM, I have no loyalty to FCM's ... I use heavily the ones that give me the best comms without having to register ... and I am not saying trade with a 50% or less winning rate at a high frequency, that is just plain stupid to even suggest/comment/or think about... everyone on this forum complains about their comms, but they are just the cost of doing business, and they can easily be controller and negotiated if your account size and your trade size warrants it.. of course, you wont get 10c comms if you trade 5 contracts a day.. that is just plain unprofitable to the fcm... but try trading 500+ RT per day.. you will see how you are viewed differently.


my original point still stands... and this is getting boring btw, as you have not contributed anything new to your argument.


Last edited by sysot1t; March 9th, 2011 at 11:33 AM.
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  #54 (permalink)
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Sysot

I will ignore your 'boring' comment as I am indeed adding to this as we go.

Day trading IS a sport. It is much closer to a sport than to an engineering discipline. Like a sport, you improve with practice. Like a sport luck plays a very small part in your ongoing success. Like a sport, if you try something different every day you get nowhere. Engineers approach trading as a problem with a mathematical solution. Hence the prevelance of people trying hopelessly to put together automated systems. They do this because the thought of uncertainty kills the engineering mind.

Of all the profitable day traders I know - not a single one has a mechanical/mathematical system. They are profitable as a result of hard work, study, and experience. It is that experience that makes someone with 10+ years trade a system effortlessly when you can give that system to a novice and he'll fail - even though it's the same system. This is the nature of day trading - a lot of it is in the gut. A bit like a sport

Quants mostly work on risk analysis. A common misconception is that quants dream up mechanical systems all day. This is not the case. Most mechanical systems are not in any way related to the type of directional positions that retail traders trade. Arbitrage and predatory algos with all of the infrastrucure required to get in first would not be around if it were possible to just dream up directional systems based on TA - which is what your average programmer cum trader tries to do (and fails).

As for fees. Let's say you have a system that wins 60% of the time. You place 30 trades for 100 shares each and you average $10 per trade. You will have made $300 before fees. There is the 10%. Now - if you consider the fees of around $60, you will see that you now need to make $12 per trade - an additional 20% per trade. This is where fees kill you on the multiple small trade approach.

If you are saying that someone with a $3000 account (your example, not mine) can make 10% a day trading multiple markets and that fees are NOT an issue, then please show how. It is the nature of the small account that they attract higher commissions than someone with a large account.

The fact is - this is just one of many things standing in the way of the dream. Like I say - as soon as you look at the realities of trading a $3k account with a goal of 10% per day, you can see why it's doomed to failure.

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  #55 (permalink)
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DionysusToast View Post
Day trading IS a sport. It is much closer to a sport than to an engineering discipline. Like a sport, you improve with practice. Like a sport luck plays a very small part in your ongoing success. Like a sport, if you try something different every day you get nowhere. Engineers approach trading as a problem with a mathematical solution. Hence the prevelance of people trying hopelessly to put together automated systems. They do this because the thought of uncertainty kills the engineering mind.

over the long term, retail traders auto systems will fail...most are overoptimized.. so we are in agreement that it is hopeless for retail to autotrade trying to gain an edge on things they dont understand. You are confusing two things though... trading and day trading.. please know they are to different things.. how about this... try day trading 500 contracts on Futures without a clear mathematical edge and only on your gut and see what happens..

I didnt play sports when little to be honest, and I care little for sports besides MMA... but sports are not the only things that improve with practice, everything in life improves with practice and hard work.


DionysusToast View Post
Of all the profitable day traders I know - not a single one has a mechanical/mathematical system. They are profitable as a result of hard work, study, and experience. It is that experience that makes someone with 10+ years trade a system effortlessly when you can give that system to a novice and he'll fail - even though it's the same system. This is the nature of day trading - a lot of it is in the gut. A bit like a sport

in this we agree, but as I said... nothing to do with sports, that is just plain and simply life... take an unexperienced operator and put him/her in charge of anything and they will fail... trading, running a restaurant, doing taxes, anything.. they will simply fail without having a clue of what they are doing.


DionysusToast View Post
Quants mostly work on risk analysis. A common misconception is that quants dream up mechanical systems all day. This is not the case. Most mechanical systems are not in any way related to the type of directional positions that retail traders trade. Arbitrage and predatory algos with all of the infrastrucure required to get in first would not be around if it were possible to just dream up directional systems based on TA - which is what your average programmer cum trader tries to do (and fails).

there are many different types of quants.. not all are FRMs.. and they dont "dream mechanical systems" ... never stated any of the things you are stating... and Quants dont work on directional systems, actually let me re-phrase that.. I dont know any quants that work on directional systems.. they exploit inefficiences on the markets, which last seconds.. retail cant compete, period... I have taken quant classes to understand what it was all about.. and #1, they dont use EasyLanguage, or NT7, or even MC.... they use MatLab and R or even K to do their analysis... and their OMS are written from scratch for the most part and they build their own orderbook... so no, retail has no chance when competing with quants and most people cant begin to understand what a quant does and what their support team does...



DionysusToast View Post
As for fees. Let's say you have a system that wins 60% of the time. You place 30 trades for 100 shares each and you average $10 per trade. You will have made $300 before fees. There is the 10%. Now - if you consider the fees of around $60, you will see that you now need to make $12 per trade - an additional 20% per trade. This is where fees kill you on the multiple small trade approach.

actually, 60% would still kill the account IMO... more like 70-80%, ideally 90%+ would make that scenario work.. but then again, I dont trade 300 shares and if we are talking equities.. PDT rules would require 25K+ as you should well know, so $3K account wont even be able to trade 30 times a day... the only market for undercap people is futures and fx... and that is why there are so many "vendors" out there promoting the next gold rush in futures..


DionysusToast View Post
If you are saying that someone with a $3000 account (your example, not mine) can make 10% a day trading multiple markets and that fees are NOT an issue, then please show how. It is the nature of the small account that they attract higher commissions than someone with a large account.

The fact is - this is just one of many things standing in the way of the dream. Like I say - as soon as you look at the realities of trading a $3k account with a goal of 10% per day, you can see why it's doomed to failure.

$3K was not my example, it is the OP account size, please read prior posts, and I do think that someone with a $3K account can make $300 per day if they trade properly... and you still miss the point... I state that it is possible.. and that no-one should tell you that it is not... it is up to the individual to determine his/her risk tolerance and trade as he/she please.. nothing more.

trading a $3K account would violate my rules, so I wont do it... my rules call for me only risking 1-3% per trade, as I like to protect my capital.. but I would not certainly tell someone else not to do if that is what they were ok with... which is the point that you are missing..

let's use some other example...

the #1 legal drug... alcohol... when taken in moderation, it is something good.. wont destroy your body... however, if you drink too much not only will it destroy your body over time, but it will certainly kill you...

the same way that I wont tell someone not to drink until they destroy their liver and die, is the same way that I wont tell anyone that they cant achieve 10% daily if that is what they think they can get...

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  #56 (permalink)
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Why is it better to trade with a 100k account than with a 50k account ?

I have the tendency to think that your losing days are bigger with your 100k account, because your account 'can stand it'

if you trade 10 lots a time, why would a 100k account be better than a 50k account ?

When you trade size, like 20 or 50 cars a time or more, most brokers need you to keep a $1000 margin.

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  #57 (permalink)
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MetalTrade View Post
Why is it better to trade with a 100k account than with a 50k account ?

I have the tendency to think that your losing days are bigger with your 100k account, because your account 'can stand it'

if you trade 10 lots a time, why would a 100k account be better than a 50k account ?

When you trade size, like 20 or 50 cars a time or more, most brokers need you to keep a $1000 margin.

1%-3% per trade is my rule... # of contracts is determined based on the ATR % of the day I am trying to capture for the given instrument and it is decided daily... at least when I do futures, options is a different formula for me.. and I only trade with full margin most of the time as I only take advantage of the day trade margin if I am like 100% certain the odds are on my favor and then I push the pedal... something along the lines of all conditions align and the prob of going my way is like 95+% and I put the initial position and then my trade goes my way with force, I add more to it...

size to me is really more like 100+ contracts... specially on ES... which I assume you are talking about... if it was a different market, then yes, 20-50 would be decent size... anyhow, I am not trading "size" in any event.. I range from 5-10 contracts on average.. just because one has enough funds to trade 50 contracs, doesnt mean one has to if the rules (one's own) dont allow you to.. of course, all my opinion... in reality, you could trade 50 cars with $50K account ... nothing stopping you from that, just not my plan.

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  #58 (permalink)
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MetalTrade View Post
Why is it better to trade with a 100k account than with a 50k account ?

also, as Dio has pointed out, a proper capitalization should enable you to survive a truly bad streak and drawdown... which will happen eventually... and also, just because you have a large account doesnt mean that you should be careless... if 5% was lost on a day, I am stopping ... but I will certainly stop myself before that if I just see my head is not on the game.. heck, I trade only when my mind set is right... like today for example, I was not in the mood to trade... so I got up at 6AM EST as usual... and went back to bed until 8AM and then I am just doing chores around the house... today was a nice day to trade IMO, but I can guarantee you I would have lost since I would have gambled just to entertain myself (I am super bored today, which is why I am on the forum).

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  #59 (permalink)
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DionysusToast View Post
I have yet to meet a single trader that is making a profit from automation. Automation is not really a cure for psychological issues, it is mostly a dead end. In my experience people attempt automation as a substitute for learning how to trade, not to gain consistency.

What an arrogance!

1. It's widely known that major bank implements automatic forex arbitrage strategy.
2. Tom Basso is known to automate all of the order generation.
3. There are many hedge funds who implements fully automatic trading system. Many of them are pretty successful e.g. CRT (which is even featured in Market's wizard).
4. I myself generate the signal automatically, but I still have to enter it manually because I haven't found a good reliable way to interface with the bloated TWS APIs. (As a point of reference, I profit 100% per year on average with swing trading 5 minutes / day.)

At the end of the day, it's the intelligence shall prevail. Brute force (thinking hard working is everything) won't do any good thesedays, especially when computer is around. A lot of repetitive stuff is better done by computer.


sysot1t View Post
over the long term, retail traders auto systems will fail...most are overoptimized.. so we are in agreement that it is hopeless for retail to autotrade trying to gain an edge on things they dont understand. You are confusing two things though... trading and day trading.. please know they are to different things.. how about this... try day trading 500 contracts on Futures without a clear mathematical edge and only on your gut and see what happens.

It seems everyone has different belief about this. My believe is the exact opposite. I believe not all auto-trade-system are over optimized. If you are talking about things like FAPTurbo, or Megadroid or other similar software then yes. But the experienced trader can trade auto-trade-system too which they can ensure it's not over-optimized.

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  #60 (permalink)
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felixtjung View Post
It seems everyone has different belief about this. My believe is the exact opposite. I believe not all auto-trade-system are over optimized. If you are talking about things like FAPTurbo, or Megadroid or other similar software then yes. But the experienced trader can trade auto-trade-system too which they can ensure it's not over-optimized.

I am referring to retail (anything you can buy off the internet basically) ... not to what a knowledgeable/sophisticated trader/prop desk with years of experience might do... start-arb/rebate trading/etc can only be done auto in todays markets... to put it in other words, not my own... there are now algos that specialized on sniffing other algos out there... a nice arms race where technology is the weapon on the market... and the ones with the best technology win..

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