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Strategies for large account sizes
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Strategies for large account sizes

  #11 (permalink)
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eric5544 View Post
Thanks for all the replies.

What I don't understand is the large number of replies trying to discourage me to pick up day trading. It seems to me that day trading is the best way to limit risk and to accumulate a large enough sample size to determine if a particular strategy has an edge or not. In particular in todays market it seems to me that swing trading or holding positions even longer term is incredibly risky given the current economic climate (the last few days are a good example).

I think that if you have an edge (and with now 14 out of 15 winning trades I think I might at least be on to something) the key is to employ that edge with limited downside risk as often as possible to overcome short term draw-downs.

I dont think we are trying to discourage you from trading but rather encourage you to learn what you are doing before risking large amounts of money.

You have not experienced the emotional torture of losing a large amount of money. Right now it easy because you have won a large number of trades with a demo account or risking a small amount of money in a live account. The feelings are much different when you have lost 14 of 16 trades. Fear and doubt revenge trading come into play which causes a person to make stupid decisions and lose even more money.


SD

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You make your own opportunities in life.
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  #12 (permalink)
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There is no edge in having a large account size and 300k is not a large account anyway. An actual large amount of capital loses edge from liquidity and market impact concerns.
Not being under capitalized is not an edge, it is what you should be doing. Playing a sport without a broken bone is not an edge, you shouldn't be playing with a broken bone to start with.
I don't understand the mentality of discouraging people from trading, it strikes me as naivety on our own possibility of blowing up.
Most people posting here won't be trading in 5 years either. That is just the way it goes, may as well take your shot.

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  #13 (permalink)
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Silver Dragon View Post
I dont think we are trying to discourage you from trading but rather encourage you to learn what you are doing before risking large amounts of money.

You have not experienced the emotional torture of losing a large amount of money. Right now it easy because you have won a large number of trades with a demo account or risking a small amount of money in a live account. The feelings are much different when you have lost 14 of 16 trades. Fear and doubt revenge trading come into play which causes a person to make stupid decisions and lose even more money.


SD


I agree that Psychology is in fact key. As an example during the one "bad" trade out of my 15 trades so far I did not respect my mental stop but instead averaged down. The result was that I eventually broke even on this trade but I still consider it a loss as I broke all my trading rules.

My current plan is to keep trading with small amounts of real money but slowly increase the amount I put on the line over the next few months. That does mean that most of my money will just sit in my bank account collecting dust but I don't feel too bad about this in todays market.

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  #14 (permalink)
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It doesn't matter if you are day trade or swing, just make sure you trade the bare MINIMUM contract(s) on your plan until you really know what you are doing.

When I started with the market in 2003, I was up 50% in less than 3 months, only gave back all in less than 1 months. Since then I have been bleeding money every year. It only until recently I finally think I "get" it and found that I was wrong all these time by avoiding day trade.

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  #15 (permalink)
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dutchbookmaker View Post
There is no edge in having a large account size and 300k is not a large account anyway. An actual large amount of capital loses edge from liquidity and market impact concerns.
Not being under capitalized is not an edge, it is what you should be doing. Playing a sport without a broken bone is not an edge, you shouldn't be playing with a broken bone to start with.
I don't understand the mentality of discouraging people from trading, it strikes me as naivety on our own possibility of blowing up.
Most people posting here won't be trading in 5 years either. That is just the way it goes, may as well take your shot.


I agree with "taking your shot" rather sooner than later. I have spend the last 6 months reading book and forums, looking at charts and backtesting strategies. It is different when you are actually starting to trade and the time spend in every trade feels 10x as valuable as the time purely researching even if the risk is limited.

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  #16 (permalink)
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dutchbookmaker View Post
There is no edge in having a large account size and 300k is not a large account anyway. An actual large amount of capital loses edge from liquidity and market impact concerns.
Not being under capitalized is not an edge, it is what you should be doing. Playing a sport without a broken bone is not an edge, you shouldn't be playing with a broken bone to start with.
I don't understand the mentality of discouraging people from trading, it strikes me as naivety on our own possibility of blowing up.
Most people posting here won't be trading in 5 years either. That is just the way it goes, may as well take your shot.

There is little edge in money if you don't know what to do with it. But having more certainly can open up more opportunities... You can trade various strategies on uncorrelated instruments for a smoother equity curve, e.g. You can launch a HFT/Market Making firm... Not that this is relevant to this situation...

But as you mention, you can easily have too much capital and it will result in diminished returns. I also agree with your negative sentiment towards the naysayers; how are they to know if this is a potential star trader or not...

It saddens me to see a lot of incredibly naive people throw away their hard-earned cash on worthless systems, though...

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  #17 (permalink)
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Lornz View Post
There is little edge in money if you don't know what to do with it. But having more certainly can open up more opportunities... You can trade various strategies on uncorrelated instruments for a smoother equity curve, e.g. You can launch a HFT/Market Making firm... Not that this is relevant to this situation...

But as you mention, you can easily have too much capital and it will result in diminished returns. I also agree with your negative sentiment towards the naysayers; how are they to know if this is a potential star trader or not...

It saddens me to see a lot of incredibly naive people throw away their hard-earned cash on worthless systems, though...



I really like the idea of trading in uncorrelated instruments instead of putting all eggs into one basket. I think this is something I wil explore more going forward.

Apart from that I wonder if very short term scalping based on price action becomes more viable when putting more money on the table like going for 1 or 2 pips per trade but putting a couple of hundred lots on the line on every trade. Of course a strategy like this needs to be heavily tested and when trading a couple of million dollars liquidity might become an issue.

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  #18 (permalink)
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eric5544 View Post
I agree that Psychology is in fact key.


I always think this is nonsense but my very first trade was buying physical silver for 6 bucks an oz. I sold out for over 100% profit but it is interesting to consider that I must view the markets different than someone who started in something else with silver at $38.84 spot as I type.
I'm more than glad I didn't listen to people who told me to be careful..But then again, I can't imagine anyone lasting if you listen to anyone else in this game.
My default is that everyone is a fool besides me. From my years of study of great traders is the only mindset that works.
On a more technical side there is minority game theory mathematics to back up such ideas.

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  #19 (permalink)
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dutchbookmaker View Post
I always think this is nonsense but my very first trade was buying physical silver for 6 bucks an oz. I sold out for over 100% profit but it is interesting to consider that I must view the markets different than someone who started in something else with silver at $38.84 spot as I type.
I'm more than glad I didn't listen to people who told me to be careful..But then again, I can't imagine anyone lasting if you listen to anyone else in this game.
My default is that everyone is a fool besides me. From my years of study of great traders is the only mindset that works.
On a more technical side there is minority game theory mathematics to back up such ideas.



I'm not sure if this is what you are getting at but whenever I hear this "95% of all traders fail" line than I view this as encouragement given the fact that in my experience beating the vast majority of people in anything is really not that hard with a bit of effort (I apologize if this comes across as arrogant).

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  #20 (permalink)
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Lornz View Post
It saddens me to see a lot of incredibly naive people throw away their hard-earned cash on worthless systems, though...

At this point I side with the swindlers though. IMO if the retail trading community stood naked, there would be no retail trading community because it is 90% swindlers.
I will always love gold/silver trading, would love to enter that business and make a valid expensive news letter but it is 99.9% swindlers and will never improve.
The swindlers and fools though are what make a community, I have no interest in just talking to EV+ traders. If that was even possible I would feel obliged to feed them false information as part of the game.

Psychology wise to me there is one thing to remember. If you didn't start young, you can not become a grand master in chess no matter what. Trading is actually much easier than that. You just have to bust your ass because no one really starts learning to trade as a little kid like in chess.

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