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Making a 100 a day
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Making a 100 a day

  #1 (permalink)
Boston Massachusetts USA
 
 
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Making a 100 a day

I'm curious, is the main reason people don't like to trade a 1000 account to make a 100 a day is because of risk reward ratio or account risk % overall. Like for example my day trade plan that I use has a 3:1 risk reward. I go by ticks, so say it's 1 tick contract, I go for 15 ticks to win anf 5 ticks to lose. So I could lose 3 times and win 1 and break even. But if I win 40% or more of my trades, I profit. For me I've been getting 50-65% win constantly for about 2 years with stocks on a paper trade. With futures I'm seeing the same success, which is great sense I can day trade with 1000$ instead of 25k stocks needs.
So I see contracts I can buy for 500-800$ and they go by 1 tick and each tick is worth 10$. So if I place 10 trades a week, I win 5 and lose 5, I'd be up 50 ticks a week on average. Or 500$ a week 100$ a trading day. If we're going by the 15 to 5 ratio above, which is what I've been using and having success consistently. Now I see that risk, so I risk 50$ a trade or 5% of 1000$ investment, everyone says 1-2% max per a investment trade. But I'd be investing with money that I would live without like tax return money etc.. That if I lost it all it makes no difference in my life. So I can trade free of emotion, and even if I lose its fine. So I see no issue taking that 5% risk. The biggest drawdown my trading plan has had was 4 losses back to back. It happened once over the course of 2 years. Past that its a steady win/loss ratio out of my average trades typically 50-65% each week, a loss then win or 2 losses and a win or 2 wins and loss etc.. Is my average of how the trades go.

I'd just like opinions, past the risk 5% of my account and emotional part sense like I said i would not be attached to the money and have experience with live trading, what's stoppong from making a 100 a day if it worked out as stated above? I'm just curious, it seems great to me sense stocks was holding me back at the 25k needed to day trade.

Thanks all

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  #2 (permalink)
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  #3 (permalink)
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Jayboii478 View Post
I'm curious, is the main reason people don't like to trade a 1000 account to make a 100 a day is because of risk reward ratio or account risk % overall. Like for example my day trade plan that I use has a 3:1 risk reward. I go by ticks, so say it's 1 tick contract, I go for 15 ticks to win anf 5 ticks to lose. So I could lose 3 times and win 1 and break even. But if I win 40% or more of my trades, I profit. For me I've been getting 50-65% win constantly for about 2 years with stocks on a paper trade. With futures I'm seeing the same success, which is great sense I can day trade with 1000$ instead of 25k stocks needs.
So I see contracts I can buy for 500-800$ and they go by 1 tick and each tick is worth 10$. So if I place 10 trades a week, I win 5 and lose 5, I'd be up 50 ticks a week on average. Or 500$ a week 100$ a trading day. If we're going by the 15 to 5 ratio above, which is what I've been using and having success consistently. Now I see that risk, so I risk 50$ a trade or 5% of 1000$ investment, everyone says 1-2% max per a investment trade. But I'd be investing with money that I would live without like tax return money etc.. That if I lost it all it makes no difference in my life. So I can trade free of emotion, and even if I lose its fine. So I see no issue taking that 5% risk. The biggest drawdown my trading plan has had was 4 losses back to back. It happened once over the course of 2 years. Past that its a steady win/loss ratio out of my average trades typically 50-65% each week, a loss then win or 2 losses and a win or 2 wins and loss etc.. Is my average of how the trades go.

I'd just like opinions, past the risk 5% of my account and emotional part sense like I said i would not be attached to the money and have experience with live trading, what's stoppong from making a 100 a day if it worked out as stated above? I'm just curious, it seems great to me sense stocks was holding me back at the 25k needed to day trade.

Thanks all


As you stated, for day trading stocks, you need minimum 25k because of pattern day trading rules. With futures, nothing is really stopping you from scalping with $1,000 if you have the discipline to follow your system and enough excess room to withstand draw-downs and commissions and fees.

2% rule is generally to withstand draw-downs and emotional swings when you go live (especially if you don't have enough experience of how you perform during live). Theoretically it's not impossible to have more losses in a row than than the mentioned 4 times. It's not uncommon to see someone who does well on sim but they change things during live. Plus, the fills are less certain if these moves only hit your limit orders to the tick.

50-65% win rate with 1:3 risk reward is enough to make you millions in the futures world. $100 a day on average on one contract with $1,000 account is 50% a week. If it works, your system can theoretically grow 4-5 fold in a month by scaling up every $1,000. Of course you can't scale up forever, especially for scalping, but it would still be incredible if you can do it.

Sounds to me like you've back-tested on crude oil. If you haven't already done so, get a sim account and forward test it. After couple hundred samples (more the better) on sim, no reason not to try it live. I know a lot of people are going to say $1,000 is simply too small and I agree. Mostly because your system wasn't tested live for the mentioned two years. Then again, if it worked for 2 years on live, there wouldn't be a need for you to ask this question here.


Last edited by Opstar; December 27th, 2017 at 02:15 AM.
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  #4 (permalink)
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Jayboii478 View Post
I'd just like opinions, past the risk 5% of my account and emotional part sense like I said i would not be attached to the money and have experience with live trading, what's stoppong from making a 100 a day if it worked out as stated above? I'm just curious, it seems great to me sense stocks was holding me back at the 25k needed to day trade.

Hey there JayBoii! It's good to hear that you're considering these things as you begin your trading journey. I've got a few points that I wanted to share with you real quick.

I'd say that the main reason that people are advised against trading with only $1000 is because it is a terribly small sum in the futures market. However, people do trade with small sums because they want to turn a paycheck into a new house in a year's time. After all, that's how compounding returns work, right?

Let's take your 5% account risk example for a moment.
  • You take the first trade, risking $50 to make $150. You pay the commissions and fees of roughly $5, for argument's sake, for one round turn on one contract.
  • The trade is a loser. Now you're down $50 + $5 = $55, which is 5.5% of your account.
  • You take the second trade. Now, however, you're down to $945 in your account. A 5% account risk now only allows you $47.25.
  • The trade is a loser. Now you're down $52.25, which is another 5.5% loss. Your account is down over $100, and over 10%, in just two trades.

Now, this is often the part where newbie traders start rationalizing. They'll say "Well, my R:R means that with 1 winner, I'll make all of that back and then some. And my winning percent is over 50%, so I probably won't even have a string of losers." It's true that with one winner you're back in the black, but every single trader out there has had a string of losers before.

You need to ask yourself "Can my $1000 account withstand 5 losers in a row?". After 5 losers--assuming that your market of choice allows you to perfectly scale your account risk with the market's tick size--your account will stand just above $750.

Once you have had 5 losing trades, your risk is limited to $37.50 per trade. This is when you'll start to see why it's near impossible to trade such a small account. I'll assume you're looking at trading crude oil at this point; the tick size and margin seems to roughly fit the product. Crude moves in tick increments of $10, like you mentioned above. This means that you lose risk granularity on a small $1000 account. With $1000, you're forced to risk your account in increments of 1%. If you had $50,000, you could risk in increments of 0.02%.

Now, to revisit the previous example:
  • You take the first trade, risking $50 (5 ticks) to make $150.
  • The trade is a loser. You're down 5.5% of your account.
  • You take the second trade. Now you can't risk $50 because that's over 5% of your account, but risking only $40 doesn't fit your plan for a 5% account risk profile.
  • Being a prudent trader, you decide to only risk $40 (4 ticks) on this trade.
  • The trade is a loser. You're down 95$.
  • But wait! The trade was only a loser because of the risk profile. If your stop had been 5 ticks instead of 4, it would have won big. As soon as the market went against you for 4 ticks, it reversed and ran on for 80 ticks.

One of the things that you need to focus on as a newbie trader is the way in which the market moves. Crude loves to move in 8 tick rotations, the ES in 5 tick rotations, and the treasuries in 4 tick rotations. This means that, in very short timeframes, you are putting yourself at the mercy of the market's harmonic rotations. Perhaps you saw the market perfectly, but you entered 1 tick too soon. Your account is small, your overall risk is small, your stop loss is forced to be less than the market's harmonic rotation, so you're losing money.

Lastly, if you are deciding to move into futures because you think that stocks are holding you back, I'd advise caution. It's possible to trade consistently with a small account, but it is unlikely to find success this way.

Cheers, and Merry Christmas!

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  #5 (permalink)
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By no means Iím an experienced trader, but have to agree with abv opinions. Itís easy to rationalize things but imho futures trading is not rational. Things can go either good or bad really fast. You can say you just need 40% or something to be profitable but can you actually be able to get that number when the heat starting to accumulate with the 1k account? You said itís only 1k, so thereís no emotional attachment, dude when you can trade only trade 1k account, there will be emotional attachment unless you fully automate the trading.

Iím not sure what platform you use to paper trade the futures, but please donít use TOS, I did when I started and itís totally no good. You might want to try to do the combine with some companies offering it and see how your system performs. If you donít mind, write a journal in this site since Iím quite curious what this system is, might be able to learn from it . Good luck!

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  #6 (permalink)
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Jayboii478 View Post
I go by ticks, so say it's 1 tick contract, I go for 15 ticks to win anf 5 ticks to lose. So I could lose 3 times and win 1 and break even.


Jayboii478 View Post
The biggest drawdown my trading plan has had was 4 losses back to back.


Please excuse my confusion, but the two observations above can't be talking about the same trading method, surely? With a risk-to-reward ratio of 1:3, the longest losing run will clearly be way higher than 4 trades.

With a 25% win-rate, over a series of about 600 trades, the chances are around 50/50 that you'll have a consecutive losing run of 20 or more trades.

Not that "longest losing runs" are the real problem, anyway: "long losing patches" are far more common (by which I mean "series of consecutive results including mostly losers and a few winners which are financially equivalent in their overall outcome to a long losing run of consecutive trades").



Jayboii478 View Post
I see no issue taking that 5% risk.


Risking 5% of your account on a single trade would require the certainty of an enormously high win-rate to be plausible or sensible. It's not something I've ever heard of a long-term successful trader doing.



Jayboii478 View Post
I'd just like opinions, past the risk 5% of my account and emotional part sense like I said i would not be attached to the money and have experience with live trading, what's stoppong from making a 100 a day if it worked out as stated above?


With apologies for sounding so negative (which I know I will), the ideas of (a) trading futures with a $1,000 account and (b) making a 10% daily return on your account are both absolutely "dreamworld stuff".

Neither will be anywhere near possible for you. Not now, and not in future, either.

I urge you to read a couple of beginners' trading books about the basic math of trading and position-sizing before opening even a sim account.

After that, I'd also strongly advise you not even to think of trading futures with a funded account until you've collected together and analyzed carefully (after first learning how to do so) the outcomes of an absolute minimum of 300 consecutive trades on a sim account. Whatever you think your overall win-rate and longest losing run are.

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  #7 (permalink)
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Hi @Jayboii478

Just a hint: Open your own journal here on futures.io with your trades (not revealing your
trade plan) and get a look and feel on every trade by documenting it.
For sure you get great reactions from traders that may help you to keep staying on track.

Happy New Year
GFIs1

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  #8 (permalink)
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A lot of great answers, mostly what I expected to hear, thanks for time! I just want to clear a few things up. I HAVE been trading on a live account, its just not funded, so its live data and I just record my entry and SL very strictly for each trade. For stocks it was fidelity and for futures its MT5 platform sense I trade forex with MT4. So the data feed is real, I traded 3k in forex before when I first started and learned a ton about emotional investment and how to prevent it. I plan the trade and trade the plan, I know some times I'll be stopped out at 6 ticks rather than my 5. Then it shot up 70 ticks, but that's the name of the game, MoveOn.com... But more times than not, I'll be hitting my 15 target, so once in a while I get stopped out right before a win, but trading the plan and planning the trade keeps me clear of being blinded and changing my SL or TP to fit current market because of a bad trade. I wanted to throw that out there, not trying to be a jerk or defensive just giving information.

Thanks everyone! Feel free to keep the replys coming, I like to hear new insights!

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  #9 (permalink)
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I only use 200 ema for a indicator by the way, just trendline support and resistance and that ema.

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  #10 (permalink)
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Jayboii478 View Post
But I'd be investing with money that I would live without like tax return money etc.. That if I lost it all it makes no difference in my life. So I can trade free of emotion, and even if I lose its fine.

You've thought about it, have a plan, and accept the risk of losing your capital.
How are the views of anonymous people on the internet, who don't know you either, about whether this is a good idea or not, or what your chances of success are; in anyway relevant?
If you believe in yourself then just try it and see how you do and what you learn. Good luck.

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