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Expectations vs Reality: Trading Profitability


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Expectations vs Reality: Trading Profitability

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Hi guys,

New poll:

Expectations vs Reality: Trading Profitability (choose two options)

Total votes: 1060
 


Please vote and discuss. Choose two options, and please elaborate or your choices here in the comments.

Mike

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Thanks Mike for such a poll. There are not many ppl voted yet.
Any how my expectation was it will be piece of cake after reading plenty of books. I thought, I will be up and running in no time. I gave myself three to six months. 5 years later I still haven't seen profit from this activity.
In a mean time lost 25K in hope trading.
Last year is made small improvement. I passed 2 TST combines & 1 Gauntlet reach desired target.

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I was lucky enough to start off on the right foot by joining FIO when I first started getting into trading. After months of reading and seeing how most people struggle, I really didn't have any expectations in terms of the amount of time it would take to become profitable... it would seem that a few picked it up in short order, but for the vast majority this was not the case. It stands to reason; one does not simply become a professional in any other endeavor without having to commit themselves to the time and patience required to gain the necessary skills and knowledge.

I'm about 1.5 years into live trading and have yet to see consistent profitability... seem to find new and creative ways to mess things up LOL. My honest assessment at this point... I have what I need to succeed. For me, it's more about continuing to develop patience, and eliminating bad habits and reactive behaviour.

Fortunately my education thus far has not cost much; yes I've popped a few accounts, but trading micro currencies has yielded a lot of real world trading experience while keeping financial exposure as low as it can be. I can continue to stay live as long as necessary with the micros.

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Worth voting to see the results. Very interesting.
I hope I will still be able to see them after more people have voted as I will be curious as to whether the proportions stay roughly the same.

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matthew28 View Post
Worth voting to see the results. Very interesting.
I hope I will still be able to see them after more people have voted as I will be curious as to whether the proportions stay roughly the same.

You've always got the option to "View Poll," even before you vote (I did, wanting to see if it stacked up the way I expected -- and it did: high expectations, low results. Hmmm.)

That's how I voted too, by the way.

Bob.

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So far I'm running with the majority: expected 1-3 months, actual, not yet.

I guess it's good to have so much company.

This is a terrific poll. I expect the general results will be very similar as more people vote. It says something about the reality of trading. I do think progress is possible. For example, I am much less naive than when I started out, which counts for something: at least I know it's a long haul.

Bob.

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Is this poll asking to reflect back to when I started trading? How long did I think it would take to be profitable versus how long to actually being consistently profitable? There are so many ways to interpret the question.

AND of course I have some pretty strong opinions on both my development and what I see others do/talk about.

Dan

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that I have a bunch to share on this topic. In typical wldman fashion it will not be easy for many people to accept my VIEW based on thirty-ish years of industry experience.

I want to encourage people and sometimes that involves telling them things that they will resist or ignore. You guys decide...say it or keep it to myself?

Dan

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wldman View Post
Is this poll asking to reflect back to when I started trading? How long did I think it would take to be profitable versus how long to actually being consistently profitable? There are so many ways to interpret the question....

Dan

Yep, that's what it means.


wldman View Post
that I have a bunch to share on this topic. In typical wldman fashion it will not be easy for many people to accept my VIEW based on thirty-ish years of industry experience.

I want to encourage people and sometimes that involves telling them things that they will resist or ignore. You guys decide...say it or keep it to myself?

Dan

Don't be shy, Dan.

People can take it, and besides, I'm interested, at least. Probably I'm not alone.

Bob.

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wldman View Post
that I have a bunch to share on this topic. In typical wldman fashion it will not be easy for many people to accept my VIEW based on thirty-ish years of industry experience.

I want to encourage people and sometimes that involves telling them things that they will resist or ignore. You guys decide...say it or keep it to myself?

Dan

We are waiting wldman. The floor is all yours.

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...when wldman talks in 3rd person. It's a bit like the character Terry in Brooklyn Nine-Nine (for those who are familiar with that sitcom).


wldman View Post
that I have a bunch to share on this topic. In typical wldman fashion it will not be easy for many people to accept my VIEW based on thirty-ish years of industry experience.

I want to encourage people and sometimes that involves telling them things that they will resist or ignore. You guys decide...say it or keep it to myself?

Dan

Jokes aside Dan, personally I am always of the opinion that the "patient needs the medicine, even if it is bitter" meaning, even if some injection of reality is harsh, it is likely to be beneficial, at least to those who are open to it.

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there is a name for people that keep talking after nobody is listening and I don't want to ever be called, "candidate". I'm not sure where this will go but I do recognize that most people are interested in comparing themselves to others. I do not think that is productive. Compare you to yourself.

Please take the P/L scoreboard off of your screens. Trade price action or whatever method you use or are developing. Consider the results after the game (trade) is over. When the game is on, separate victory from profits and focus on victory. It might sound dumb and I could try to explain it if someone asks, but focus on the scoreboard and you cant see whats going on in the game. For me, when I was new, I was too dumb and under too much pressure to monitor both. At the end of the post I hope I remember to give specific advice to new or struggling traders. If I don't, ask me. It's the advice that I wish I'd gotten and it is now the cornerstone of what I do.

I may have typed this or parts of this in the forum in the past.

In the early 90's I was a salesman (stockbroker) at a small regional boutique that specialized in 1st tier and mezzanine financing in tech and biotech. The salesman role at the firm was evolving into selling Reg D offerings to qualified investors. I was a great bond salesman earlier in my career but I did not understand or believe in many of the offerings my firm was working on. I had ethical questions and thus was not selling anything. Our firms "trader" was a veteran and a wealth of information, but his personality did not work well at the firm. A door was opened...

The trader, recently married, demanded that he was entitled to his vacation time in consecutive weeks to enjoy his honeymoon. He wanted to pick someone to "train" as his backup. I was asked if I'd consider it, I think because the senior management trusted me, but also because I was not "selling" and perhaps to valuable to simply be fired.

I was not who the trader wanted, so my week and a half of "training" was brutal. Within a half hour of the open on my first day I soiled my pants. Go ahead laugh about it...I sure do. No shit, pun intended< I was going Hawaiian by 9am. The phone would ring and someone would be yelling shit fast as hell in a vernacular that might as well been ancient Greek. The only words I understood are not appropriate for the forum. Brokers were sending orders and calling for fills, begging for ad credit and watching my mental and emotional breakdown.

Before 10 I heard a voice that I recognized from the few phone calls that I was allowed to take during my "training". It was one of the girls from a wholesaler desk of the greatest human being I've met in business. I tear up thinking about him as i type this. She was telling our receptionist that she had a meeting with me. Against protocol and probably NASD rules, I opened the door and let her on the desk. She said, Danny, fuck those guys, you are going to get through this. Apparently "the street" was aware of the situation and could smell blood in the water.

She took a Sharpie and put a B on the back of my left hand and an O on the back of my right hand. Yep, I did not know the difference between the bid and the offer when trades would come at me on the phone. She said if I hear "you're bid" or "at you", that I should say, let me buy 1000 and get out of your way. Conversely, if I hear "I'm bid" or "take you", I should say, let me sell 1000 and get out of the way. In an hour, this woman had given me enough training to at least survive on the phone. As long as I live I'll never forget that day.

By the afternoon guys had lightened up and were being reasonable and even engaging in small talk on the phone. I survived the Chicago NASDAQ community for at least my first day.

At 3:30 the guy that owned the firm came over to the window and asked how it went. He said the clearing firm had called because things seemed different in the account. "How did it go today?" I said that I was sorry if I'd fucked things up and that I'd do the absolute best I could to get us through. He said, "Whatever you did today, can you do it again tomorrow?" My response, "I'm so glad you aren't telling me, I'm fired." I had no idea what the firms positions were, a huge failure on a real responsibility. I had no idea about anything, really. So the boss tells me that Fidelity called because the activity was significantly up and that the desk netted $19,000 that day...ten times a typical day. They would lower our rates if that becomes typical and did we need additional support? It was my first effing day and my soiled shorts were still stinking up the bathroom.

I never went back to sales. Actually, I never went back to anything. I was a trader now.

The only expectation I had was help the firm and try not to get fired. When the other guy came back from his honeymoon the was given the option of share the desk/deck with me or leave. He left.

Expecting profits means that if you don't make profits you have failed. Most people are seriously underfunded, especially for short term directional speculation. Focus on making good trades, profits will come. Expect to execute well and defend your capital. When the review shows a less desired outcome, embrace what you can learn and focus on improving your method or your execution. This way every outcome is an opportunity. Personally I study the bottom 20% of trades. Admittedly my frequency is down (which is another topic) but imagine if the bottom 20% of your trades started to contain trades that you made money on?

Anyway I'm losing focus because I'm so damn hungry.

Advice:

Expand your time frame...significantly. If you are day trading the ES because you do not have enough capital to carry positions, STOP, you are going to lose all your money.
I suggest finding a price via whatever method you think works (yes, tone is of the roll the eyes type) where you can responsibly get long SPY. Learn to trade /ES (or /MES if necessary) from the short side, delta neutral, against the SPY. This will allow you to relax and use time in your favor. You will develop immensely and at a rate much faster than usual. Granted, you are not leveraged naked long/short so you won't bank or burn as fast, but you will be able to stay in the game with confidence and develop your approach. I realize that under some amount of deposit, that the pattern day trade rule is in the way. That is to protect the consumer, think about that and expand your time frame.

After I eat something I'll show a risk analysis tab for /MES and SPY...now as I'm thinking about it that might require like $50,000. If you have a significant deposit, chances are you understand my point. While your approach may differ, please consider what Ive said from the perspective of people that are trying very hard against long odds. I don't need to be right, I'm simply hoping to help people, especially people that struggle and are without guidance.

Dan

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wldman View Post
While your approach may differ, please consider what Ive said from the perspective of people that are trying very hard against long odds. I don't need to be right, I'm simply hoping to help people, especially people that struggle and are without guidance.

Dan

Dan, posts like this are a big part of why I am happy to be on futures.io.

Thanks, man.

Bob.

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wldman View Post
there is a name for people that keep talking after nobody is listening and I don't want to ever be called, "candidate". I'm not sure where this will go but I do recognize that most people are interested in comparing themselves to others. I do not think that is productive. Compare you to yourself.

Please take the P/L scoreboard off of your screens. Trade price action or whatever method you use or are developing. Consider the results after the game (trade) is over. When the game is on, separate victory from profits and focus on victory. It might sound dumb and I could try to explain it if someone asks, but focus on the scoreboard and you cant see whats going on in the game. For me, when I was new, I was too dumb and under too much pressure to monitor both. At the end of the post I hope I remember to give specific advice to new or struggling traders. If I don't, ask me. It's the advice that I wish I'd gotten and it is now the cornerstone of what I do.

I may have typed this or parts of this in the forum in the past.

In the early 90's I was a salesman (stockbroker) at a small regional boutique that specialized in 1st tier and mezzanine financing in tech and biotech. The salesman role at the firm was evolving into selling Reg D offerings to qualified investors. I was a great bond salesman earlier in my career but I did not understand or believe in many of the offerings my firm was working on. I had ethical questions and thus was not selling anything. Our firms "trader" was a veteran and a wealth of information, but his personality did not work well at the firm. A door was opened...

The trader, recently married, demanded that he was entitled to his vacation time in consecutive weeks to enjoy his honeymoon. He wanted to pick someone to "train" as his backup. I was asked if I'd consider it, I think because the senior management trusted me, but also because I was not "selling" and perhaps to valuable to simply be fired.

I was not who the trader wanted, so my week and a half of "training" was brutal. Within a half hour of the open on my first day I soiled my pants. Go ahead laugh about it...I sure do. No shit, pun intended< I was going Hawaiian by 9am. The phone would ring and someone would be yelling shit fast as hell in a vernacular that might as well been ancient Greek. The only words I understood are not appropriate for the forum. Brokers were sending orders and calling for fills, begging for ad credit and watching my mental and emotional breakdown.

Before 10 I heard a voice that I recognized from the few phone calls that I was allowed to take during my "training". It was one of the girls from a wholesaler desk of the greatest human being I've met in business. I tear up thinking about him as i type this. She was telling our receptionist that she had a meeting with me. Against protocol and probably NASD rules, I opened the door and let her on the desk. She said, Danny, fuck those guys, you are going to get through this. Apparently "the street" was aware of the situation and could smell blood in the water.

She took a Sharpie and put a B on the back of my left hand and an O on the back of my right hand. Yep, I did not know the difference between the bid and the offer when trades would come at me on the phone. She said if I hear "you're bid" or "at you", that I should say, let me buy 1000 and get out of your way. Conversely, if I hear "I'm bid" or "take you", I should say, let me sell 1000 and get out of the way. In an hour, this woman had given me enough training to at least survive on the phone. As long as I live I'll never forget that day.

By the afternoon guys had lightened up and were being reasonable and even engaging in small talk on the phone. I survived the Chicago NASDAQ community for at least my first day.

At 3:30 the guy that owned the firm came over to the window and asked how it went. He said the clearing firm had called because things seemed different in the account. "How did it go today?" I said that I was sorry if I'd fucked things up and that I'd do the absolute best I could to get us through. He said, "Whatever you did today, can you do it again tomorrow?" My response, "I'm so glad you aren't telling me, I'm fired." I had no idea what the firms positions were, a huge failure on a real responsibility. I had no idea about anything, really. So the boss tells me that Fidelity called because the activity was significantly up and that the desk netted $19,000 that day...ten times a typical day. They would lower our rates if that becomes typical and did we need additional support? It was my first effing day and my soiled shorts were still stinking up the bathroom.

I never went back to sales. Actually, I never went back to anything. I was a trader now.

The only expectation I had was help the firm and try not to get fired. When the other guy came back from his honeymoon the was given the option of share the desk/deck with me or leave. He left.

Expecting profits means that if you don't make profits you have failed. Most people are seriously underfunded, especially for short term directional speculation. Focus on making good trades, profits will come. Expect to execute well and defend your capital. When the review shows a less desired outcome, embrace what you can learn and focus on improving your method or your execution. This way every outcome is an opportunity. Personally I study the bottom 20% of trades. Admittedly my frequency is down (which is another topic) but imagine if the bottom 20% of your trades started to contain trades that you made money on?

Anyway I'm losing focus because I'm so damn hungry.

Advice:

Expand your time frame...significantly. If you are day trading the ES because you do not have enough capital to carry positions, STOP, you are going to lose all your money.
I suggest finding a price via whatever method you think works (yes, tone is of the roll the eyes type) where you can responsibly get long SPY. Learn to trade /ES (or /MES if necessary) from the short side, delta neutral, against the SPY. This will allow you to relax and use time in your favor. You will develop immensely and at a rate much faster than usual. Granted, you are not leveraged naked long/short so you won't bank or burn as fast, but you will be able to stay in the game with confidence and develop your approach. I realize that under some amount of deposit, that the pattern day trade rule is in the way. That is to protect the consumer, think about that and expand your time frame.

After I eat something I'll show a risk analysis tab for /MES and SPY...now as I'm thinking about it that might require like $50,000. If you have a significant deposit, chances are you understand my point. While your approach may differ, please consider what Ive said from the perspective of people that are trying very hard against long odds. I don't need to be right, I'm simply hoping to help people, especially people that struggle and are without guidance.

Dan

great story .I would gladly soil my pants(proudly) if i was given that opportunity

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It is beyond my understanding of platform complexity to make a risk chart to display the concept mentioned above. This is the daily risk chart of an account I trade. Ive obscured some info or left it off out of humility and privacy concerns. If someone wants me to address specifics let me know.

This portfolio, today with ES at 2700 nets about 4200, with ES at 3180, nets about 3000. This example right now leans slightly short. The idea is to create edge and take profits by legging in ES or in this account ES and long SPY puts, against an existing portfolio of stocks. This is a little more complex than ES and SPY, but delta neutral long stock against short ES. All categories of "risk" are specifically managed here.

At 2700 today I make money, at 3300 today I make money. Granted, you still have to be good at leg in and leg out, but is this not what everyone is trying to do?


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wldman View Post
If someone wants me to address specifics let me know.

Understanding any of this would be a start!

For example, what does


Quoting 
This portfolio, today with ES at 2700 nets about 4200, with ES at 3180, nets about 3000

mean? Or the whole paragraph, for that matter.

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xplorer View Post
Understanding any of this would be a start!

For example, what does



mean? Or the whole paragraph, for that matter.

@wldman

Dan, I've just managed to put together the few neurons I have left for today - basically what you are saying is, no matter where the ES is headed, you're going to make money because of the particular techniques you are using.

Am I correct in this assumption?

Sorry for the basic question, it's late here in Europe and it's been a long day.

EDIT: yes, I've re read this bit


Quoting 
At 2700 today I make money, at 3300 today I make money. Granted, you still have to be good at leg in and leg out, but is this not what everyone is trying to do?


I would argue, though, that your approach works coming from someone with 30+ years experience in the field. So, it's easier for you to see what to do.

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The horizontal axis is the price of /ES. The vertical axis is P/L day. When you get good prices on legging in or legging out of delta neutral your curve (pink line) moves up the vertical axis.(you are making money)

The idea is that /ES is traded against a basket of stocks delta neutral....a classic hedge.

Think of the stocks as an investment, one that I never want to sell, they give me long side exposure, meaning when the market goes up, my stocks go up. The short /ES gives me downside exposure, meaning that when stocks (the ones I own) go down, the short ES goes up, effectively hedging my long basket. Well executed trades on either side of the market put space between my risk profile (pink line) and the zero line.

So I'm allowed to consider the ES on an extended time frame as a tool to move equity exposure between delta neutral and market exposure long or short. No position in ES is naked long. I like to move between neutral (when I think market is over priced) and naked long, when I think we are going higher. When I get it right I make money on the hedge (ES) when the market moves lower and my dividend and growth machine (stocks) go lower. Keep in mind I look to hold stock perpetually.

Does that answer?

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  #20 (permalink)
Market Wizard
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I have experimented with what might be a delta neutral position. At the same moment I would buy a high yielding dividend stock and marry a long term in the money put. The dividends would cover the cost of the put. I would write out of the money calls and collect the premiums as profit against the position. If the stock advanced against the put the Greeks: delta and theta are suppose to deliver additional profit for the position. If the stock declines: keep the premiums, collect the dividends and put the stock. It's a slow grind so currently all I do is sell naked puts.

So I am interested in hearing more about a delta neutral strategy about the ES or MES vs. SPY or it's options (puts or calls). And to the above post if you are long SPY (a basket of stocks) and you want to be hedged properly, wouldn't you need to be short the ES overnight?

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Does that answer?

It does. Thank you.

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  #22 (permalink)
Market Wizard
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@Tiberius

As a generalization I sell weekly 30 delta puts on stocks that I'd be happy to own. Those short puts are sometimes part of a long put spread and all the option deltas are in the consideration of "neutral"

Sometimes I have to roll the puts but most of the time they expire. Again, generally speaking you want to sell puts (long delta) when people are scrambling to buy insurance. Vola is exploding. Puts are bid up. This is fairly complex...meaning sometimes difficult...but like any insurance underwriter, the metrics for evaluation are there.

On that strategy that you described. Trying to sound humble...I do not usually marry puts at the time of purchase. Rather i try to convince myself that I'm buying long stock at a good price and owning for a very long time. I put all of my dividends on reinvestment and consider heavily 5 yr div growth rates and payout ratio, among other items when looking at stocks to own.

I will add protection by owing a long put, but most of my long puts are SPY puts. I buy those if I need a known downside for my short exposure...unfortunatly that element is something I have NOT mastered.

Maybe the right place is one of the Es threads if guys want to have a discussion.

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  #23 (permalink)
Market Wizard
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@Tiberius

Short the ES for as long as it takes. That is never the goal to have a short Es position for weeks, but it happens. I'm short a few more than I like from net 2917 right now.

The ES position does not have to be static. I do trade that both sides intra day if I think there is a good set up. Sometimes I improve my position, sometimes I screw it up, but if I'm neutral I have a theoretical basis for any outcome.

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  #24 (permalink)
Market Wizard
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@Tiberius

Short the ES for as long as it takes. That is never the goal to have a short Es position for weeks, but it happens. I'm short a few more than I like from net 2917 right now.

The ES position does not have to be static. I do trade that both sides intra day if I think there is a good set up. Sometimes I improve my position, sometimes I screw it up, but if I'm neutral I have a theoretical basis for any outcome.

@wldman Your two above posts are understood and very helpful.

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Market Wizard
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it might help to say that a position does not have to be static/dynamic or binary to make money. Maybe it is appropriate to say that what I am describing is the ES trade as an element of a bigger picture. Are most members thinking of ES as an intra-day long or short... in an exclusive way. Meaning, I trade the ES for directional moves while the market is open (RTH)?

My question would be, that's cool, but why are you making time the enemy?

A legitimate, but in my opinion, unfortunate answer is that margin/deposit wont allow carry. Day trading the most competitive market in the world is, perhaps, the most difficult vocation on the planet.

It can be done, for sure...but I do not think that I could have done it on my best days, much less for a career.

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Market Wizard
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on that issue. You could pick any stock to be long. Then you could trade the /MES against it delta neutral. See, that calculation is Beta weighted. I should have included that all along. Now, a stock that is an element of the index, especially one that is a significant percent of the index, that is less that 290 ish per share does make the deposit required more tenable.

You can illustrate this manually peg a stock purchase and then the sell of a future against it. At the end of the day check the closing prices relative to the peg (trade price). You will see that most of the time the relationship is reliable...not always, but over time. Then if you look at the price action of both during the day you will see in the divergence and convergence of the two areas where you could have taken a leg.

I know that sounds complicated, but its not once you have a handle on it.

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  #27 (permalink)
Holladay, Utah, USA
 
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What a timely poll. Only on FIO can futures traders openly discuss the disparity between the REALITY of their trading (mis)adventures compared the the EXPECTATIONS without having to be anonymous! I love this site.

I have been trying for over a decade to trade one (just 1) contract of YM or NQ on a $1,500 or $2,000 account. And the market seems to know exactly when I enter every trade, as if to say "Steve is back! Let's show him AGAIN what an idiot he is!" And "When will he learn that 4 losses in a row of $150 wipes out half his account?" And "Major Loser!!"

For the past 3 years I have been dealing with this "Undercapitalized!!!" issue by trying out TST, OneUp, and LeeLoo. And I succeeded. I have been funded by MES capital after passing the OneUp trial 4 times now, and I am FINALLY being profitable. I have an account now that will allow me to trade multiple Emini contracts with a large enough draw down to make it through some bad trades. It has made ALL THE DIFFERENCE in my stress level and ability to be profitable.

Because of my success, I have been recommending the "Funded Trader" route to my friends, with the caveat that they better be able to win on a sim account 5 days in a row FIRST. These evaluations are NOT a practice field, but a money sink if you are not prepared to follow all the rules and do it right the first time. (You can review my FIO OneUp/MES journal here.)

Now something amazing happened last month. I have been hoping for micro indicies for a long time, and they finally arrived! I have since been toying around with the MES, MNQ and MYM. They are 1/10 the size of the Emini's. This doesn't mean that I don't make bad trades, it just means I don't die as fast. Because the commission is twice as costly as the Emini's per unit of gain ($.80 micro vs $4.00 Emini) I readily admit these are only to get someone started. But it is still exciting.

And now I tell people to avoid the combines all together and just open a $2,000 account and trade one (just 1) micro position at a time to start. That is like a $20k Emini account! According to a 2015 survey the average trader spent $1,145 on TopStep Trader. I now say FORGET TST, OneUP, LeeLoo, Earn2Trade, and all the rest. So put the combine money into your own account! And away we go.

Now trade the Micros. And watch in amazement as you patiently grow your war chest. Try to make just $20 per day to start on your $2000 account. That is 1% per day. Add one micro contract with each $300 you make. At 1% per day, you will have $24,000 at the end of 250 trading days. Once your account reaches $5,000, then switch over to the Emini's. Keep going at 1% per day using one Emini contract. This is just a $50 gain. Then add another contract with each $5,000 to $10,000 in your account. At the end of one year you will be trading with 1 to 4 contracts and conservatively making $238 per day. You will have $24,000.

You can keep scaling to your comfort level during the second year. At 1% per day, at the end of 500 trading days, you would be making over $2,500 per day and have over $250,000 in your account.

I think the Eminis are awesome and should help a lot of people bring their Realities closer to their Expectations.

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  #28 (permalink)
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sstheo View Post
What a timely poll. Only on FIO can futures traders openly discuss the disparity between the REALITY of their trading (mis)adventures compared the the EXPECTATIONS without having to be anonymous! I love this site.

I have been trying for over a decade to trade one (just 1) contract of YM or NQ on a $1,500 or $2,000 account. And the market seems to know exactly when I enter every trade, as if to say "Steve is back! Let's show him AGAIN what an idiot he is!" And "When will he learn that 4 losses in a row of $150 wipes out half his account?" And "Major Loser!!"

For the past 3 years I have been dealing with this "Undercapitalized!!!" issue by trying out TST, OneUp, and LeeLoo. And I succeeded. I have been funded by MES capital after passing the OneUp trial 4 times now, and I am FINALLY being profitable. I have an account now that will allow me to trade multiple Emini contracts with a large enough draw down to make it through some bad trades. It has made ALL THE DIFFERENCE in my stress level and ability to be profitable.

Because of my success, I have been recommending the "Funded Trader" route to my friends, with the caveat that they better be able to win on a sim account 5 days in a row FIRST. These evaluations are NOT a practice field, but a money sink if you are not prepared to follow all the rules and do it right the first time. (You can review my FIO OneUp/MES journal here.)

Now something amazing happened last month. I have been hoping for micro indicies for a long time, and they finally arrived! I have since been toying around with the MES, MNQ and MYM. They are 1/10 the size of the Emini's. This doesn't mean that I don't make bad trades, it just means I don't die as fast. Because the commission is twice as costly as the Emini's per unit of gain ($.80 micro vs $4.00 Emini) I readily admit these are only to get someone started. But it is still exciting.

And now I tell people to avoid the combines all together and just open a $2,000 account and trade one (just 1) micro position at a time to start. That is like a $20k Emini account! According to a 2015 survey the average trader spent $1,145 on TopStep Trader. I now say FORGET TST, OneUP, LeeLoo, Earn2Trade, and all the rest. So put the combine money into your own account! And away we go.

Now trade the Micros. And watch in amazement as you patiently grow your war chest. Try to make just $20 per day to start on your $2000 account. That is 1% per day. Add one micro contract with each $300 you make. At 1% per day, you will have $24,000 at the end of 250 trading days. Once your account reaches $5,000, then switch over to the Emini's. Keep going at 1% per day using one Emini contract. This is just a $50 gain. Then add another contract with each $5,000 to $10,000 in your account. At the end of one year you will be trading with 1 to 4 contracts and conservatively making $238 per day. You will have $24,000.

You can keep scaling to your comfort level during the second year. At 1% per day, at the end of 500 trading days, you would be making over $2,500 per day and have over $250,000 in your account.

I think the Eminis are awesome and should help a lot of people bring their Realities closer to their Expectations.


Hey Steve, It is a wise approach you are offering. Let's have a look at it from the point of view who just came to that field and thinking he is going to make $1500 in 1 hours as there are many videos stating on youtube. When we are coming to trading we are seeing that we can get reach quick. At least this is what i thought when i join the club.
Most of us didn't realised that it is a marathon and not a sprint.
What you wrote above is already a plan for 1 year plus. Who wants to do it? When ppl wants to have it here and now.

At the end of the day the sooner trader realise that it is a Marathon and not a sprint the quicker he will progress.

With a micros now it is a truly a best approach to get your foot wet.

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  #29 (permalink)
Legendary Market Wizard
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wldman View Post
there is a name for people that keep talking after nobody is listening and I don't want to ever be called, "candidate". I'm not sure where this will go but I do recognize that most people are interested in comparing themselves to others. I do not think that is productive. Compare you to yourself.

Please take the P/L scoreboard off of your screens. Trade price action or whatever method you use or are developing. Consider the results after the game (trade) is over. When the game is on, separate victory from profits and focus on victory. It might sound dumb and I could try to explain it if someone asks, but focus on the scoreboard and you cant see whats going on in the game. For me, when I was new, I was too dumb and under too much pressure to monitor both. At the end of the post I hope I remember to give specific advice to new or struggling traders. If I don't, ask me. It's the advice that I wish I'd gotten and it is now the cornerstone of what I do.

I may have typed this or parts of this in the forum in the past.

In the early 90's I was a salesman (stockbroker) at a small regional boutique that specialized in 1st tier and mezzanine financing in tech and biotech. The salesman role at the firm was evolving into selling Reg D offerings to qualified investors. I was a great bond salesman earlier in my career but I did not understand or believe in many of the offerings my firm was working on. I had ethical questions and thus was not selling anything. Our firms "trader" was a veteran and a wealth of information, but his personality did not work well at the firm. A door was opened...

The trader, recently married, demanded that he was entitled to his vacation time in consecutive weeks to enjoy his honeymoon. He wanted to pick someone to "train" as his backup. I was asked if I'd consider it, I think because the senior management trusted me, but also because I was not "selling" and perhaps to valuable to simply be fired.

I was not who the trader wanted, so my week and a half of "training" was brutal. Within a half hour of the open on my first day I soiled my pants. Go ahead laugh about it...I sure do. No shit, pun intended< I was going Hawaiian by 9am. The phone would ring and someone would be yelling shit fast as hell in a vernacular that might as well been ancient Greek. The only words I understood are not appropriate for the forum. Brokers were sending orders and calling for fills, begging for ad credit and watching my mental and emotional breakdown.

Before 10 I heard a voice that I recognized from the few phone calls that I was allowed to take during my "training". It was one of the girls from a wholesaler desk of the greatest human being I've met in business. I tear up thinking about him as i type this. She was telling our receptionist that she had a meeting with me. Against protocol and probably NASD rules, I opened the door and let her on the desk. She said, Danny, fuck those guys, you are going to get through this. Apparently "the street" was aware of the situation and could smell blood in the water.

She took a Sharpie and put a B on the back of my left hand and an O on the back of my right hand. Yep, I did not know the difference between the bid and the offer when trades would come at me on the phone. She said if I hear "you're bid" or "at you", that I should say, let me buy 1000 and get out of your way. Conversely, if I hear "I'm bid" or "take you", I should say, let me sell 1000 and get out of the way. In an hour, this woman had given me enough training to at least survive on the phone. As long as I live I'll never forget that day.

By the afternoon guys had lightened up and were being reasonable and even engaging in small talk on the phone. I survived the Chicago NASDAQ community for at least my first day.

At 3:30 the guy that owned the firm came over to the window and asked how it went. He said the clearing firm had called because things seemed different in the account. "How did it go today?" I said that I was sorry if I'd fucked things up and that I'd do the absolute best I could to get us through. He said, "Whatever you did today, can you do it again tomorrow?" My response, "I'm so glad you aren't telling me, I'm fired." I had no idea what the firms positions were, a huge failure on a real responsibility. I had no idea about anything, really. So the boss tells me that Fidelity called because the activity was significantly up and that the desk netted $19,000 that day...ten times a typical day. They would lower our rates if that becomes typical and did we need additional support? It was my first effing day and my soiled shorts were still stinking up the bathroom.

I never went back to sales. Actually, I never went back to anything. I was a trader now.

The only expectation I had was help the firm and try not to get fired. When the other guy came back from his honeymoon the was given the option of share the desk/deck with me or leave. He left.

Expecting profits means that if you don't make profits you have failed. Most people are seriously underfunded, especially for short term directional speculation. Focus on making good trades, profits will come. Expect to execute well and defend your capital. When the review shows a less desired outcome, embrace what you can learn and focus on improving your method or your execution. This way every outcome is an opportunity. Personally I study the bottom 20% of trades. Admittedly my frequency is down (which is another topic) but imagine if the bottom 20% of your trades started to contain trades that you made money on?

Anyway I'm losing focus because I'm so damn hungry.

Advice:

Expand your time frame...significantly. If you are day trading the ES because you do not have enough capital to carry positions, STOP, you are going to lose all your money.
I suggest finding a price via whatever method you think works (yes, tone is of the roll the eyes type) where you can responsibly get long SPY. Learn to trade /ES (or /MES if necessary) from the short side, delta neutral, against the SPY. This will allow you to relax and use time in your favor. You will develop immensely and at a rate much faster than usual. Granted, you are not leveraged naked long/short so you won't bank or burn as fast, but you will be able to stay in the game with confidence and develop your approach. I realize that under some amount of deposit, that the pattern day trade rule is in the way. That is to protect the consumer, think about that and expand your time frame.

After I eat something I'll show a risk analysis tab for /MES and SPY...now as I'm thinking about it that might require like $50,000. If you have a significant deposit, chances are you understand my point. While your approach may differ, please consider what Ive said from the perspective of people that are trying very hard against long odds. I don't need to be right, I'm simply hoping to help people, especially people that struggle and are without guidance.

Dan

Fantastic post, @wldman There's so much to take from it that I can't put it in one post.

But since no one else mentioned it, congrats to you for handling that situation with aplomb. I've unfortunately never worked in trading but I can't imagine setting someone up to possibly fail like that. I feel like I know how that conversation went with that trader after they got back from vacation. I am glad you got the desk, and if it were up to me I would have promoted and/or bonused that great person from the wholesaler desk that did more to help you in minutes than the other person did in a week and a half.

Anyway enough of that, over time I'd like to learn more about these time frame expansion strategies you are describing.

Thanks for the insight and Cheers!

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  #30 (permalink)
Legendary Recovering Method Hopper
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July 2018 I stumbled upon a video on YouTube about a daytrader’s ‘lifestyle.’ It seemed glorious and instantly had me hooked on the prospect of overnight success and great riches.

One month later I bought a course. There was plenty of BS, but I did learn some crucial elements of trading from the upstart. The teacher stressed again and again the importance of having a plan and sticking to that plan. He also had the same reaction to a big win as to a big loss. This was an important psychological trait to witness as emotional detachment from results is a crucial element of profitable trading.

In true beginner fashion, I abandoned the aforementioned method approximately one month later, after losing money trading live. Who woulda thought I’d lose money going live after two weeks of learning!

For the next four months I bounced around testing countless indicator combinations and ‘surprisingly’ found nothing of substance!

In January I happened upon Damian Castilla’s videos on YouTube as well as his thread on forexfactory. It amazed me that he could consistently lock in $10,000+ sized wins without any indicators on his screen. I began to learn Damian’s methods of price action and acquired bits and pieces from other members on his thread. I demo traded for two months and broke even for the most part. I then opened a live account and traded SPY (SP500) ETF with small risk (approx 1-2 MES). I actually came out in the green by a small margin.

Fast forward to now, I decided in June to move up to 1 ES contract. June has been a green month!

When I began trading I expected to win overnight. That did not happen. When I restarted my trading journey with price action I expected to be able to get to profitability but did not know how long it would take. Now I am 1 year into my journey and have had a profitable month. It would be foolish and naive to assume that because I’ve had one good month I am now consistently profitable... BUT it is a start and I am on my way to consistently tipping the scale to the green side!


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  #31 (permalink)
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@snax

Yeah.

The guy that ran the desk came back from vacation and there was a meeting with the owner. I knew what was coming so I stayed quiet and let people be who they are. The meeting started with a review of how things went. It was bait....and it was taken hook line and sinker. Second day back and the guy had no idea how the account looked. The FIRST thing each day was to review associated firm accounts, check trades, review positions.

The guy said in the meeting that (Dan) doesn't know a stock from a sock and that he wondered if the street invited me to cocktails at the clearing house...a thing that often happens to newbies as the clearing house is not an actual place. The owners response...CLASSIC, yeah we were all hoping Dan would not take a shit while you were not here to clean it up.

So the top 3-4 guys were there and the boss says that the trading desk needs to adopt the firm's culture when it comes to dress and office hours. The idea was the we were on "corporate" floor where investment banking and corporate finance were located...we had to "look" that part, not in golf shirts and khakis. The guy said that's not how trading desks are and that laundered shirts cost 1.25 a day...no shit, he said that! One of the other guys asked me what I thought of that. I said that I have 2 or three appropriate shirts, but I'll go look for some deals over the weekend. The boss told me he had a guy and that his wife will make the introduction before we go to dinner. Dinner? I said. Yeah, we should celebrate if you take the job.

I did not know anything...but there was no way this was going to pass through my hands. The word decision means to separate from all other outcomes and on that day the trading desk became my life's work.

The guy who sent his staff to help me was one of the greatest men Ive ever known. I could write a book about what he taught me and the stories I was part of because of him. Guys like that are why I linger around in the forums and why I want everyone to find their way in trading or life.

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  #32 (permalink)
Market Wizard
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I like your approach when I read your journal. Stay focused and get a little better everyday.

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  #33 (permalink)
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Dan, thanks for the awesome story and advice!




wldman View Post
I never went back to sales. Actually, I never went back to anything. I was a trader now.


I found this particularly inspiring. Someday... thanks again man.

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  #34 (permalink)
Market Wizard
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I cant say that it came without tears or misplaced poop. Rule number one for me will always be risk outcome first, protect capital to persevere.



Rrrracer View Post
Dan, thanks for the awesome story and advice!






I found this particularly inspiring. Someday... thanks again man.


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  #35 (permalink)
St Paul
 
 
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Hi Mike

I've always been told where there is no vision people perish. I see no :
Big Mike View Post
Hi guys,
worthwhile advantage in trading where one has any expectation of success without a plan for a realistic outcome. Maybe I am odd but so be it!

TheOne0926
New poll:



Please vote and discuss. Choose two options, and please elaborate or your choices here in the comments.

Mike


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  #36 (permalink)
FORT WORTH
 
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Thanks for the poll . It helps to know that I am not the only one who has struggled with profitability. Seeing the other
people's comments help me keep things in perspective, and to control my expectations and ego.

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  #37 (permalink)
St Paul
 
 
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ldcapital View Post
Thanks for the poll . It helps to know that I am not the only one who has struggled with profitability. Seeing the other
people's comments help me keep things in perspective, and to control my expectations and ego.

IDCapital:

I am with you. The pain of the trading journey is an experience I will never forget. I am glad to say it is sooooo much less painful now.

TheOne0926

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  #38 (permalink)
San Francisco, California
 
Experience: Intermediate
Platform: TradeStation, NinjaTrader
Broker: TradeStation, Forex.com
Trading: ES,CL
 
Posts: 39 since Oct 2014
Thanks: 773 given, 114 received

Great poll. Thanks, Mike. We like charts, so I plotted the poll results at the top of this thread


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  #39 (permalink)
Market Wizard
Coos County New Hampshire
 
Experience: Intermediate
Platform: NinjaTrader
Broker: IB
Trading: ES
 
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Posts: 1,552 since Feb 2010
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The day is done. I got a bunch done up here on the acreage up in the Great White North right against the Canadian border. Saturday I will trailer the boat out of the equipment shed and go trout fishing in Back Lake up here in Pittsburg NH.

This thread is about expectation vs. reality. This is my story: a requiem for a futures trader. It's my personality: in futures, I expected to make instant profits and the reality is I never made enough to write home about, mostly nothing. Because I am vain I will say I have been successful in business and stocks and their derivatives. That gives me a certain mindset. At this point if I never trade an ES contract again, it doesn't matter; I figure I am set for life. But I want to trade ES for one last time, it's the ultimate game and I have all this experience in futures trading and I am vain, a matured vanity. I am risk adverse and patience and I no longer sweat the small stuff. I do lack some discipline but because I am more Zen (now) and don't sweat the small stuff as I trade within my comfort zone and account; I can stick to a trading plan. That would be my future in futures but I am not going to bet the Ranch on it.

So this is my history, a requiem, not that I failed but that I have not succeeded (in futures). It's not that I am looking back at the trading day or week but decades. I am not wining about this or that, but to move forward I thought I would review the past and it is fun for me to remember more youthful days, not that I am some old buck now. Actually it seems like I have never been better in mind, body and soul. And Futures.io (BMT) also.

So I am 18 in 1975, I am living at home in Hooksett NH and going to college. I open a stock account with ML in Boston. Okay minor success, so in 1976 (can't remember exactly) I get the notion I can trade futures and succeed instantly, I have an easy $2500 and my mother gives me another $2500 to open an account in Chicago with Maduff and Sons. Imagine I am reading the daily futures prices in the newspaper and updating my charts by pencil that I receive in the mail every Monday. At this moment the only trades I remember is Cattle, but in six months I lost half of my account, $2500. I gave my mother her 2.5 K and the tax lost. The takeaway is that I relied on the broker for some advice and he knew I was another chump. But to this day I remember what he said to me when I tried to rationalize the market. It's about the TV show at the time but he said, "don't try to be Baretta and interpret every price move in the market."

Out of futures and back into stocks with Advest, Manchester NH. Okay great success, double my account, then I am in business entering the 80's but back in stocks at the end of the 80's. Okay by 1989 my industry: construction is bust, we sell everything and in the spring of 1990 we move to Siesta Key, Sarasota Florida. To sell everything in NH and move to Siesta Key was one of my best years in life, 1990, everything was prefect, a salaried job, great weather, great beach sand, super Gulf of Mexico from Spring to Autumn. Just beyond belief for a New Hampshire boy.

Okay 1993 back in business, somewhat boring so back to futures again, I can do this. This time it Welles Wilder and the Delta Society. I have an IBM 50z, Delta charting program and data. I have an introducing account with I can't remember what broker I remember that in was with Lou and his office was at the Bank East building at South Pineapple and Main Street Sarasota. I remember Lou was a drunk and he was at the bar at the Four O'clock Club sucking down martinis after market hours. I don't remember any victory but neither defeat, the takeaway was in Lou's office was an Air Force Retired Intel guy, John, who knew futures and how to profit and I didn't engage him as a mentor and he didn't offer. Lost opportunity? Back to business, no future in futures.

Okay fast forward, it must be 2009 keying off my BMT date of Feb 2010. I have stock accounts, I make money; I am tired of business, I can be a day trader. I enrolled in this day trading course for $4K. The course by a 40 year well known veteran; makes money every week. The problem was when I took the course, he changed the charting software and engaged a new series of indies. So he was demonstrating something new that somehow related to his past and present success and course materials but wasn't how he did it before. I was lost but. I emulated this trader, I could succeed in stocks on swing trading but I was simply horrible on day trading the ES. It was horrible, alone as a again newbie, I drifted and drifted and then I don't know how I found Big Mike's Trading.com. BMT was a stabilizing force where I could base out and regain myself. BMT was mystical with the back in the day traders.

So at BMT, I learned and experienced much, a human sponge for trading. I have treads and posts. But I failed to achieve a birth right of success of my choose: day trading. Why? Because I didn't tend to business. I counted that I have 384 chart templates, maybe five is enough. I did have medium size drawdowns trading someone's option technique, because I was too lazy to do my own analyze. I guess the bottom line of my distractions in trading is that I avoided success by avoiding failure or I avoided failure by avoiding success. The lack of discipline of a decisive trading plan which I had hundreds. I wasted my opportunity, a moment in time. The unforgiving opportunity of a lifetime again. Gone as a burn out and a laggard.

That's it, a lost moment in time. I got back in business, forget the ES, just stocks; BMT is now Futures.io. I move from Sarasota back to New Hampshire. I am engaged in all types of activity. My accounts are at record highs. I am much more active on futures.io now. I will have other opportunities, moments in time. But I am here. Now.

A quick shout out to Zsike, BMT member 20,000; my wife.

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  #40 (permalink)
Chicago Illinois
 
 
Posts: 27 since Jun 2019
Thanks: 8 given, 10 received

How do I vote? Sorry I’m new and not seeing any options to choose..

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  #41 (permalink)
Princeton NJ, USA
 
Experience: Intermediate
Platform: Bookmap,Tradestation,MT4
Broker: TradeStation,IG,Oanda
Trading: ES, NQ, YM, RTY, Currencies
 
Posts: 8 since May 2019
Thanks: 14 given, 11 received

Hi Everyone,

This is my first post. I am not profitable at this point, and in my opinion, there is no way to tell how long I will still need, even after 1 1/2 years. I am always surprised at those people saying: I think I almost figured it out. Or: I just have to get my emotions under control and trade my plan. How do you know? That's a serious question.

I have been backtesting with Forex Tester for more than 5000 trades, mostly in EURUSD. There can be long strings of winners, and you still haven't figured out anything, especially if your risk to reward ratio isn't the greatest. I know that by now. It's not easy to tell if you made progress or not. You can be miles away or the goal is just around the corner, there is no objective way telling, at least I haven't found one.

At this point I only trust it if I can produce significant consistent profit, and I mean hundreds of trades.

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  #42 (permalink)
Legendary Market Wizard
Portland, OR
 
Experience: None
 
Massive l's Avatar
 
Posts: 1,977 since Mar 2011
Thanks: 1,642 given, 3,993 received

Expected profits 6-12 months
Reality No profits 2 years in and a large deficit

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