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I always thought "Traders being under-capitalized" was bigger issue than the "Account itself being under-capitalized", and account size was indirect indication of the same, well its difficult to foot a big account if you are not capitalized enough... with everything else.
In more direct words, its an emotional thing tbh, a relatively poor trader might get more effected emotionally if he losses just 1k out of 10k account that he has managed to muster up. Even if the account itself while being small is still good enough to trade with.
Another thing is that well funded account can exploit different avenues to reduce risk, for example; selling options on future contracts getting traded, which does require full margin and if you have account capable of doing that, its possible to make small but good regular return even if your directional view is wrong. Which is a massive advantage that not enough people talk about.
So, while I do think its possible to turn small amount into big sum over the period but its considerably difficult compared to getting regular output from a well funded account and probably more importantly, trader himself.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,048 since Dec 2013
Thanks Given: 4,381
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To be a full time trader, dependent upon the proceeds of your trading, don't you need to be taking a $40k/year OUT of your account. (And thats only a $20/hr equivalent.)
If you start with $100k, make 50% every year, take $40k out for living expenses every year, it takes you 5 years to double your money to $200k!
If on the other hand you start with $200k, make 50% every year, take $40k out for living expenses every year, it takes you just over 2 years to double your money to $400k!
I just don't see how the math works for full time, earnings dependent traders, on smaller amounts.
Full disclosure, I worked on what people here would call an institutional desk for about 17 years, and have been a solo independent proprietary trader for the last 14 years, whose only income stream is trading. My starting capital was significantly more than the numbers been discussed in this thread, and my median return lower than being discussed. I hate to burst peoples bubbles, but I think the path of a undercapitalized (or low-capitalized) independent full-time trader, without significant market experience (ideally pro-experience) is a very difficult and dangerous one, with a very low probability of success. That's not to say you can't make good money though, but maybe the Nick Radge philosophy quoted above is the better way to go.
@SMCJB makes some excellent points. A few things I would add: one, as an independent trader or sole proprietor of any kind, you'll be paying your own health insurance, which, for an individual in the US is insanely expensive these days. Two, being adequately capitalized means also having a substantial savings cushion - fully segregated from your trading account - that you will not dip into! Having your entire liquid net worth tied up in a futures trading account that you hope to grow aggressively just isn't responsible, especially if you have a family.
I come from a somewhat similar background as SMCJB and would have never even considered going off on my own without having very well funded retirement and household spending accounts, and still I struggled to make it work.
If you're young, healthy, and single, maybe the hurdle rate is a bit lower, but still not something to take lightly.
I agree with both you @Schnook and @SMCJB but the situation in Europe is different:
in most EU countries you get free education and free healthcare. If you have a property, you don't need to pay the rent and thus your living expenses are as follows:
-gas 1200€ per year
-water: 500 € per year
-electricity: 700€ per year
concerning food, in the last three years I spent on average 2500€ on food (for me and my wife). Basically if you just want to survive you need 5K per year (assuming you have a property).
In south of Spain most families live 2/3 people with an income of 1500€/month paying a rent.... you don't live well but you survive.
Taxation is 25% on capital gains.
So let's say you need 10.000 euros per year to get by, this is around 12000 USD, so you need to generate around 16.216 USD including taxes.
On a 50K account that's around 33%.
Another way to look at it: In Italy and Spain as an employee you get paid 78€ per day.... maybe I am optimistic but I want to believe that this is achievable trading micros.
I am not saying that this is easy, but I think you can develop a trading plan and work the math to make it viable.
My expenses here in Germany are unfortunately much higher (I have a wife and kids, pay for health insurance, housing, etc.) but if you can achieve your financial goals as you described them above, then I think that's great. I also don't think it's outside the realm of possibility for a very good trader to put up those types of numbers. Still, it would be nice to have a few Euros left over at the end of the year to put in the family retirement / savings account
Whether you think you can achieve those returns, however, is someting you'll only believe with confidence if you you have a demonstrably successful and repeatable strategy. Absent that, your days will be frought with uncertainty and doubt. Ask me how I know
To point out the obvious - the costs of living are substantially less outside the Western world (i.e. in Southeast Asia...etc.), but of course, not everyone can move around the world. But for those who can, it's an amazing bargain overseas.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
Full time trading: For me that sniffs like an odd 9 to 5 job.
I am economist and project founder. So I started 95 a regional internet provider and was head of the Board. From 1986 I traveled every year to Boston to watch the Apple keynote with Steve Jobs.Trading for me was always in the background. Until my wife died and I had to stay with 4 children at home. Everything changed. I needed a job that can be done from everywhere - so I came back to my immature trading skills. I invested 3 years to find 2 working systems with a very low (screen-)time investment. Because I wanted to get back on my knowledge collection for environmental projects that are in progress.
My systems base on minimizing risks (like no trade overnight or weekends), having strict time based entry and exit rules - and do not include more than 1 to 2 trades per day. These trades are not under survey. So I can use time for other stuff. Some time consuming part is still my longtime trading journals here
Of course my CO2 down projects need a lot of time and are to be discussed in many countries with different languages (contracts, meetings etc.) and time shifts.
Besides I am organizing a dozen 4 day wine events per year in Switzerland - mostly on ships. All with Swiss made wines - all the winemakers on board.
So get here a proposal what to do with the time when you do not trade:
• find a beneficial system for yourself or develop one - programming evt. done by a professional
• look at the coin scene, deepen your knowledge and profit from very interesting moves that run for some hours long/short to take out some good profits
• do not watch the market(s) all day - but get a feeling for the repeating of important moves. Prepare a strategy to make the most out of it.
• Learn about how to use the Non-Fungible Tokens NFT (art, diamonds, gold, cars, etc.). This will be THE next big thing in our world. The quicker you get skills the more you will gain. It is all about Certificates. This is the same for my CO2 projects. Certificates stay for new worldwide span trading.
Be sure - we are in a very changing world right now. Those pioneers that have that knowledge (trading inclusive) are ahead of the mass. This short time window (next 10 years) will shuffle wealth and power.
To sum it up: it is all about property - be it real or intellectual property.
@GFIs1 thanks a lot for the advices, they are extremely valuable. Quite interestingly I created a thread about NFT on Futures.io around 2 weeks ago, I was surprised nobody mentioned this new trend.
I agree with you, we are really living extraordinary times. My vision is that in the near future the whole financial industry will go a dramatic change and it money (big money) will be managed by independent traders/investors that will probably work completely indipendently from any institution. I think etoro and collective2 are just scratching the surface of what can be done, so the world will become extremely interesting for indipendent traders and thinkers in general. (By the way, look at what Sierrachart is trying to do!!)
Exactly as content production is being decentralized (wikipedia replaced old encyclopedias), return on investments will be decentralized as well, traders diversity of location/culture/background will offer true diversification. Talent and creativity will be more valuable now than ever.
who is the founder of that wonderful stable platform for traders around the world.
He had the pioneering right view to bring together traders as well as wisdom. Years ago! Taking out the fear to trade independently. And to handle the exchange of traders openly to speak about their forthcoming or resets.
Thanks to fio I have found some dear traders in my area which I contacted personally during my posting time. Of course I do have followers since many years that I appreciate the most.
Unfortunately some of my very good contacts passed away. RIP.
Of course the platform has some very specialized mods that handle the big mass professionally. So my thanks are going to @bobwest, and all (especially) now active mods.
There are many highly skilled traders here that are giving advice, making live shows and help struggling traders to focus on trading. Just light years away from my small trading steps.
Happy trading on and on with the help of fio!
GFIs1
Yeah - you are right I should start a new thread: Contributing to the fio founder
By the way, @Big Mike's name has a space in it after "Big" -- that's why it didn't appear in underline bold in your post, the way names do when the system recognizes them. (You have time to edit it if you like.)
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
