I think clorets is right - many people coming into trading are mentally unprepared to lose anything on even one trade. Whether its admission of bad judgement or the unsavoury parallel this creates with gambling or just their social conditioning might vary from case to case. Trading is not for conservative people.
advfntrader
Established member
- Messages
- 739
- Likes
- 66
unless you have minimum £10k don't even bother, you are undercapitalised and wasting your time. it took me a long time to realise this
montmorencyt2w
Senior member
- Messages
- 2,619
- Likes
- 294
That 35% sounds very depressing, especially as it sounds rather realistic.
B
Black Swan
Technically Fundamental
Senior member
- Messages
- 2,810
- Likes
- 178
This is so wrong I dont know where to start....so I won't.
I hope so.
virtuos0
Well-known member
- Messages
- 423
- Likes
- 117
Black Swan, I was under the impression you were quite clued up, but I guess I was wrong.This is so wrong I dont know where to start....so I won't.
ADVFN is absolutely spot on in what he says. Undercapitalisation can absolutely be the difference between success and failure. Undercapitalisation forces you to use higher trade leverage to make meaningfull gains, which increases your risk.
It's not impossible to build a tiny account into a huge account of course, but being undercapitalised MASSIVELY reduces your chances of success. Considering that most traders have a wafer-thin edge at the best of times this can very well tip the balance and make you a loser.
Of course it's not a binary situation, it's not like it's impossible to be a winner with £9000 and possible with £10,000, it's a sliding scale. But £10,000 is certainly in the ballpark as a STARTING point of capitalisation.
tenbobtrader
Guest
- Messages
- 450
- Likes
- 140
full time / intra day /
good post virtuoso imvho
part time, more than enough in capable hands
good post virtuoso imvho
part time, more than enough in capable hands
B
Black Swan
Starting point? A grand is all that should be committed/risked. Thereafter if you develop then further capitalisation will be necessary/will help as you learn to compound your equity. IMHO there's a myth re. this 'ballpark' figure, and it's been populated mainly by those in the 'industry', perhaps in order to get newbies to think of 10K as a reasonable pot to gamble with. It's simply not necessary and encourages reckless money management...
I think it's a kop out excuse too..."Oh I failed, I was under capitalised..."
Risking 30 pips per trade at no more than £1 per pip is where most newbies should start and stay for some time. I have to say if they can't make it work with that then IMHO it's unlikely that more cash will improve performance/solve their problem.
A grand is the new ten grand...
virtuos0
Well-known member
- Messages
- 423
- Likes
- 117
I don't know a way to say it nicely so I'll just come out and say it, your post is garbage and you're misguided.Starting point? A grand is all that should be committed/risked. Thereafter if you develop then further capitalisation will be necessary/will help as you learn to compound your equity. IMHO there's a myth re. this 'ballpark' figure, and it's been populated mainly by those in the 'industry', perhaps in order to get newbies to think of 10K as a reasonable pot to gamble with. It's simply not necessary and encourages reckless money management...
I think it's a kop out excuse too..."Oh I failed, I was under capitalised..."
Risking 30 pips per trade at no more than £1 per pip is where most newbies should start and stay for some time. I have to say if they can't make it work with that then IMHO it's unlikely that more cash will improve performance/solve their problem.
A grand is the new ten grand...
At even £1 a point with a 30pip stop you are risking 3% of your account with each trade. Even good profitable systems can easily have loss runs of between 5 and 10 trades. If you hit one of those loss runs you will lose between 15% and 30% of your account and you will be unable to reduce your risk (assuming the minimum bet is £1pp as it normally is) without reducing your stop loss.
The risk 1% of your account with each trade is almost certainly too much risk, and beginners would be better off looking at 0.1%. That way you might stay in the game long enough to actually learn how to trade.
Everything comes down to risk, if you manage it then you're golden, but it's absolutely impossible to manage your risk effectively with an undercapitalised account.
Last edited:
B
Black Swan
Firstly, I have to say that (having noticed several of your posts) your overall 'tone' on this forum does not stimulate healthy debate...
Moving on, my post suggested up to a £1 per pip, at a max of 3%. Now you can state that 3% is high, I'd suggest that (up to) £30, from a £1,000 pot, is enough to get the new trader's heart racing and concentrate the mind.
We all post from a position of experience, your own and others. TBH I can't possibly contemplate a run of ten losing trades (particularly on a single security as a new trader) without seriously questioning my ability. The last action by a new trader in that situation should be committing more money to a loss making situation. Even classing myself as an 'intermediate' trader, trading 6/7 pairs a day off 1hr TFs, that is difficult to imagine, but given the endless possibilities certainly not impossible. However, should it occur there would have to be reasons (other than a brain freeze), those reasons could prove to be impossible for a new trader to spot.
If you target 100 pips a day, at 3ppp, the reward is roughly £6,500 per month. Given past performance and the probability that following the same plan will result in the same profit why is there any need to capitalise the account to the levels of £10K?
I've seen endless tales on forums of guys blowing up to the tune of circa 10K, IMHO it is simply unecessary and reckless. A new trader need commit no more than £1K to see if they've 'got it' and can make it work. Whether forex or SB further capitalisation of perhaps 2K is all that's needed.
I'm guessing your a last word kinda guy, so the floor is yours....
virtuos0
Well-known member
- Messages
- 423
- Likes
- 117
I apologise for my bluntness, but it is so important that traders (particularly newbies) understand these points.Firstly, I have to say that (having noticed several of your posts) your overall 'tone' on this forum does not stimulate healthy debate...
Moving on, my post suggested up to a £1 per pip, at a max of 3%. Now you can state that 3% is high, I'd suggest that (up to) £30, from a £1,000 pot, is enough to get the new trader's heart racing and concentrate the mind.
We all post from a position of experience, your own and others. TBH I can't possibly contemplate a run of ten losing trades (particularly on a single security as a new trader) without seriously questioning my ability. The last action by a new trader in that situation should be committing more money to a loss making situation. Even classing myself as an 'intermediate' trader, trading 6/7 pairs a day off 1hr TFs, that is difficult to imagine, but given the endless possibilities certainly not impossible. However, should it occur there would have to be reasons (other than a brain freeze), those reasons could prove to be impossible for a new trader to spot.
If you target 100 pips a day, at 3ppp, the reward is roughly £6,500 per month. Given past performance and the probability that following the same plan will result in the same profit why is there any need to capitalise the account to the levels of £10K?
I've seen endless tales on forums of guys blowing up to the tune of circa 10K, IMHO it is simply unecessary and reckless. A new trader need commit no more than £1K to see if they've 'got it' and can make it work. Whether forex or SB further capitalisation of perhaps 2K is all that's needed.
I'm guessing your a last word kinda guy, so the floor is yours....
It boils down to this, you don't understand risk. You need to go and thoroughly research ideas such as account leverage, trade leverage, margin, sharpe ratio, drawdown, and risk/return.. all of these things. When you've done that come back and if you still think you're right, you have more reading to do!
GladiatorX
Established member
- Messages
- 905
- Likes
- 119
Black Swan -
It totally depends on your approach to the market; In trading 1,000 - Your forcing yourself to a particular style of trading - Highly leveraged short-term...
For example if an individual wanted to start trading mutual funds/money markets, £1,000 wouldn't be sufficient - That does not make it an unviable approach to the market; Just one that requires more capitalisation and proving that you can make money on a 5-minute Forex chart on a SpreadBetting account with £1,000 has nothing to do with managing equity on a larger scale across multiple assets on real exchanges.
The £1,000 Spreadbetting approach forces everyone to try to trade with small amounts for large returns; a harder task that a patient approach with a larger fund. Then to increase these earnings they look for the Holy Grail...
I deem it totally un-neccesary to start with a £1,000 unless an individual has totally thought out how they want to trade and what their style is; If it is highly-leveraged hourly charts then Yes spreadbetting is fine... However you couldn't assess whether an individual would be a good Fund trader or E-mini S&P500 trader through looking at their performance in a small account on a fake market...
Most traders on this forum seem to have that same approach; Highly-leveraged, Large % gains on an account, Aggressive growth, Day-trading to reduce overnight risk...
I think it just makes it all much harder.
I understand if this approach is taken when an individual doesn't have much money; But if you have £100,000 - I would deem it better to start investing in stocks and funds patiently and thought-out, therefore not having to carry highly-leveraged risks because small returns are nice monetarily than simply trying £1,000 in a SB account which could be totally irrelevant to most investors; Only to those who want to trade Via High-leveraged Forex, which is popular because it allows limited funds to create high returns, but that 'benefit' makes it more difficult... Hence i think most fail because their trying to do the most difficult thing with the most limited experience, but there brain-washed to think that this is the 'norm'; In reality its not, just seems the norm on this forum.
It totally depends on your approach to the market; In trading 1,000 - Your forcing yourself to a particular style of trading - Highly leveraged short-term...
For example if an individual wanted to start trading mutual funds/money markets, £1,000 wouldn't be sufficient - That does not make it an unviable approach to the market; Just one that requires more capitalisation and proving that you can make money on a 5-minute Forex chart on a SpreadBetting account with £1,000 has nothing to do with managing equity on a larger scale across multiple assets on real exchanges.
The £1,000 Spreadbetting approach forces everyone to try to trade with small amounts for large returns; a harder task that a patient approach with a larger fund. Then to increase these earnings they look for the Holy Grail...
I deem it totally un-neccesary to start with a £1,000 unless an individual has totally thought out how they want to trade and what their style is; If it is highly-leveraged hourly charts then Yes spreadbetting is fine... However you couldn't assess whether an individual would be a good Fund trader or E-mini S&P500 trader through looking at their performance in a small account on a fake market...
Most traders on this forum seem to have that same approach; Highly-leveraged, Large % gains on an account, Aggressive growth, Day-trading to reduce overnight risk...
I think it just makes it all much harder.
I understand if this approach is taken when an individual doesn't have much money; But if you have £100,000 - I would deem it better to start investing in stocks and funds patiently and thought-out, therefore not having to carry highly-leveraged risks because small returns are nice monetarily than simply trying £1,000 in a SB account which could be totally irrelevant to most investors; Only to those who want to trade Via High-leveraged Forex, which is popular because it allows limited funds to create high returns, but that 'benefit' makes it more difficult... Hence i think most fail because their trying to do the most difficult thing with the most limited experience, but there brain-washed to think that this is the 'norm'; In reality its not, just seems the norm on this forum.
Last edited:
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Of course 67.38% of statistics are made up on the spot.
But in seriousness, I think a useful study would analyze failure/success rate by leverage (how much used).
B
Black Swan
Thanks for this...I had no idea so much 'common sense' was involved in order to become a successful trader
By the way love the patronising tone and the contradictory message in your rhetoric...
virtuos0
Well-known member
- Messages
- 423
- Likes
- 117
Oh the hypocrisy! Remember when you said the following to ADVFN?Thanks for this...I had no idea so much 'common sense' was involved in order to become a successful trader
By the way love the patronising tone and the contradictory message in your rhetoric...
"This is so wrong I dont know where to start....so I won't. "
Take a little time to muse on whether you think THAT was patronising. That was what riled me in the first place about you, and half the reason I have reacted the way I have. You reap what you sow.
To anyone still reading this train wreck, please bother to do your basic research on the general area of risk, that way you will be a step ahead of 90% of retail traders.
Have a nice day!
B
Black Swan
B
Black Swan
You missed this bit out of your well honed strategy;
Virtuos0: "Right now pretty much every market out there is going nuts and reaching either yearly highs or all time highs, hence my plan is just to short everything. I'm gonna short every equity, currency, index, and commodity. I think it should work out pretty well...."
virtuos0
Well-known member
- Messages
- 423
- Likes
- 117
I guess the sarcasm passed you by.You missed this bit out of your well honed strategy;
Virtuos0: "Right now pretty much every market out there is going nuts and reaching either yearly highs or all time highs, hence my plan is just to short everything. I'm gonna short every equity, currency, index, and commodity. I think it should work out pretty well...."
Oh by the way, by copying and pasting a comment from another thread into this thread you make yourself look like a petty child, top job!
