How much capital do you need to trade full time?

[Libertine]

For most people, I would say you need 300K to start with if you wish to stack the deck in your favor.

Let's be realistic - for most people no amount of money, small or large, is going to provide a reasonable income or indeed a profit of any kind.

For those few who are willing to spend the long hard hours analysing their market until it haunts their dreams, rigorously defining the set-up they believe will be profitable, trading it with small stakes, failing and re-defining and failing and re-defining until finally something works on a consistent basis, then repeating the whole process until a broad range of potential set-ups is in the armoury to provide a decent regular monthly income regardless of market conditions - you stand a fair chance with a lot less than 300k.

In other words, dear reader, you CAN do it. But you almost certainly won't.

 

[schoe]

More personal attacks, at least you are consistent.
Im not the longshot on elite trader, since im not on elite trader. That site is just a bunch of 24/7 flame wars. There is a "longshot" on this board, maybe that is him?

Are you sure? Strange how the longshot on Elitetrader was banned on the 28/9/04 at 2.08 pm .

Your first post 4.41 pm 28/9/04

Big coincidence. Maybe I should get the mods to check out your IP address.

 

[frugi]

Professional money managers operate differently from sole traders. Typically they will be in charge of long only, non-leveraged funds with reams of small print controlling their actions. They seek relative not absolute performance because that is what their customers want. Essentially the majority of funds are index trackers and very few beat the market because they all buy and sell roughly the same stocks at roughly the same time. They are, in the main, a bunch of overeducated, overpaid parasitic sheep, but I cannot blame them for what they do as people willingly give them their money under the illusion that they are experts destined to do better than average. They are paid handsomely almost regardless of absolute performance, unless they do really atrociously when compared to their benchmark index. They do not need to develop trading systems because they don't have to. A fund management company will run several different funds, often with hugely varying betas and objectives, so that they will always have a stellar past performer to flog to the next bunch of suckers. In the case of stock funds, especially small caps, size can affect their performance. Of course there will be the occasional exception.

That said, 30% a month consistently seems to me to be the preserve of, at best, a minuscule minority. If they exist, I'm sure they don't want the rest of us to know about it, although FWIW I fully believe that at least 5 regular posters on t2w are doing so, day in, day out.

Fortunately 5% a month just about pays the bills.

 

[Roberto]

Fortunately 5% a month just about pays the bills

I'll drink to that.

 

[frugi]

...while I edit the toast, oops

Mmm Tasmanian sparkly...

Cheers for the PM btw Roberto, very kind of you.

 

[L33bets]

Retirement

Just out of interest, for all those who say you need several hundred thousand to start trading, if i had that in my bank, i would pay off my mortgage, and retire!!!

 

[longshot666]

If what you say is true, that is quite a coincidence, but please go ahead and check IP addresses so you can prove yourself wrong. I welcome it.

More personal attacks, at least you are consistent.
Im not the longshot on elite trader, since im not on elite trader. That site is just a bunch of 24/7 flame wars. There is a "longshot" on this board, maybe that is him?

Are you sure? Strange how the longshot on Elitetrader was banned on the 28/9/04 at 2.08 pm .

Your first post 4.41 pm 28/9/04

Big coincidence. Maybe I should get the mods to check out your IP address.

 

[longshot666]

I looked around elite trader and it seems that longshot was not really banned, he just changed alias's, and he seems to have many. His latest alias is cornholio on elite trader. His longshot alias is banned but he is still on elite trader as cornholio and many other names it seems.

Besides, my registration date was 30-07-2004, so who cares if the ET longshot got banned the day of my first post, doesnt say much. But please do the IP research so we can prove your conspiracy theory false. You may want to check the ip address of "longshot" on trade2win as well to see if that is the elite trader longshot, because its certainly not me.

 

[michael_d]

Forex Trading Minimum?

My Guru has the opinion that you require at least enough money in your account to put on three trades in any currency. This is the minimum margin. Depending on how much you risk and how risk averse you are the minimum is about $5000 US. This would yield a minimum reasonable return for the average South African to make a living.

 

[henry766]

i think you missed my point trendy, yeh i bet there are allsorts of problems when your trades are too big for the mkt ( i think u mentioned when you get too big you become the market, words to that effect), let me know when you've gotten too big for the fx market !!

 

[anley]

Let Longshot have his say, he makes some good points.

Ultimatly though what many people are trying to argue, Libertine sums up beautifully;

In other words, dear reader, you CAN do it. But you almost certainly won't.

 

[michael_d]

Capital Protection and Risk

i think you missed my point trendy, yeh i bet there are allsorts of problems when your trades are too big for the mkt ( i think u mentioned when you get too big you become the market, words to that effect), let me know when you've gotten too big for the fx market !!

If you have an account of $5000 you could at best risk $1000 in any single trade. If you risk more than that you are a gunslinger! Get the point.

 

[anley]

If you have $5000 and risk anything like $1000 on any single trade you are a complete fool and have absolutely no idea what this game is really about.

Risking those sorts of percentages means that there is is an iron glad guarantee that you will lose everything overtime, and most probably a lot sooner than you think.

 

[fastnet]

Well said Anley - these are the sorts of crazy %s that bloke Champion Trader used to advocate - of course in the context of his ''workbook'' it meant that he could demonstrate the principle of compounding and how risking 20% per trade would multiply your pot many times within weeks!!

Greed, fear and hope - I've been thinking about Frugi's post earlier - excellent analogy.

In some ways you are much better off coming in with a couple of grand and losing the lot in a few weeks/days - this way you're so disgruntled you may never come back and save yourself much more in the long-tem

The main problem with this thread is that many folk are happier dreaming about the possible returns rather than treating it as a serious business where risk/reward principles certainly apply in their rawest form.

I think 20-30% per year using an EOD system an tax-free (if using SB) is very good to be honest. Where else would you get this? I also think you should be very proud to achieve anything like it. If you can't live in 15-20% of your pot per year then you'd better carry on with the 9-5 until you can.

Just my opinion. I'm also talking about Mr Overachieving trader - the minority but not the odd one-off superstar.

Again - although I think the delivery is a little ragged - Longshot has made some excellent points.

 

[Dave1971]

The main problem with this thread is that many folk are happier dreaming about the possible returns rather than treating it as a serious business where risk/reward principles certainly apply in their rawest form.

I think 20-30% per year using an EOD system an tax-free (if using SB) is very good to be honest. Where else would you get this? I also think you should be very proud to achieve anything like it. If you can't live in 15-20% of your pot per year then you'd better carry on with the 9-5 until you can.

Fastnet

I agree to an extent and similarly find some of the claims of others laughable.

However daytrading forex can readily give a (non compounded) 1% return per day on your trading bank, so allowing for the odd bad day (but not for the exceptionally good one) I would expect a return of 10% - 15% per month to be achievable.

This is what I am currently doing, albeit on a small bank and only for a few months. Do you therefore think I am doomed to failure. My per pip stake is 0.1% of my bank and my loose stop is at around 2%.

Would be interestd to hear your thoughts.

Dave

 

[fastnet]

Doomed to failure - not at all. Destined to carry on making 10-15% on yr total pot every month for much longer . . . . . probably not.

Why? I don't know except that compounding such results quickly leads to incredible, no, ridiculous figures. If your pots currently a few hundred quid this might take a year or so. If you already have £10 -100K in there it might not take too long.

Dave - if you are consistently net up at the end of each month (with a decent history of such) then you are way WAY ahead of the game. Really. Just keep on doing what you are doing. IF you have a winning system then the single next important thing is risk management. You are doomed to failure with just one of the above. Even with a winning system you will be wiped out sooner or later w/o risk management. Of course the best risk management in the world will not help a net losing system.

Play a long game and stay in the game.

bets of luck!!

F

 

[theblackmamba]

as a position trader i agree with fastnet. this is the 9th year i have traded full time. if i take out my best year (348% this was during tec rally), and worst year(this one +10.97% currently), i have averaged 36% over the other 7 years.
the previous 8 years i was at parents with no bills etc. this yeear i have left home, bought a place of my own, and started living independently. as i need a full time carer+support myself+pay tax, from now on i need to make 30% a year just to break even.
i can assure everyone when you need to make 30% a year it is a lot harder than you think. there is constant voices in my head going "i must do it, or how am i going to live", sleepless nights etcc. i regard my selef as a lucky trader as everything clicked from the start, but i can see from now on the pressure is going to be huge, just to breakeven each year.

 

[Dave1971]

Doomed to failure - not at all. Destined to carry on making 10-15% on yr total pot every month for much longer . . . . . probably not.

Why? I don't know except that compounding such results quickly leads to incredible, no, ridiculous figures. If your pots currently a few hundred quid this might take a year or so. If you already have £10 -100K in there it might not take too long.

Dave - if you are consistently net up at the end of each month (with a decent history of such) then you are way WAY ahead of the game. Really. Just keep on doing what you are doing. IF you have a winning system then the single next important thing is risk management. You are doomed to failure with just one of the above. Even with a winning system you will be wiped out sooner or later w/o risk management. Of course the best risk management in the world will not help a net losing system.

Play a long game and stay in the game.

bets of luck!!

F

Thanks Fastnet

As I said in my post the 1% return is not compounded, I have as I am sure many others have run a quick spreadsheet showing what compounding can acheive and I think it is counter productive, 'cos it shows you sailing past Bill Gates in a couple of years !!

What I am doing is allowing my bank to grow, and gradually increasing my stake at the rate I feel comfortable with, and not according to the size of my bank. I do not need to draw from my bank 'cos my salaried income can cover my domestic expenses. Therefore whilst my percentage returns will no doubt drop my capital growth will at a decreasing percentage rate, continue to rise, until it reaches my personal critical mass (i.e a figure at which a 'safe' low monthly return can be drawn and lived off comfortabley without the need to up stakes).

Thats the game plan. Bank currenty has 3 zero's should be 4 by early next year, but I am deliberately not looking beyond that yet.

Dave

 

[Dave1971]

i can assure everyone when you need to make 30% a year it is a lot harder than you think. there is constant voices in my head going "i must do it, or how am i going to live", sleepless nights etcc.

I can believe it and sympathise completely, which is why I said earlier in this thread that I would need to be very well off before I thought about giving up the cushy day job.

You are much braver than me, good luck.

Dave

 

[fastnet]

Nice one - I'm in a similar boat albeit w/o such a fantastic system!

I actually really enjoy trading and I have found from bitter experience that I can only continue to ''enjoy'' trading if I am winning overall (over 3 month period and 10-20 trades say) AND no large drawdowns.

Large drawdowns are the worse cos I start looking at them in the context of family holidays/cars/presents for loved-ones etc - can really scramble ya 'ed.

Build slow and consistently - that's my goal - boring maybe but hopefully I'll still be in the game after the fly-boys have flown too close to the sun. . .

Have a good w/e - F