Weekly income from trading - is it possible?

[jersey10]

I would like to find out what level of trading capabilities you would require to pull $500 a week from a starting trading capital of $50000.

Who would be confident that they could do this and how long have they been trading?

Are there any trading techniques that would give a high probability of being able to do this over the long term

this is my aim: $500 a week 'wage' from a trading capital of $50 000 (i.e. 1% per week). this would be after brokerage too. so maybe up to 500 a week in brokerage (10 -15 trades) therefore 2% per week.

[Trembling Hand]

So many things wrong with this thinking I don't know where to start. :(

[CFD]

In Risk Management terms 1% of your bank would be $500-, so risking $500- on any one trade you would need a risk/reward of 1/1 to make $500-. Which is fine as far as that goes. Win 50% of trades with an R/R of 2/1 you've made your $500-.

Trouble with this (apart from winning 50%) is on a good week you are going to stop winning when you have made $500- and on a bad week you are going to keep losing because you have not made $500-.

IMHO profitability is determined by the Win% and R/R. Only when these are known, can you determine how much you need to risk on each trade to make $500- a week. However limiting your risk to 1% of your bank size as per the above example is a very good start.

[julius]

quality intraday futures traders return anywhere up to 5 x account balance...

but i'm with trembling hand, focus on the process not the profits

[peter2]

Yes it can be done, Jersey10. You need to get to stage 3 trading ability.


Stage 3. Consciously competent;
- Consistent traders with positive expectancy who understand why they have a positive expectancy and act accordingly.


[Thanks MichaelD I borrowed this.]

[Birdster]

this is my aim: $500 a week 'wage' from a trading capital of $50 000 (i.e. 1% per week). this would be after brokerage too. so maybe up to 500 a week in brokerage (10 -15 trades) therefore 2% per week.

Best rethink your strategy IMO. Even at 10 trades per week, (minus brokerage and CGT) comes to approx $1500 worst case to make $500. So you look only to make $150 per trade?

I have no idea what the average is for the forum, but I day trade with less capital than $50,000 and well surpass $500 p/w (on average). And that could be wrong with the figures for you.

There are posts on this site that have different techniques/strategies explained and proofed. Studying those and other methods and playing on paper before committing $$$ might refine your strategy and maybe save you a few dollars as well, if not make you more. :)

Remember, My views expressed are not, in any form, to be taken as financial advice. I post my opinions for commentary only.

[IFocus]

I would like to find out what level of trading capabilities you would require to pull $500 a week from a starting trading capital of $50000.

TH makes a good point but I'll have a go

A step before the above for starting to trade will be what you resonate with, method, type of market, instrument, time frame etc etc.

Your results are likely to be determined by the market nothing like a weekly wage.


Who would be confident that they could do this and how long have they been trading?

If trading stocks in the ASX in the current conditions as the make churns and chops around very few if any on a weekly basis the best will wait patiently for the right moves to come which means doing nothing.

Even then they will get whipsawed if they push the wrong time frame.


Are there any trading techniques that would give a high probability of being able to do this over the long term

Ah the holy grail, there are no certainties in the market when it comes to profits


this is my aim: $500 a week 'wage' from a trading capital of $50 000 (i.e. 1% per week). this would be after brokerage too. so maybe up to 500 a week in brokerage (10 -15 trades) therefore 2% per week.

Others I am sure can give some good guidance in this area

[Wysiwyg]

In order to find the trades with higher probability of gains then market scanning software is essential.With the software you can define the parameters with your present trading experience to avoid tediously pawing over individual stock.

[MRC & Co]

Sounds like the pipe dream.

First find a trading strategy that works. Which instrument(s) you want to trade and which suit you personally. Looks like IFocus beat me too it.

Also remember, even if you can make $500pw, you are then taking all profits and end up with a depleted real capital base (initial capital, minus inflation).

Consistency is HUGE for the day trader also. You do not want multiple loosing weeks/months in a row, or it can hurt!

I would say 50k is too low to live off. If others say they can do it (where are you living, the local squat?), I would want to see trading statements before I beleive.

What platform are they using to trade (how low is brokerage, data feed etc)? How are they increasing their capital base while still living off it? What returns are they making 100%pa? Highly doubt it would be an understatement.

If so, join a prop shop and live the dream!

One more thing to mention, a strategy that is prooving very successful lately, is waiting for major divergences between the XMJ and XFJ. Lots of sloshing between the two over multiple trading day periods. A strong divergence, and its switch time. Simple, but has been effective lately.

[korrupt_1]

the short answer is yes... BUT only if you know what you are doing.

If you are new to trading, I doubt very much - with all due respet - that you will be able to achieve $500/w consitently right from the start. My advice, start small, think about the number of wins, and not how much money you could make. When you achieve a certain WIN/LOSE ratio, up your ante bit by bit...

With me, it has taken almost 2 years to reach a stage where i can say "yes I can achieve $X/wk consistently".

as with everyone above has been saying...

a) need a strategy
b) need discipline, discipline, discipline, discipline....
c) think % wins... not $ profits

With $50K... technically, $500/wk is possible if you use a leverage product.

[tayser]

$5k account balance (yes five thousand, not fifty thousand)
1:100 leverage
10 pips (net of commission) a day on AUD/JPY @ 100,000 lots (only using 20% of account balance, 10 pips = 2% of account)

equals roughly $500 per week, yes it's possible, but there are far too many other factors you need to think about - and it takes time to do it, and best not to commit real money until you're fully aware and know how to manage risk, technique and money.

^ multiply lot size and profit (AND loss!) above by 10 if you start with $50,000.

[Grinder]

tayser,

At the rsik of sounding cliche, anything is possible if you want it bad enough and your willing to put in the time and effort to make it happen. Why not paper trade to see you think it can be done.... just an idea. :sly:

[tayser]

...I have been. I lost interest in equities whilst 'paper trading' - because there are so very few free or low-cost simulators out there to train yourself on. Learning about all the aforementioned areas already discussed by everyone is best done in a demo account when it comes to FX.

[phoenix_gr]

By you using the word "wage" i will assume you want to do this as a living, i.e. no outside employment.

By this assumption you'll need living expenses, basically the entire $500 per week you make.

This means you're trying to make 26K per year, since you are living off your profits each week, there is no compounding effect (forget about capital maintenance -inflation- for now), hence your required rate of return is 52%p.a. Put it this way, high risk funds tend to get 20-30%p.a.

Judging by your OP i'd say you are not an experienced investor/trader.

In conclusion, get a job

[ROE]

I would like to find out what level of trading capabilities you would require to pull $500 a week from a starting trading capital of $50000.

Who would be confident that they could do this and how long have they been trading?

Are there any trading techniques that would give a high probability of being able to do this over the long term

this is my aim: $500 a week 'wage' from a trading capital of $50 000 (i.e. 1% per week). this would be after brokerage too. so maybe up to 500 a week in brokerage (10 -15 trades) therefore 2% per week.

2% a week return = 104% return a year.

Is that possible? absolutely not..you can be an ultra billionaire with that sort of return :D

You maybe lucky to pull it one once in a while but to keep it going on a regularly basis not much different than taking 50K to the casino.

[Trembling Hand]

2% a week return = 104% return a year.

Is that possible? absolutely not..you can be an ultra billionaire with that sort of return :D

You maybe lucky to pull it one once in a while but to keep it going on a regularly basis not much different than taking 50K to the casino.

Ok I will chime in.

Can it be done. ABSOLUTELY.

Lets say you aim is $1000 per week (data+ brokerage+ Tax+ etc) to get you $500 wage.

That's just 40 points per week on the SPI. That is no hard task for an experienced trader to average trading just 1 contract. and $50,000 would cover that no problem.

Don't give me the compounding thing you don't need to compound your account until your richer than Buffett.

jersey10. Will you be able to do it. No. Sorry, but thinking like you have stated in your first post is about as far away from the right approach as I could imagine.

[julius]

2% a week return = 104% return a year.

Is that possible? absolutely not..you can be an ultra billionaire with that sort of return :D

You maybe lucky to pull it one once in a while but to keep it going on a regularly basis not much different than taking 50K to the casino.

In actual fact it is very possible and with an extremely low degree of risk.

Consider the ~20:1 leverage of futures for example. 104%/20 = ...

Risk : variance (drawdown) is proportional to holding time. (risk is not equal to leverage)

And no, returns don't scale with account size because of slippage.

[Markcoinoz]

I would like to find out what level of trading capabilities you would require to pull $500 a week from a starting trading capital of $50000.

Who would be confident that they could do this and how long have they been trading?

Are there any trading techniques that would give a high probability of being able to do this over the long term

this is my aim: $500 a week 'wage' from a trading capital of $50 000 (i.e. 1% per week). this would be after brokerage too. so maybe up to 500 a week in brokerage (10 -15 trades) therefore 2% per week.

Its possible.

But not probable.

OK, you want $500 a week.

Simple!!

Take 26 weeks worth of wages immediately out of the Kitty.

Thats approximately $13k

That gives you 6 mths to read as much as you can, learn as much as you can about a few stocks and papertrade for a while.

When you think there are a couple of good stocks that you can see a good uptrend and believe the entry point is pretty close enter your $37k that you have left. This way, you are at least allowing some time for the stocks to move rather than relying on a small kitty to get you out of trouble consistently each week. Don't forget to set Stoplosses along the way.

Remember, you are out to preserve capital at all costs.

It also takes away alot of the stress.
Trying to daytrade on a minimum is a sure fire way to lose everything.

Cheers markcoinoz:)

[wayneL]

Ok I will chime in.

Can it be done. ABSOLUTELY.

Lets say you aim is $1000 per week (data+ brokerage+ Tax+ etc) to get you $500 wage.

That's just 40 points per week on the SPI. That is no hard task for an experienced trader to average trading just 1 contract. and $50,000 would cover that no problem.

Don't give me the compounding thing you don't need to compound your account until your richer than Buffett.

jersey10. Will you be able to do it. No. Sorry, but thinking like you have stated in your first post is about as far away from the right approach as I could imagine.
I'll chuck in my :2twocents as well.

Totally agree with TH here. Lots of folks are doing just that and more right now.

Is it easy? Technically it is much much easier than many things. You do of course need a method that works. The difficult part is mostly Psychological. Managing the mind can be a tall order.

TH has got a thread somewhere that discusses how the mind can screw up an otherwise good method and how he had to find his natural style etc. Perhaps he could post a link to that thread (I can't remember the title of the thread).

As for the compounding argument.

Day trading is a profession and you need to take out wages from your winnings. This will limit the compounding ability to a greater or lesser extent. You will also eventually run out of adequate liquidity.

Obviously you can compound it up to a certain extent, but most day traders will day trade a set amount of capital and any excess will buy scrip for the bottom drawer, rather than ramping up their day trading excessively.
The reasons for this are probably psychological as well. Trading 1 contract is different to trading 5 contracts, is different to 20 contracts, 100 contract and so on.

Just my :2twocents

[nizar]

I would like to find out what level of trading capabilities you would require to pull $500 a week from a starting trading capital of $50000.


I believe it can be done.
A few months ago I would have said impossible.

I won't say the only way but i think probably the easiest way to make that sort of money (1% per week unleveraged) is through a high frequency trading system.

So its possible but it would take a lot more than 10-15 trades.

Actually I would say this is impossible with 10-15 trades.

Because of the high frequency sort of system that is required for these sorts of returns, I would be looking at forex. Trading (ASX) stocks the brokerage would kill you.

[nizar]

As for the compounding argument.

Day trading is a profession and you need to take out wages from your winnings. This will limit the compounding ability to a greater or lesser extent. You will also eventually run out of adequate liquidity.

Obviously you can compound it up to a certain extent, but most day traders will day trade a set amount of capital and any excess will buy scrip for the bottom drawer, rather than ramping up their day trading excessively.
The reasons for this are probably psychological as well. Trading 1 contract is different to trading 5 contracts, is different to 20 contracts, 100 contract and so on.

Just my :2twocents

Great post Wayne.

[wayneL]

I believe it can be done.
A few months ago I would have said impossible.

I won't say the only way but i think probably the easiest way to make that sort of money (1% per week unleveraged) is through a high frequency trading system.

So its possible but it would take a lot more than 10-15 trades.

Actually I would say this is impossible with 10-15 trades.

Because of the high frequency sort of system that is required for these sorts of returns, I would be looking at forex. Trading (ASX) stocks the brokerage would kill you.
Nonsense!

My trading frequency is less than that (per instrument). I won't say my returns so I don't have to prove them etc. While frequency is important, it doesn't have to be 50 trades a day. (though it could be if that is the trader's style)

Why do you make definitive statements in an area where you have no experience?

[nizar]

Nonsense!

My trading frequency is less than that (per instrument). I won't say my returns so I don't have to prove them etc. While frequency is important, it doesn't have to be 50 trades a day. (though it could be if that is the trader's style)

Why do you make definitive statements in an area where you have no experience?

Does "I think probably" mean definitive to you?

[wayneL]

Does "I think probably" mean definitive to you?
How about this statement of yours:

Actually I would say this is impossible with 10-15 trades.
... which I was clearly referring to.

Looks pretty definitive to me.

At your stage in your trading career, I would be more inclined to ask questions, and seek answers, rather than making statements implying experience.

I'm not trying to be mean or rude, but such rigidness in opinion based on nothing, is damaging to both yourself and those who read; it doesn't help anyone.

Cheers

[julius]

Is it easy? Technically it is much much easier than many things. You do of course need a method that works. The difficult part is mostly Psychological.


Not sure I agree.

It's by far the hardest thing I've ever tried to learn. Maybe I haven't tried to learn much ? :p:

I would say technically it's very simple, but still very very difficult. Extremely steep learning curve.

What your actually improving at can be so ambiguous at times...

[wayneL]

Not sure I agree.

It's by far the hardest thing I've ever tried to learn. Maybe I haven't tried to learn much ? :p:

I would say technically it's very simple, but still very very difficult. Extremely steep learning curve.

What your actually improving at can be so ambiguous at times...
Well, I would say it's technically easier than building a bridge, being a lawyer, training racehorses, being a computer programmer, or even a qualified farrier.

This ain't rocket science.

Maybe we're saying the same thing: "technically it's very simple, but still very very difficult" seems to be an oxymoronic statement, yet so true.

So why is it difficult? It's gotta be psychological. Our reptilian brain wants to do the wrong thing, the exact opposite to what we know to do when real dollars are not involved. The ambiguity of improvement you mention is in both managing the inner reptile, and in the recognition of patterns... experience in other words, therefore psychological.

I'm not trying to belittle the actual technical knowledge required, but c'mon, I spend most of my time BSing on forums and playing computer games. When a trade comes up, a quick mental evaluation, a couple of clicks and I'm in... play computer games until an exit condition is hit.

Keep that reptile on a leash and technicals can be written up in probably 100 pages.

[wayneL]

PS - I'm speaking specifically on day trading. Trading options for instance, or fundamental analysis, involves substantially more technical knowledge.

[kennas]

Keep that reptile on a leash and technicals can be written up in probably 100 pages.:) LOL. I'll tell the turtles that this afternoon Wayne, and ask for some tips.

[wayneL]

:) LOL. I'll tell the turtles that this afternoon Wayne, and ask for some tips.

Here ya go:

http://bigpicture.typepad.com/comments/files/turtlerules.pdf

The complete original Turtle trading rules; 37 pages including about 12 pages of title, table of contents, intros and forewords. :cool::cool:

[Wysiwyg]

At your stage in your trading career, I would be more inclined to ask questions, and seek answers, rather than making statements implying experience.

Still finding your posts mostly informative waynel and the above sentence taught me a great deal too.

[julius]

Wayne,

On a side note : I personally think bridges are bloody fascinating, but a couple of my mates who are engineering students tell me they are simple in terms of engineering complexity. Time consuming work though.

I think you probably know more than you know... I've always found this when Ive asked traders questions. You might only be in a trade for 5 minutes of the day, but your also choosing not to trade the rest of it, while noobs like me jump in and out getting burnt.

Psychology is definitely a big part of what makes day trading hard, but I also think the tiny margin for error in trading plays a pretty big part too. What I mean is you can be doing 90% of things right and still be losing money, then finally you find a tipping point where it all starts coming together. And then you lose some more money.

Trading is fundamentally different from other jobs because you can do everything 'right' and still end up being 'wrong'. This is where the psychology comes in because the first thing your head wants to do is adjust the way you think by associating the loss with something that just happened ealier.

But you also have to account for the market constantly changing. That's the single biggest difference I've noticed with good traders, they spot the changes and adapt straight away. :2twocents

[trillionaire#1]

I tried something along these lines briefly before coming to my senses.
yes an experienced person can make a living from day trading,
but its quite likely anyone else will be eating crayfish one week, two minute noodles the next, as someone else said try paper trading first, and protect your capital:)

[nizar]

At your stage in your trading career, I would be more inclined to ask questions, and seek answers, rather than making statements implying experience.


Hi Wayne.

Yeh no worries.

I didn't mean to come across as being experienced or whatever, just expressing my opinion.

High frequency was the only way I knew it could be done.

Turns out I was wrong -- Well thanks for correcting me.

As for asking questions, well I have started dozens of threads trying to seek answers. You know that.

As for your rigidness in opinion comment, well in my time here I have gone from hardcore fundies, to blue chart breakouts, and now to mechanical systems trading. Clearly shows I have an open mind and always open to improvement and alternative trading methods.

But now I have a question from you.

Can you please elaborate on your strategy and how you are pulling 1% per week unleveraged from a low number of trades?

I don't want proof of trades of anything like that, just the overall strategy and statistics of the system.

Thanks.

[AMR]

Go back to work part time, so you at least remove the strain of "this next tick has to pay for dinner".

Start a CFD account and start trading $1 contracts for a few months. You still feel the pain of losing and the joy of winning without doing some real damage.

Spend a few hundred on a reading list.

(You mention daytrading so I assume you mean futures and forex...stocks might be a bit big)

[CFD]

but c'mon, I spend most of my time BSing on forums and playing computer games. pages.

That's what I'm doing wrong!

[wayneL]

Can you please elaborate on your strategy and how you are pulling 1% per week unleveraged from a low number of trades?

I don't want proof of trades of anything like that, just the overall strategy and statistics of the system.

Thanks.
* I didn't say how much I was pulling... it varies.
* It's not unleveraged, it's futures, but I leverage conservatively.
* I choose markets I *suspect* will yield reasonable intraday swings.

So I go for a decent intraday swing... nothing fancy, nothing nobody has ever heard of (in fact I've posted some techniques in the past). That means in the current market (in nice round achievable figures) I'm shooting for 100 Dow points, 10 SP500 points, $1 on crude futures, $10 on Gold, 50 ticks on Currency futs etc. If futures are quiet I'll find something on Nasdaq that might put in a bold move.

Sometimes I get less sometimes more, but that's what I'm shooting for. It's trend trading on a 5minute time frame (with entries off supp/res/retracements rather than breakout type trading).. finessing low risk entries on a 1 minute chart.

Indices probably average 4-5 entries a week, oil/gold/currencies maybe 8 -15 between the lot -entries between them.

That's it, no rocket science there.

[ROE]

Ok I will chime in.

Can it be done. ABSOLUTELY.

Lets say you aim is $1000 per week (data+ brokerage+ Tax+ etc) to get you $500 wage.

That's just 40 points per week on the SPI. That is no hard task for an experienced trader to average trading just 1 contract. and $50,000 would cover that no problem.

Don't give me the compounding thing you don't need to compound your account until your richer than Buffett.

jersey10. Will you be able to do it. No. Sorry, but thinking like you have stated in your first post is about as far away from the right approach as I could imagine.

Prove it show me a trader who consistently double its money every year?
if you can do it with $500 bucks why stop at $500 why not go for a few thousand or 10K because the market is big enough for you to earn a few K a week...

Because 2% is just a small number only 40 points movement. :D

Actually I will do walk the talk for you and challenge you..
I give you 50K if you can double the money to 100K you can have 35K profit and I take 15K
and if you lose my cash I just ask for 50K plus 9% interest on it, so I want my 54K back

So you cannot lose with this challenge because you can make 35K and even if you go to the bank and borrow
50K @ 10% if still pocket 30K .. after all cost 5K interest but you make 35K..

Damn easy isnt it...good easy money...license to print cash the stock market

[>Apocalypto<]

totally possible.

[Markcoinoz]

Jersey10,

Something else that i don't think anyone else has picked up on.

You were very specific in saying over the Longterm.

IMO, thats what sorts out the wheat from the chaff.

I agree that anyone can make or lose a substantial amount in this volatile market in the short term. The question is, "Can you stay the distance?"

If you had of been a trader in 2001 after the Dot.com Bubble/Burst in 2000, the market was very dead. Very little volatility. It was very difficult apart from the banks. It wasn't until September 2001 when everything changed. Volatility can be your best friend or your worst nightmare. At the time it became my worst nightmare. I lost my shirt so to speak on warrants and took me years to gain confidence again. I have been in the markets since 83.

I don't day trade anymore. However, i look for opportunities and follow the swings. Much less heartache and stress. This market is a Daytraders paradise if you are any good. The biggest risk that D/T can come unstuck is not managing the risk for each trade and not being strict in setting stop losses. A lack of discipline is a dangerous thing to have and goes against the grain of being a good D/T.

We only need to look at Margin Lending & CFD's to see how easy it is to get burnt. I don't use either.

Anyway, if you can get through the next 2years with some success
you are well onto your way of making your first Million. There are a fair few who have done it. A mate of mine started with $30k in his SMSF a few years ago.

He now has close to a Million in that account and has another trading account to make good wages. Works long hours and a good researcher of the stocks he buys. As well, he has good scanning software, a couple of computers and double screen to give him the edge. Not everyones way of trading.
You need to first find out where your niche is.

All the best with it.

I'll check in 2 years time.

Cheers markcoinoz:)

[Trembling Hand]

Prove it show me a trader who consistently double its money every year?

I never said that you can double your money every year. I said you can make $500 net each week from $50,000 no problem.


if you can do it with $500 bucks why stop at $500 why not go for a few thousand or 10K because the market is big enough for you to earn a few K a week...

Because 2&#37; is just a small number only 40 points movement. :D

Actually I will do walk the talk for you and challenge you..
I give you 50K if you can double the money to 100K you can have 35K profit and I take 15K
and if you lose my cash I just ask for 50K plus 9% interest on it, so I want my 54K back

So you cannot lose with this challenge because you can make 35K and even if you go to the bank and borrow
50K @ 10% if still pocket 30K .. after all cost 5K interest but you make 35K..

Damn easy isnt it...good easy money...license to print cash the stock market

No problem. set up a futures account With IB and I will make $1000 per week from it. Just Like I said. I didn't say you can double your money every year until you are as rich as Buffett. I said you can consistently take $1000 out from a small account day trading.

But lets make it more interesting. I want ALL the profit AND If I do it you have to match the profit to me $ for $ from your own mouth. If I lose any I will give you five times the loss to you + your 9% interest

Before you take it PM me with your email so I can said you some statements with what you may be up for in loses.

[MRC & Co]

Well, I would say it's technically easier than building a bridge, being a lawyer, training racehorses, being a computer programmer, or even a qualified farrier.

This ain't rocket science.

Maybe we're saying the same thing: "technically it's very simple, but still very very difficult" seems to be an oxymoronic statement, yet so true.

So why is it difficult? It's gotta be psychological. Our reptilian brain wants to do the wrong thing, the exact opposite to what we know to do when real dollars are not involved. The ambiguity of improvement you mention is in both managing the inner reptile, and in the recognition of patterns... experience in other words, therefore psychological.

I'm not trying to belittle the actual technical knowledge required, but c'mon, I spend most of my time BSing on forums and playing computer games. When a trade comes up, a quick mental evaluation, a couple of clicks and I'm in... play computer games until an exit condition is hit.

Keep that reptile on a leash and technicals can be written up in probably 100 pages.

ha ha ha ha, AMEN!

[Trembling Hand]

Stuff it big mouth. I will do it with a $1000 dollar account. I will give you a measly $1000 dollars to open a crappy little CFD account and I will average $500 from it over 2 months.

Last year I did this for 3 different friends to help them get out of some Financial problems by doing the exact same thing. I give them $1000 dollars they open an account, I trade it for a couple of weeks. we split the profit.

Have a look for yourself here are the statements.

So big mouth same deal I give you the money. You double any profit to me that I make. If I loss I will give you $5000.

[Trembling Hand]

wait there is more.

[Trembling Hand]

So ROE send me your account number. I will get my lawyer to type up an agreement and we should be ready by middle of next week I would think. Just make sure you have a spare couple of thousand to give away. As the example above shows it can be done no problem $1000 to $50,000 in 7 days. I don't think I will repeat that but either way make sure your ready to pay up. $500 net a week for sure.

[nizar]

TH,

You continue to amaze me.
Keep up the good work son, you are one hell of a gun trader.

[prawn_86]

Wow TH that is amazing. With results like that you could pretty much have any material possesion you wanted ;)

A question for yourself or Wayne or any other full time traders.

How long did it take before you were confident in going live with the method you use?

How many years of learning/paper trading did it take until you were consistently profitable?

[ithatheekret]

I don't trade all the time . When I do , it can be intense and a break is very nice . But I've always found it easier to wait for the trade , sometimes no matter how much patience it takes .

The break from being active can make it hard to get back into sync though .

I must admit the latest sequence of events has narrowed down the field and there's not so much to keep up with .

I got cramps after laughing at the latest JPM comments on valuations and resource stocks though , thought they saved that sort of rhetoric for utilities :D

[xyzedarteerf]

, I spend most of my time BSing on forums and playing computer games. When a trade comes up, a quick mental evaluation, a couple of clicks and I'm in... play computer games until an exit condition is hit.

Keep that reptile on a leash and technicals can be written up in probably 100 pages.

hey WayneL what kinda games do you play?? i was thinking of starting a thread regarding pc games traders play during the day or on slow days. ;):D

[BentRod]

Very impressive TH!:eek:

Thanks for posting!

[MRC & Co]

5000% in 7 days, WTF!

Was this done by scalping indices?

[Trembling Hand]

5000% in 7 days, WTF!

Was this done by scalping indices?

Yep

[MRC & Co]

Fukcin insane!

Im in a bit of financial trouble, want to lend me a hand :D

[ROE]

So ROE send me your account number. I will get my lawyer to type up an agreement and we should be ready by middle of next week I would think. Just make sure you have a spare couple of thousand to give away. As the example above shows it can be done no problem $1000 to $50,000 in 7 days. I don't think I will repeat that but either way make sure your ready to pay up. $500 net a week for sure.

Sure I cant lose either way ...

If you double the money I take 15K profit, you can keep your 35K
if you cant double it.. I take my 50K plus 9&#37;. :D

Draw up the contract, you have 12 months to do it

[julius]

...money talks, bullsh*t walks

[MRC & Co]

ROE is a long-term fundamental investor, TH a scalper.

Completely different strategies.

Thats all it is.

Each to his own.

[Trembling Hand]

Sure I cant lose either way ...

If you double the money I take 15K profit, you can keep your 35K
if you cant double it.. I take my 50K plus 9%. :D

Draw up the contract, you have 12 months to do it

no the deal is I put up the money.

You open an account in your name with that money.

If I cannot make $500 average per week for the period I will pay you $5000.

If I make more than $500 per week average you have to pay me that amount as well as me keeping the profit.

So if over 8 weeks I make anything less than $4000. You get $5000

IF I make over $4000 I keep all the profit but you MUST also match that profit. For example if I turn the account into $50,000 I keep that as well as you also paying me $50,000.

I think that's only fair. What have you got to lose ??apparently I cannot even make 2% per month I'm giving you a huge advantage I am willing to start with a mere $1000.

Come on it will be interesting to make a fool of me surely?? (and make $5000)

[wayneL]

wait there is more.

Ahahahaha! 5 Stars mate.

I'm gonna save this for future day trading doubters.

[tayser]

Scalpers R Us.

I'm loving the fact that someone's just validated the conclusion I came to not long ago: that scalping is a technique that is highly portable amongst tradeable instruments!

[Timmy]

I'm only going to speak for myself here, but I imagine my thoughts resound with others as well.

TH has done a huge favour to those wanting to achieve consistent daily or weekly success in the market by showing what is possible. Sometimes the biggest hurdle in wanting to achieve something is knowing it is even possible. By posting his results and posing the challenge TH has effectively changed the question (again, speaking for myself) from "can it be done?", to "can I do it?". That's a big difference.

Wayne, you said "I'm gonna save this for future day trading doubters." Definitely, please do.

Thank-you very muich TH, from a learner.

[tayser]

Wayne / TH: have either of you ever scalped any of the large volume stocks on the ASX - be it buying/selling the underlying equity or through CFDs?

[metric]

You need to first find out where your niche is.
:)

is this the best bit of advice posted so far?

[Trembling Hand]

Wayne / TH: have either of you ever scalped any of the large volume stocks on the ASX - be it buying/selling the underlying equity or through CFDs?

Have tried. I have a go with BHP when I have some firm ideas but its not really scalping more intraday swing. The problem with doing it with stocks is the larger move you need to cover your brokerage. With Futures you need less than 1 tick to cover your cost(spread aside) and same with Forex. With BHP for example you need a 6 cent or so just to cover brokerage(depends on your size and broker)

[Timmy]

TH, I left my last post with the question "Can I do it?"

The next logical question is "How can I do it?" and your comments here are of direct relevance to that:


Have tried. I have a go with BHP when I have some firm ideas but its not really scalping more intraday swing. The problem with doing it with stocks is the larger move you need to cover your brokerage. With Futures you need less than 1 tick to cover your cost(spread aside) and same with Forex. With BHP for example you need a 6 cent or so just to cover brokerage(depends on your size and broker)

Keep this stuff coming, what a great thread.

[wayneL]

Wayne / TH: have either of you ever scalped any of the large volume stocks on the ASX - be it buying/selling the underlying equity or through CFDs?
I'll echo TH's comments, but add that it is much more feasible on Nasdaq stocks. The brokerage is way cheap, Margin is 25%, you can easily short and liquidity is enormous.

There are masses of day traders who never venture outside of the Nasdaq who do just great.

[tayser]

Nasdaq times are bollocks if you live in AUS though :(

[IFocus]

Nasdaq times are bollocks if you live in AUS though :(

I remember saying that to a trader here in the West that traded the US S&P and got told to get over it........LOL:D

[tayser]

It's better for you over there :D but yeah, if I didn't have a FT job Id suck it up and do the opens no worries.

[Trembling Hand]

About night trading would you want a brain surgeon come to you and say you can have the day shift do your brain operation or you can have the night shift do it at 3 am in the morning.

What would you pick in relation to decision making and skill performance of people working through the night.

All things being equal you would choose day shift every time.

I know I use to own bakeries. People make silly mistakes when they work night hours but live in a world that runs during day hours.

[Markcoinoz]

Have tried. I have a go with BHP when I have some firm ideas but its not really scalping more intraday swing. The problem with doing it with stocks is the larger move you need to cover your brokerage. With Futures you need less than 1 tick to cover your cost(spread aside) and same with Forex. With BHP for example you need a 6 cent or so just to cover brokerage(depends on your size and broker)

Hi TH,

I take my hat of to you.

That was a classic showing that it is possible.

Well done.

Again, I would say it is highly improbable.
Not everyone can cut it even though you have shown that you can do it.

Put me in trading Indices or FX I will guarantee you I will lose the lot for you in 7 days. Lol!!

However, if it were playing share Warrants like BHP, I would probably do fairly well over a period of time.

In the early 90's i played the roulette tables around Australia for a year with only $10k in my pocket. I had a ball during that time. Everything was payed for by the Casinos including hotels and airfares. After a year I got bored and got sick of going to the same venues over and over again. Also a bit of a lonely life. Could everyone do that?

I would suggest no.

Again, it really comes down to the niche area of the market that suits your risk or comfort zone.

Hope you continue to scalp the markets well.

Cheers markcoinoz:)

[korrupt_1]

I will do it with a $1000 dollar account.

not bad TH... i honestly think you are a grumpy, arrogrant, rude bastard... but will results like, who cares what other ppl think? you have the results is all that matters. :)

well done.

out of curiosity, from $1k to $50k... do you continually re-invest the winnings or do you set a maximum 'bet' and try to win as many scalps as possible?

have you ever though about writing a "scalping-for-dummies"??? you could do well :D

[Trembling Hand]

out of curiosity, from $1k to $50k... do you continually re-invest the winnings or do you set a maximum 'bet' and try to win as many scalps as possible?


That's is the WHOLE argument. Trades don't continuously compound their returns.

Trader continually TAKE money from the market. I am pretty sure on the SPI I am close to the limit of volume I can do with this system. Maybe I could double it with some changes but thats probably it.

The first hour of trade on the SPI I can do 50 or more trades of 2 to 5 SPI contracts that, up to that point is about 2% to 3% of the market. How much more volume could I do?

On the HSI I am only trading 1 contract about to go to 2 but anything over 5 and it would be very hard to scalp.

[tayser]

But aren't there two different phases we're talking about here? Compounding would only occur during phase 1 - using korrupt's $1k to $50k & FX as an example:

Phase 1: Start up through to optimum account balance for income generation.

Start with $1000 and build your way up to $50,000. Start with lot sizes around 20,000-30,000 (25% account balance) and compound with each win until the account balance is roughly $50k - however long it takes (weeks, months, years!)

Phase 2: income generation.

At the start of each week you have $50,000 and at the end of the week you withdraw the difference between what you have and $50,000 (that is of course if you're positive for the week!).

As an example, $50,000(AUD) buys 50,000,000 AUD/JPY @ 1:100 - there's no way in hell you could trade that amount on a retail ECN, 10,000,000 is far more plausible (my estimates on EFX are that 20,000,000 would be the ceiling for that pair based on what you see in the market depth). 10,000,000 = pip value of roughly $1,000 AUD (~90,000 yen), 50 pips (net of commission) for the week = $50k that you end up withdrawing on the Friday.

[Trembling Hand]

Yeah for sure.

I got to say(in spite of my challenge to ROE) there is no way that you should trade with $1000 thinking its going to go anywhere but down.

When I have done it its because I had a lot more $$ to burn just not in that account. And I know I can do it now because I know my system. That's a long way away from hoping you can turn $1000 into $50,000 while still learning. I hope I haven't misled anyone on that just using max drawdown and 1% max stop you realise its not going to happen. You really need to start with $50,000 min.

[prawn_86]

I got to say(in spite of my challenge to ROE) there is no way that you should trade with $1000 thinking its going to go anywhere but down.

What if you were just working on slowly compounding the account?

Such as myself and Tayser have been paper trading in the Cyrox forex thread.

If you can consistently make your pip target after X months of paper trading, and then meet the targets when you go live, I can see why you cannot start with 1k. Just dont expect fast/quick returns thats all.

[Trembling Hand]

As an example, $50,000(AUD) buys 50,000,000 AUD/JPY @ 1:100 - there's no way in hell you could trade that amount on a retail ECN, 10,000,000 is far more plausible (my estimates on EFX are that 20,000,000 would be the ceiling for that pair based on what you see in the market depth). 10,000,000 = pip value of roughly $1,000 AUD (~90,000 yen), 50 pips (net of commission) for the week = $50k that you end up withdrawing on the Friday.

Just a note this example blows the most important trading rule. The 1&#37; max account per stop loss.

I would think thats not the best position sizing. Margin should be ignored in position sizing calculations. Its the 1% rule that counts.

[Trembling Hand]

What if you were just working on slowly compounding the account?

Such as myself and Tayser have been paper trading in the Cyrox forex thread.

If you can consistently make your pip target after X months of paper trading, and then meet the targets when you go live, I can see why you cannot start with 1k. Just dont expect fast/quick returns thats all.

The FIRST and most important rule is that 1% rule. If you can stick to that then I guess thats OK. BUT you are really going to be up against it. Just too hard to take any draw down, every bad day is going to be a step closer to blow out and there is going to be to much pressure to leverage up every little gain you get. Which will probably result in giving that back quick smart.

With small accounts the focus goes from process to $ results and thats the worst thing to do when you are trying to actually make $.

[prawn_86]

Thanks TH, appreciate the feedback :)

When I can consistently hit my target paper trading then I will re-evaluate as to how much capital I need when I go live.

[julius]

scalping FX like you guys do is different because you've got more flexibility with position sizing

you lose that when trading futures

[el caballo]

Classic thread - first time I have read through it. Does this forum have a special section where "classic threads" or posts be stored for posterity? It would be a shame for future uninitiated users to miss it.

[theasxgorilla]

On the HSI I am only trading 1 contract about to go to 2 but anything over 5 and it would be very hard to scalp.

Give a yell when you reach capacity and I can set up a trading room for you on this side of the world and you can trade the US during normal hours :)

[Trembling Hand]

Give a yell when you reach capacity and I can set up a trading room for you on this side of the world and you can trade the US during normal hours :)

Haha!

I have said somewhere here recently that at the end of the month I always get out the calculator and do the figures on transferring my results to the ES(S&P500) where there is probably always 500 contracts on the bid/ask. Instead of the 3 to 20 on the SPI.

We all need to dream ;)

[Trembling Hand]

Draw up the contract, you have 12 months to do it


no the deal is I put up the money.

You open an account in your name with that money.

If I cannot make $500 average per week for the period I will pay you $5000.

If I make more than $500 per week average you have to pay me that amount as well as me keeping the profit.

So if over 8 weeks I make anything less than $4000. You get $5000

IF I make over $4000 I keep all the profit but you MUST also match that profit. For example if I turn the account into $50,000 I keep that as well as you also paying me $50,000.

I think that's only fair. What have you got to lose ??apparently I cannot even make 2% per month I'm giving you a huge advantage I am willing to start with a mere $1000.

Come on it will be interesting to make a fool of me surely?? (and make $5000)

Well ROE has yet to agree to my challenge with odds greatly in his favour.


...money talks, bullsh*t walks

Where has the expert on other peoples methods gone??

[Frank D]

Trembling hand,

Why don't you use your trading strategy on actual futures instead of CFD's.

On a 2 contract trade because of the spread, you are potentially $100 bucks worse off per trade. ie SPI

[Trembling Hand]

Trembling Hand,

Why don't you use your trading strategy on actual futures instead of CFD's.

On a 2 contract trade because of the spread, you are potentially $100 bucks worse off per trade. ie SPI

I do. I hate the CFDs they are rubbish. But it was just an excise to help friends with little $ outlay from me. Instead of having to put up $10,000 in a futs account.

I've done 76 round trips on the SPI so far this morning. (the real thing not CFDs)

[Frank D]

Being that active, i'm sure we exchange hands a few times in the trading day ;)

[Timmy]

Haha!

I have said somewhere here recently that at the end of the month I always get out the calculator and do the figures on transferring my results to the ES(S&P500) where there is probably always 500 contracts on the bid/ask. Instead of the 3 to 20 on the SPI.

We all need to dream ;)

TH, can I nitpick ... 500 on the bid/ask is a bit optimistic ... on the ES reliably a 100 or so either side (reliably in the sense that there is until you need there to be...) but of course widly variable.

I think you should consider asxgorrila's idea... I am sure there is a city in Europe/US that can match Melbourne's charms ...

Enjoying this thread thanks all.

[el caballo]

TH,

Not sure if this is possible, but IG using Level 2?

[trend rider]

seems there are many views to this subject, so here's another just to totally confuse you. I started out in options in 2003, while working a 60 hour week, within 6 months, I had lost enough of my origional bank, that I worked every weekend for the next 2 years just to recoup some of those losses. In 2005, I started trading again using a different instument / penny stocks/resources. On the first trade I made more than the entire 2 years of working weekends. In that year, I had 33 consecutive winning trades, averaging 26%. I excuded 4 of those trades as they were exceptional returns/ 263%/352% /228%/512%. THIS WAS THE WORST THING THAT COULD HAPPEN,Why, because after not having 1 losing trade that entire year, I could not accept losses and after making profits of this magnitude one begins to expect every trade to make huge percentages. The next year I had 8 consecutive losses.
My point here is trading is mainly in your head. If your expect to make a consistant wage you are placing to much pressure on yourself.You cannot force trades, they are either there or they are not there. If you get into a trade just because you want aother $300 this week, to make up your $500, you're highly likely to lose $600 and be down $300.Think how this would make you feel. Advice: take the pressure off youself /get a part time job/think in percentages rather than dollars, and above all, if this is money you cannot afford to lose wait until you have the money.GOOD LUCK:)

[Trembling Hand]

Being that active, i'm sure we exchange hands a few times in the trading day ;)

yes. It would be funny to see at the end of the day who took who's money :mad:

Although I slow down a lot after the first hour & half then go onto the HSI after lunch.


TH, can I nitpick ... 500 on the bid/ask is a bit optimistic ... on the ES reliably a 100 or so either side (reliably in the sense that there is until you need there to be...) but of course widly variable.

I think you should consider asxgorrila's idea... I am sure there is a city in Europe/US that can match Melbourne's charms ...


Yes, Some time next year I'm planing to spend a couple of months in Paris & New York and trade the ES or one of the US Futs. But as Wayne said right back at the start of the thread. Its a different psychological game.


Trading 1 contract is different to trading 5 contracts, is different to 20 contracts, 100 contract and so on.

Plenty of work yet to do before I start dreamin.

[CFD]

I've done 76 round trips on the SPI so far this morning. (the real thing not CFDs)

To think you have all that success from the market noise that I spend all my time trying to eliminate!

[jersey10]

I do. I hate the CFDs they are rubbish. But it was just an excise to help friends with little $ outlay from me. Instead of having to put up $10,000 in a futs account.

I've done 76 round trips on the SPI so far this morning. (the real thing not CFDs)

Yes this is a great thread i have learnt a lot from reading it. Well done to whoever started it!! Ha ha.

Trembling Hand where do you live i'm coming to stay at your place for a couple of months. I reckon my transformation would get a huge boost from doing that and watching you work.

When i said a wage of $500 / week, i meant as an average so maybe i would have been better stating it as $26000 over 12 months from a starting capital of 50K.

Would it be the case that more traders would be confident of making $26000 profit for a twelve month period rather than $500 per week from a starting capital of 50K in either scenario?

[korrupt_1]

Would it be the case that more traders would be confident of making $26000 profit for a twelve month period rather than $500 per week from a starting capital of 50K in either scenario?

Again... dont think $$$... think %%% wins....

Paper trade, and work out how many times you get a winning trade vs a lossing one.

Once you know your win/lose ratio, getting a $$$ is as simple as multiplying it up.

ie if you could win 10 times and lose 2 times - consistently... does it matter if you get 8x $5 or 8x $50 or 8x $500????

The important thing to note is that 10 wins and 2 losses. Nett is 8 wins.

Once you start thinking about $$$,... it messes with your head and emotions starts to kick in.

[Rockhoundnz]

Haha!

I have said somewhere here recently that at the end of the month I always get out the calculator and do the figures on transferring my results to the ES(S&P500) where there is probably always 500 contracts on the bid/ask. Instead of the 3 to 20 on the SPI.

We all need to dream ;)

TH, have you traded the YM, and if so, how do you compare it to the SPI? With 3 to 20 contracts on the bid/ask it sounds about a quarter to a tenth the size on the YM. Just interested to know, as long term I'd like to consider markets other than the US, simply for my lifestyle, if nothing else.

[Timmy]

ie if you could win 10 times and lose 2 times - consistently...

Do this, or get close to it, with a good $win:$loss, and good daily turnover, and you have the keys to the kingdom

[CFD]

I don't see that happening, it's certainly not on my horizon.

Profit comes from managing the trade to get the S/L to B/E whenever possible, so the average loss becomes less than 1 R/R. Get an average win of 2 R/R and you have a positive expectancy even when the S/R drops below 50% (which it frequently does).

[Trembling Hand]

TH, have you traded the YM, and if so, how do you compare it to the SPI? With 3 to 20 contracts on the bid/ask it sounds about a quarter to a tenth the size on the YM. Just interested to know, as long term I'd like to consider markets other than the US, simply for my lifestyle, if nothing else.

I have had more success trading the YM than the ES(but absolutely nothing to get excited about) I think because it moves a a bit more similar to the HSI. that is a bit more oscillation around the bid/ask. The SPI compared to anything else is pretty slow. I mean it does 20,000 contracts a day the YM will do that before the cash opens.

But still I think it probably doesn't matter we still get the same types of daily ranges and there plenty of volume there for 99&#37; of people and price patterns.

[Rockhoundnz]

I have had more success trading the YM than the ES(but absolutely nothing to get excited about) I think because it moves a a bit more similar to the HSI. that is a bit more oscillation around the bid/ask. The SPI compared to anything else is pretty slow. I mean it does 20,000 contracts a day the YM will do that before the cash opens.

But still I think it probably doesn't matter we still get the same types of daily ranges and there plenty of volume there for 99&#37; of people and price patterns.

Sounds good - so you also trade the Hang Seng as well, is that right? Thanks for the info - I'm definitely interested in anything that acts like the YM.

[AMR]

TH, how did you get you stops under marketmaker for the Hang Seng? Usually it moves so fast that if i needed a stop it's already too late to enter.

[Trembling Hand]

With my finger.

[Timmy]

Don't know ahything about market maker. Are there pre-set bracket order options?

[Trembling Hand]

Don't know ahything about market maker. Are there pre-set bracket order options?

No way that would be something that helps a trader. Why would they do that:cool:

[Timmy]

Just some wild and crazy notion TH...I must have read it somewhere.

At the very least CMC offers "if done" orders:
From the CMC website
http://www.cmcmarkets.com.au/en/content/trading_software/risk_management.jsp

If-Done order

An If-Done order is a combination of two orders and may be useful if you are unable to watch the market all the time but want to participate in a market move in your favour and/or exit a move against you.
EXAMPLE OF A IF-DONE ORDER
A Share CFD is trading at $5.00 and you wish to buy if the price falls to $4.90 but exit if it continues to fall to $4.70. You would place an order to buy the Share CFD at $4.90; if done, sell at $4.70 on stop loss.

[CFD]

IG do the same so I guess it's a MM thing. They also make it easier to exit a trade, just select close as opposed to creating a new trade in the opposite direction.

[professor_frink]

Just noticed this thread. Interesting reading:)

Trembling Hand, a couple of questions if you don't mind-

Which markets were you trading when you went nuts with the cfd account?

What kind of &#37; risk per trade where you exposing the account to?

[Trembling Hand]

Mostly HSI (80%)

To start with way, way to much as a simple account % (10% per trade!!). BUT as I have said I had plenty more $ elsewhere. All trading was scalps & I knew I had the expectancy to push it a bit.

So it can be done but "don't try this at home" ;):)

[professor_frink]

Mostly HSI (80&#37;)

To start with way, way to much as a simple account % (10% per trade!!). BUT as I have said I had plenty more $ elsewhere. All trading was scalps & I knew I had the expectancy to push it a bit.

So it can be done but "don't try this at home" ;):)

Thanks TH.

Na, wouldn't even consider trying to replicate those kinds of results, I know my limitations. 1k to 50 in a week or so is a little beyond me at the moment. Would be fun to try to see how hard I could push a small account when I next have some spare $$ though:)

[Trembling Hand]

Actually I have to give you a big thanks. It was you that brought the HSI to my attention. Its amazing how the results change when you find a market that suits your style.

So thank you. Check is in the mail. :p:

[professor_frink]

Actually I have to give you a big thanks. It was you that brought the HSI to my attention. Its amazing how the results change when you find a market that suits your style.

So thank you. Check is in the mail. :p:

No worries. Don't worry bout the check. You can buy me a beer next time I'm in Melbourne:drink::D

[Trembling Hand]

You can buy me a beer next time I'm in Melbourne:drink::D

For sure on the beer or 3. You think I can trade like this without developing a drinking problem. :D

[doctorj]

Its amazing how the results change when you find a market that suits your style.
It's great to see people find success through information shared at ASF. Now where do I send the log in details for my $1,000 CFD account? :D

[professor_frink]

For sure on the beer or 3. You think I can trade like this without developing a drinking problem. :D

And this is also an on topic part of this thread. "Weekly income from trading - is it possible" isn't quite the full question that needs to be asked. "weekly income from trading - can it be done without turning you into a drunk"

And if that is the question, I'm gunna have to go with NO:D

[MRC & Co]

"weekly income from trading - can it be done without turning you into a drunk"

And if that is the question, I'm gunna have to go with NO:D

ha ha ha, I have to agree! I know traders who have gone back to work due to that problem alone!

They only triggered a couple trades a day, and all mechanical. So they only spent about 10 minutes a day actually "trading"..........and the rest drinking!

I myself, found earlier in the year, when the weather was fine, that I was sitting in my little tradestation next to the open window, sipping beers. Which as weeks went by, became a few too many! Since then, cut them completely..........until wkends! :D;)

[julius]

I myself, found earlier in the year, when the weather was fine, that I was sitting in my little tradestation next to the open window, sipping beers.

Sounds like a pretty good problem to have if you ask me

[MRC & Co]

Sounds like a pretty good problem to have if you ask me

Yeh, was until I started turning upto my football (outdoor soccer) training and matches (indoor midweek matches) half slashed :eek:

Its really a bad habbit to keep a lid on, probably exacerbated by the fact that you spend most of your hours by yourself.

[doctorj]

Some of you might find the free 20 day trial at http://www.saxobank.com/ interesting to play with for fx/cfds/indices/commodities

[jersey10]

Yeh, was until I started turning upto my football (outdoor soccer) training and matches (indoor midweek matches) half slashed :eek:

Its really a bad habbit to keep a lid on, probably exacerbated by the fact that you spend most of your hours by yourself.

Hi MRC & Co,

I notice you are 25 and list your occupation as a trader. Like you i play football (in Brisbane). Unlike you my occupation is not listed as trader however i would very much like that to be my occupation. How have you managed to earn a living from trading by the age of 25?

Jersey10

[korrupt_1]

Being inspired by TremblingHand's efforts from $1k to $50K in 10 days... I decided to theorectical see if it's possible to make a killing in one day's trading based on a $1k deposit that you are willing to GAMBLE away in the hopes of multiplying it up.

Notes:

Starting capital: $1000
Trading product: IG Markets Australia 200 mini ($5/contract)
Date of trade: Friday, 4th April 2008
Technicals: RSI, Bollinger, Moving Average (8, 21) and P-SAR (not all indicators shown on graph)



I did not take into account the spread of 2 points.
Initial trade was 10 minis ($50/point) which can be done with a $1000 margin if a stop loss of 20 points was set.
Maximum position is 50 mini contracts ($250/point). Not sure if there would be liquidity for higher number of contracts. (I have never personally traded >50 mini contracts, so I do not know)


My theorectical trade list is below. I've given reasons as to why I entered and exit a trade. The chart is the intraday 1 minute tick of April 4th 2008.

The result was, as you can see, a staggering $28,400 in about 7 hours. To risk $1,000 would be well worth the effort. However, having said that, I think this kind of result may not be possible as it's likely that emotions will take over during the trades and you will either close out a positon for a loss due to it going the wrong way or taking profits too soon and not maximising potential gains (fear & greed arguement)

Anyway, please do not try this as this is only theorectical. If you do, you might as well give me the $1000. Atleast one of us will be happy :D

[MRC & Co]

Hi MRC & Co,

I notice you are 25 and list your occupation as a trader. Like you i play football (in Brisbane). Unlike you my occupation is not listed as trader however i would very much like that to be my occupation. How have you managed to earn a living from trading by the age of 25?

Jersey10

Hi Jersey,

I gained some inheritance a few years back and have built up my capital base while working. Spent every cent I earned, however, kept all trading profits.

For the moment, I am covering costs plus adding to the capital base off trading, so no need to work. However, I expect to go back to work in the future and only trade part-time.

Unless of course I can score a job at Propex which is my goal and will find out the result in June I beleive.

[nitpra]

Korrupt 1

In your theoretical trading example, what instrument were you using (for trading )

[tayser]

^
Trading product: IG Markets Australia 200 mini ($5/contract)

a CFD over the S&P200 by the looks.

[Plasmo]

There are easier ways of making $500 a week... most of them involve getting a job.

[MRC & Co]

There are easier ways of making $500 a week... most of them involve getting a job.

Depends how you define "easier".

But thanks for the insight! :rolleyes:

[nizar]

Unless of course I can score a job at Propex which is my goal and will find out the result in June I beleive.

Propex??

[MRC & Co]

Propex??

Proprietary trading firm. Actually operates as one, unlike most of these "contribute your own capital" new age "prop shops".
TH would know a lot more about it than me should you have any questions.

Cheers

[Trembling Hand]

There are easier ways of making $500 a week... most of them involve getting a job.

Really. Like what. Getting a job? where you income, hours, holidays, sick leave, over time, 'career' development, earning capacity, recognition, environment, collegaues, profit and Life are all controlled by someone else.

I for one have never considered that easy.

[Andy_aus]

Shut down by TH :P

[dojara]

Really. Like what. Getting a job? where you income, hours, holidays, sick leave, over time, 'career' development, earning capacity, recognition, environment, collegaues, profit and Life are all controlled by someone else.

I for one have never considered that easy.

OH come on then Trembler please oh please let us in on how you do it atleast give us all some hope on where to start so we can be on our way to reproducing even a fraction of the amazing returns your generating from your scalping. All I've read from your posts and your blog is how your consistently nibbling at tiny profits but hundreds of them each day to make a sizable profit. I would do anything to learn this and I'm pretty sure most people here feel the same. Rather than tell us how horrible working for a job is which we already know how about telling us mere mortals just some of the setups you use I mean surely its not that proprietary. After all successful scalping is the one style that truely requires the strictest of disclipine so its not necessarily the setup that makes it a success but the disclipine so let us in on the setup so we can concentrate on becoming better at disclipine. That would be the greatest contribution you can give to us I believe if you really wanna help. Ok so I'm a struggling trader but is it because I have bad disclipine or just a bad system I have no way of knowing maybe you can give us your system so we can atleast know for sure we are off on the right foot and can become better at trading. I'm even willing to pay for your tuition let me know how much its worth I'm sure most people would consider taking it up also. After reading so much from here and ET I'm pretty convinced you got this style of trading down pat so I'm only interested in how your doing it since your private and not like some of the other bullsh*t posts in EliteTrader. Trust me I'm doing whatever I can to replace my 'easy to make 500$/wk job' just to learn this art so please spare some thought and give us some direction.

[zengin]

Well said Dojara , how about it T H .
I am also willing to pay for my education I am sure there will be others who will pay for a education which in return can make us earn some money and hopefully dont have to go back to work one day.

[Trembling Hand]

Gee!! I'm just a punter that has found a style that gels with me. :o


After all successful scalping is the one style that truely requires the strictest of disclipine so its not necessarily the setup that makes it a success but the disclipine so let us in on the setup so we can concentrate on becoming better at disclipine. Ok so I'm a struggling trader but is it because I have bad disclipine or just a bad system......

Actually I disagree with both points. First scalping is all about execution. You gotta know when to work the spread or when to hit the market. If you are always hitting the market for entry & exit you are going to be giving away 0.3 to 1 R per trade and that is going to kill you over 100 trades. BUT If you always work the spread you run the risk of missing the fast trades that are running hard and make the day a good one, the trades that turn into 10 R or more winners. As well if your always working the spread you will always get the bad trades as it goes through you & straight to your stop. :mad:

The second thing I disagree with is the discipline thing. If you are doing something that YOU know works AND fits with YOUR personality I just don't see you needing discipline to stick to it. I have said it somewhere else here...

Don't confuse a old market cliche with a problem. If your struggling and have kept decent data of your trades at a minimum you already have all the info you need to eliminate 75% of you trading mistakes. And if they come down to discipline your trading is equivalent to eating brussel sprouts. That is your mum has served you them, you know they are good for you but you just don't like them. And you are never going to be good at doing something you don't like.

Best Tip I have is find what you like. Get creative and then learn and practise it until your doing it in automatically, without any need for discipline. Find your chocolate ice-cream and stop forcing Brussels sprouts down your neck.

I might do a blog post about this in a day or two but thats my rank for now been starring at the DOM since 10:00 this morning (thats my choc ice-cream ;) ) Maybe a follow up tomorrow after some sleep.

[prawn_86]

Dojara and Zengin,

I notice you are both relatively new members, so please take some advice.

TH has been kind enough to show his results publicly, without being asked.

If you could be kind enough to not ask for his specific method or "secret" then that would be appreciated. Posters like TH are valuable members of the ASF community, however if every lesser trader (myself included) started bugging him to know how he did it, it would be rather annoying as im sure you can appreciate.

Plus its quite rude to ask someone thier specific trading style. They will disclose it if they wish to, but it should not be asked/expected by other members.

Hope this clears things up.

Prawn

[barney]

Dojara and Zengin,

I notice you are both relatively new members, so please take some advice.

TH has been kind enough to show his results publicly, without being asked.

If you could be kind enough to not ask for his specific method or "secret" then that would be appreciated. Posters like TH are valuable members of the ASF community, however if every lesser trader (myself included) started bugging him to know how he did it, it would be rather annoying as im sure you can appreciate.

Plus its quite rude to ask someone thier specific trading style. They will disclose it if they wish to, but it should not be asked/expected by other members.

Hope this clears things up.

Prawn


Hi Prawn,

In laymans terms:

"If TH told you he'd have to kill you" :D


There was no ill intent meant by the boys I'm sure (I felt the same way). Most of us around here who are struggling for a working method have been impressed with TH's no nonsense approach.

[Trembling Hand]

Guys its all fine. The secret is......... there is no secret!

I will post what I think are the "secrets" to my trading later. But you are all going to be disappointed. Mostly it comes down to money management, niche finding & practise.

Oh also be warned you may not like what you are about to hear. And watch out for the men in black helicopters. They are coming to get you. ;)

[brty]

Hi,

I agree with Prawn, There is no way in the world TH should be just giving out his method.

It has probably taken quite a deal of time, effort, and expense to get to the point where his method jells with his personality and tolerance for risk.

It's like saying to Leonardo da Vinci, now that you have perfected your painting, I'll have one thanks.

Imagine that 500 people read and tried to copy TH's method of scalping the SPI, exactly. The market is not thick enough for everyone to do this.


The positives of TH's posts are that it can be done. So, go and find your own methods that work for you.

bye

brty

[wayneL]

Best Tip I have is find what you like. Get creative and then learn and practise it until your doing it in automatically, without any need for discipline. Find your chocolate ice-cream and stop forcing Brussels sprouts down your neck.
Here's the real gem in the whole thread.

For instance, I totally suck at scalping... haven't got the concentration to stick to one chart and rip it up all day. But I'm pretty good at picking up intraday swings and can monitor 3 or 4 markets, plus my option trades.

TH's message is find your niche and develop that. Some probably shouldn't go anywhere near day trading and would be far more successful swing or trend trading. So be it.

FWIW

[brty]

zengin,

There are as many different styles of trading and results as you can possibly imagine. If one person is successful with one of them, it does not mean that others will be.

Take the example of the Turtles. They all learned the same method at the same time, yet some became fantastically successful, others said that it didn't work.

If you pay money to find out a good trading system, it does not mean you will be successful with it. You could end up spending a great deal of money on a lot of really good systems, but not make any money.

You are better off reading, studying, trying a few things on a very small scale, trying again when it all looks too hard, having a break, retrying, keep learning, keep studying....
Eventually you will come across something that works for you, that you are happy with, that you can trade confidently with. Just remember to always keep the ability to play.

bye

brty

[MRC & Co]

Take the example of the Turtles. They all learned the same method at the same time, yet some became fantastically successful, others said that it didn't work.



Actually, the ones that "said it didn't work", are the ones who did not follow the trading plan and set-ups.

They lacked DISCIPLINE, there is that word again that TH doesnt beleive in. Which I still think is of paramount importance. Perhaps not to some, but still to the masses. I think its inherent in human psychology to think you can always find a way to do it better. Make bigger returns. Hence, the importance of telling yourself to remain loyal to your trading plan. Of course, some will tinker to try and increase that expectancy.

Just my opinion.

[brty]

MRC,


Actually, the ones that "said it didn't work", are the ones who did not follow the trading plan and set-ups.


That was my point.

[MRC & Co]

MRC,



That was my point.

Yes, sorry, wasn't meant to sound like I was having a dig.

Just stating that even though they KNEW it would work (however, I beleive one thought he was not being told everything), they lacked the discipline to stick too it. Its just a word I think is important for many traders, perhaps not the seasoned veterans (TH, Wayne in this thread), but for most here who are starting out (starting out can last years or decades for some). Even once you know you have a positive expectancy and are happy/content with that, it can still take effort to ensure you are disciplined. Of course, applicable to a discretionary approach. Not so for a mechanical approach. Anyways I hate the semantics behind most of these arguements, this is my opinion from experience (my own and other traders I know) and from study of some seasoned professionals themselves.

Horses for courses.

[prawn_86]

I tend to agree with MRC here.

Even with the scalping method i am demoing, i sometimes struggle with the discipline.

I know the method can be succesfull, it is just up to me to pick the best entries and not overtrade...

[Trembling Hand]

They lacked DISCIPLINE, there is that word again that TH doesnt beleive in. Which I still think is of paramount importance. Perhaps not to some, but still to the masses.

MRC how are you going to get good at something that you don't like? that you need discipline to stick to.

Does an elite musician need discipline to practise? No they don't want to do anything else.
Or an elite sports person need discipline to train? No training in the cold rain is play.

If you need discipline to do something you are NEVER going to enter the FLOW state that is essential for expertise development. You are going to be in the same state of mind as a kid forced to do homework or an adult forcing himself to eat enough green vegs.

Discipline is not the difference between elite performance and the masses. Its the connection between person and the performance, the feed back loop.
Which creates a multiplier effect that is the difference between normal learning and enhanced development that makes expertise.

IMHO. ;)

[MRC & Co]

I think that is discipline taken way out of context :eek:

I am not talking about sticking to something you dont like.

I am talking about having the psychological discipline to stick to something you know works, without altering to try and increase expectancy.

Here is a quote from the famed Gary Smith: "My losing months result not so much from being out of synch with the rhythm of the market, but from psychological miscues, which could include anything from fear of pulling the trigger to over-trading". - hence, psychological discipline. He did not following his trading plan within these months, despite KNOWING it had been effective nearly every month for several years! This man LOVED and BREATHED the market, much as many here do. Inclusive of myself.

IMHO ;)

You may not need as much discipline, because it may be inherent in your genetic make-up, but for many discretionary traders, discipline is still a vital tool in the game.

[kingie_d]

I think both of you are correct.
The beginner at anything (trading, sport, their job etc) needs discipline.
They need discipline to learn (how to trade their plan, how to kick a footy properly, how to re-loom those electrical wires etc) both theory and practical. The discipline part is important until someone gets really good at doing whatever it is that is important.
That, I think is where motivation comes in and takes over. When someone is really good at their thing, then discipline isn't so important because they will do what they need to do naturally. They then need to motivation to become one of the 'elite' (traders, sportsmen, worker etc).
Combining the two is what will make someone really good at what they do and continue to improve.

my :2twocents

[korrupt_1]

Imagine that 500 people read and tried to copy TH's method of scalping the SPI, exactly. The market is not thick enough for everyone to do this.


wouldn't that add liquidity to the system? for example, if TH's method showed a BUY signal, all 500 would buy on that signal, the inevitable result is that prices will be pushed higher?

[prawn_86]

wouldn't that add liquidity to the system? for example, if TH's method showed a BUY signal, all 500 would buy on that signal, the inevitable result is that prices will be pushed higher?

There would not be enough liquidity in the market, hence driving prices hgher as you suggested.

This would then cause the 'system' to not work, due to the fact that the market has changed, due to the vast number of people using the exact same method.

All theoretical of course

[MRC & Co]

There would not be enough liquidity in the market, hence driving prices hgher as you suggested.

This would then cause the 'system' to not work, due to the fact that the market has changed, due to the vast number of people using the exact same method.

All theoretical of course

Yes, fallacy of composition I beleive.

Check out Black-Scholes formula example.

Though, doubt it would ever happen. That example of TH seems to have sent the pollyanna on a rampage (sorry Chops, had to steal that one)! :D

Even if everybody knew TH trading methodology, I'm sure the application would be various.

[Trembling Hand]

Even if everybody knew TH trading methodology, I'm sure the application would be various.


Yes. In my little old opinion my method is of little importantance to everyone. What thinking works in my head will make another persons head schitzophrentic. :nuts:

But here it is. Take a good dose of the do no harm line as far as money management goes and religiously keeping and tracking results to ALWAYS have something to work on. Either repeating the positive or avoiding the negative. Very simple charts patterns mostly 1 min candle. also 5 min and 15 min for bigger view (and helps to fill up my 4 screens)

Absolutely nothing fancy about the chart patterns. Simple HH, LL, Support & resistance etc. AS far as indicators BolBands and a couple of EMA(20& 50) & Volume, very important.

BUT with all that said I can trade 30 or more times without looking at a chart. Probably my biggest edge is reading the DOM. I would think I have had close to 8000 hours staring at the DOM. How do I put that in writing? All the patterns I have internalized and the reactions to them are automatic. Without any angst over the action needed. Catch a falling knife no prob, Standing in front of a freight train, often. take a 0.5 R loss hundreds of times a day. A 2 R loss yep about 10 times a day.

And that is back to my brussels sprout v choc ice-cream example. You ain't going to get anywhere if you haven't found your niche. If I had to tell you or make you watch a DOM for 8 to 10 hours a day for years then trading off the DOM isn't for you.

Hope you can see that my method is of little importance to anyone else. There is no secret just basic trading rules & practise.

[MRC & Co]

Brilliant TH.

K.I.S.S rules. Including finding your niche and becoming an expert in your given market(s). Tracking results important also.

That one post basically summarises most books out there from expert traders.

[dojara]

well thanks Trembler for the input as I have been really trying to get good at this scalping ever since I had my first taste of it back in late jan when it was easy to scalp the SPI as everything was dropping like a tonne of bricks. Made a few grand while demoing this method on my CFD provider in a few hours then lost it all and more over the next few days. But I caught the bug and feel this is a style I'm suited to as I have loads of free time :D.

Now I'm trying to learn all about basic price patterns like you mentioned here mainly HH/HL and support/resistance. I've been following the popular AHG method at http://www.elitetrader.com/vb/showthread.php?s=&threadid=99283
which is all about riding intraday swings using basic HH/HL patterns. Thats how I'm scalping now just waiting for HH/HL or LH/LL and breaks of support/resistance.

I've also read up on trading off the DOM using the ratio of bid volume to ask volume as discussed in the 'Scalping My Way with ACV' thread over at
http://www.elitetrader.com/vb/showthread.php?threadid=68098
This is based on the premise that the market tends to trade towards size. ie if the ratio of volume in the ask is about twice that on the bid then you would initially expect price to go down since there 'appears' to be more selling pressure. However the reverse happens in that the market will move towards the higher offers since the markets exists to facilitate trade so since there are more volume on the ask then price will have to rise to maintain liquidity.

Anyway enough of me blabbering just would like to know if you can shed some more on how you trade off the DOM alone. I know this is asking too much but like I said this would suit my trading style or like your analogy this would be my Rocky Road icecream. Even if you've internalized most of it can you still atleast walk us through just some of the things you were looking at the time you made a trade. I can understand you not having any angst over pulling the trigger every time since you've already proven to yourself the system works so you can more easily catch a falling knife if it turns out that way. I also dont think if you share this to others it would eventually take out any edge it has since your really trading off noise and if the method works on something as liquid as the S&P500 e-minis then it really would have a very minimal impact even if hordes of traders are taking the same signal.

[Trembling Hand]

Made a few grand while demoing this method on my CFD provider in a few hours then lost it all and more over the next few days. But I caught the bug and feel this is a style I'm suited to as I have loads of free time :D.

For true scalping you have to use the Futures to get fills. You simply cannot develop a system scalping CFDs, your are down right from the entry. I would say if your system Target is any less than 10 times the spread you are at a big disadvantage using CFDs. (in spite of the CFD example I posted :rolleyes:) That is if you are really scalping. I would classify scalping as a target of 1 to 3 times the spread and a stop = to the spread.


I've also read up on trading off the DOM using the ratio of bid volume to ask volume

I'm not so interested in whats sitting in the DOM but rather what is hitting the market and what is being pulled. Just a note my avg time in a SPI trade is less than a min & 25 sec on the HSI. And that is greatly skewed higher by just a couple of keepers.

[Timmy]

Probably my biggest edge is reading the DOM. .
You can't trade like that.



Catch a falling knife no prob,. .
You can't trade like that.



Standing in front of a freight train, often,. .
You can't trade like that.



Now, given that you are, it is great to see see someone succeeding against the commonly accepted (and rarely questioned) 'wisdom'. I hope to join you there someday TH. Good to see you beating all the can'ts (he types, carefully checking the spelling).

[Trembling Hand]

Now, given that you are, it is great to see see someone succeeding against the commonly accepted (and rarely questioned) 'wisdom'.

There are lots of good R:R setups trading against the accepted 'wisdom'.


Good to see you beating all the can'ts (he types, carefully checking the spelling).

LOL

[alwaysLearning]

Its possible.

That gives you 6 mths to read as much as you can, learn as much as you can about a few stocks and papertrade for a while.



what does papertrade mean in this context? Is one not still trading by electronic means such as etrade.com.au etc?

Or does papertrade mean that you are not using a computer software program to track stocks in more detail so that you see changes to stock in real time?

[Trembling Hand]

what does papertrade mean in this context? Is one not still trading by electronic means such as etrade.com.au etc?

Or does papertrade mean that you are not using a computer software program to track stocks in more detail so that you see changes to stock in real time?

It means taking pretend trades. Can be as simple as writing down your entries & exits on paper or using a real time simulator.

[alwaysLearning]

It means taking pretend trades. Can be as simple as writing down your entries & exits on paper or using a real time simulator.

Cool, thanks for the explanation.

I'm going to play with pretend trades for at least a year before I get down and dirty with investing my hard earned wages.

There appears to be a lot to learn hence the one year time frame.

I especially want to get good at analysing charts and more of the maths side of things along with finding out what the best predictors are for success for a given trade.

[kennas]

This thead seems to have concentrated on 'trading', which is fair enough considering the title.

Let's not discount the possibility of making an income from 'investing' also.

I have been a full time 'investor' for 3 years with no signs that I will not be able to continue as is, into the future. I think YT is probably in the same situation, and will not need to find a 'real' job from here on in. It will depend on your personality I feel as to which type of business (investing or trading) works for you, but you may need to try both to find your niche.

[tech/a]

This thread seems to have concentrated on 'trading', which is fair enough considering the title.

Let's not discount the possibility of making an income from 'investing' also.

I have been a full time 'investor' for 3 years with no signs that I will not be able to continue as is, into the future. I think YT is probably in the same situation, and will not need to find a 'real' job from here on in. It will depend on your personality I feel as to which type of business (investing or trading) works for you, but you may need to try both to find your niche.

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed.
TH admitted that without these the results were very average.

The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.

On to your point about investing.
I closed T/T (my own account) last year and those returns on investment were substantial.If I were living solely off of the income Id still be going---bored to death but still going.

Each have their way of trading the markets as we see them,and from what we have gained and are gaining as experience.
Nothing is necessarily more right than another.(If its profitable).
As Howard Bandy says we must find our own Objective Function---mines not infront of a screen reading M/D but more so set and forget conditional orders,something I never knew was viable till recently.

[Trembling Hand]

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed TH admitted that without these the results were very average.

Very Average are your words. It was still $500 bucks profit with out the big hits after brokerage in a day, is that very average?


The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.


I would disagree. Unless of course taking a couple of thousand out of the market reliably day in day out on avg, no matter what the market is doing is not making money. :p:

Buy the way concentrating on one method doesn't exclude participating in another ie momentum trading or investing.

[Timmy]

risk is absolutely minimised

taking a couple of thousand out of the market reliably day in day out on avg

I think these two points are intricately linked.



Each have their way of trading the markets as we see them,and from what we have gained and are gaining as experience.
Nothing is necessarily more right than another. (If its profitable).

Spot on there Tech.

[professor_frink]

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed.
TH admitted that without these the results were very average.

The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.

Where would you say the money is to be made then tech?

[tech/a]

The money is made from R/R and frequency.
The aim is to increase R/R (minimising loss is important in the overall calculation of return to risk over many trades),and increase frequency.
If you can increase frequency of outlier moves then you'll have the "Holy Grail"
Volatility becomes your friend.

Let me explain this a little clearer.
If TH can find 200 moves of 1 tick in a day then he's happy.
If he could find and trade 190 moves of 1 tick and 10 of 10 ticks or more
he'd be happier.
Frequency may dictate that your only going to be able to trade as TH does taking a tick or 2

So

Higher R/R
Increased Trade Frequency
Then Increased Capital on each trade (Or number of contracts)
Then add leverage (which you already have with Futures)
Then Compound and use profits.
This maximises return.
Really this is what we should all be aiming for.

TH
"Average" compared to when they are included.

[Trembling Hand]

TH
"Average" compared to when they are included.

Tech I'm not sure if I'm on the right track but,

The daily profit from that scatter chart was $4500 I think total and just under $500 without the 10 or 12 outliners included. (after brokerage)

The outliners are a result of being "in" the market a lot. Some just go past my target almost straight away and then I just trail a stop. Now If I could just find out which ones they are before I trade ;)

[PolarBear]

Hi All,

So this is my first post here - so I have absolutely no credability :( .. but we all have to start at some point or another.

I have read with interest the threads about traders international and this thread, and wanted to ask a couple of questions to draw from the experience here in this room.

A bit of background... I'm only new to trading, have been reading everything i could get my hands on over the past 3-4 months. This probably doesn't sound like a long time, but i can usually pick things up pretty quickly... i'm and aero engineer, phd, etc, and am good with programming and numbers..
I've looked into heaps of indicators and strategies, and downloaded ninja trader to do some simulations.

The eminis thing from traders international sparked my interest initially, but as i've read on your forum, and through my dealings with affiliate programs in the past, i can see the intention for them is to make money off their affiliate program...
anyway, i'm gettign off topic... so, onto my questions....

Also, I have gotten the past 10 years worth on 1 minute intraday data for ES S&P500 futures, and written programs to convert that and imported into ninja trader to investigate indicators and strategies via backtesting... I'm also in the process of coding up some neural networks (did a lot of this in my phd years) to look at data and try to learn patterns to perhaps indicate trades (not sure on this at the moment).

Some factors in my thinking at present:
- I chose the emini S&P500 futures market as it's got good volume, liquidity, etc
- only trade in the open market (8am-4pm)
- perhaps don't trade around news announcement times

SO, my questions are:
- does anyone do backtesting on their strategies like what I'm talking about (I noticed TremblingHand that you had some ninja trader plots on one of your posts - do you use this for testing?)
- is backtesting startegies over a 10 year timeframe for trading S&P500 futures valid - ie: has there been any big events that would say make testing strategies at particular times irrelevant to the market at the moment (I have data from 1998-2008)?
- I wonder from what i've read in this forum regarding scalping, and going short/long for small periods of time, whether/why if people have particular things they look for before trading, why this can't be totally automated?
(but i guess if this existed then someone would be cleaning up - maybe they are??)
- leads to... if it's not an entirely mechanical process based on indicators, then what do people think are the outside influences (obviously how well the top 500 US companies are doing.... anything else?)?

Anyway, that's probably enough of a rant/questions for now.

Thanks again - and very interesting and informative site.

cheers
Daniel

[Trembling Hand]

Welcome Daniel.
Lots of people here back test and run systems like you have indicated. I don't back test. My trading provides all the info I need. I do test for patterns that I "frame" ideas around but my trading is discretionary.

And I don't use indicators. Price and volume (and there patterns) is all I'm interested in.

there is some very experienced system traders here that you can ask question to.

As for a automated scalping system I can tell you the smaller the Time frame the greater the frequency will need to be and then execution become much more important. (paying the spread for a 20 tick target is nothing but paying the spread for a 8 tick target will kill you)
That is if you mean scalping, as in doing 10 to 50 round trips a day. Not sure how that can be accommodated into a high frequency system especially if its based on an backwards looking indicator. But they are out there. If you are sharp enough they are paying $1 mil a year for physic PhD etc on Wall Street to do the same thing.

[PolarBear]

Thanks for the reply TH.

One thing, would you be able to explain a little more what you mean by: "paying the spread for a 20 tick target is nothing but paying the spread for a 8 tick target will kill you". In particular 'paying the spread'

As I said I'm new to this game, and I don't really follow what your saying here.

thanks in advance,
Daniel

[Trembling Hand]

Thanks for the reply TH.

One thing, would you be able to explain a little more what you mean by: "paying the spread for a 20 tick target is nothing but paying the spread for a 8 tick target will kill you". In particular 'paying the spread'

As I said I'm new to this game, and I don't really follow what your saying here.

thanks in advance,
Daniel

At any time there is a difference between the price you can buy at and sell at. With the ES its 0.25 of a point. If you are using Market orders to enter and exit and your target is only small you are losing 0.5 points of the move or 2 ticks.

If your target is 8 ticks thats 25% of the move and going to make what looks like a profitable system in back testing disastrous in practice. But if your looking for 20 or more ticks its not going to effect you so much. Also you have to know that that spread takes from your profits and ADDS to your loses.

What size move were you looking at trading?

[julius]

Hi Daniel,

Couple of thoughts:

Futures markets are saturated with algorithmic trading models. These aren't all neccessarily designed to profit from small price movements, but they still dominate small timeframes. You also have discretionary scalpers like Trembling looking out for these kind of patterns in the order book.

Backtesting results are difficult to verify because of the effect of slippage on performance. Brokerage is also very significant because of trade frequency.

If you have access to there are some interesting articles related to this in the finance journals.

[PolarBear]

Cheers, thanks guys for the responses.

I do have a slippage variable that I can include in the backtesting for the reasons you are both suggesting.... At present I have this set at 0.5 which I'm assuming is reasonable (PLEASE correct me if this is incorrect)....

I have observed in my siimulations that it's a LOT easier to make profits on a system when that slippage parameter is set to 0.

So the long and short of it, is that I *think* i'm on the right track - just need to keep testing stuff.

TH, thanks for that explanation.


What size move were you looking at trading?
As far as size, i'm still experimenting. With the sims I'm doing i've put in profit targets and stop losses as inputs, so I can optimize each strategy and work out what the best levels are....
Although at present these are fixed. I want to test putting in trailing stop losses and move up my profit target for trades that continue through past the profit target.. i'm still thinking on ideas for this.

cheers,
d

[Timmy]

I do have a slippage variable that I can include in the backtesting for the reasons you are both suggesting.... At present I have this set at 0.5 which I'm assuming is reasonable (PLEASE correct me if this is incorrect)....



IF that slippage is 0.5 (half a point, i.e. 2 tics) in the ES then I would think that is more than enough in amounts up to around 150-200 (rough figure), on average.

p.s. Good input Daniel - on this thread and others, thanks.

[MACCA350]

WOW,

I've been reading through these forums for a couple of weeks and this thread has simply floored me.

Absolutely amazing Trembling Hand!!

We have a large amount of cash that we are looking to invest, hence why I've been reading this forum.

Trembling Hand, does your method work for larger investments(ie $500k+) or is it only freezable for smaller amounts?

Also, is this your personal investment or do you take on investors?

cheers

[tech/a]

Need more be said.

[MACCA350]

Need more be said.
Thanks for the welcome:D

cheers

[Trembling Hand]

We have a large amount of cash that we are looking to invest, hence why I've been reading this forum.

Trembling Hand, does your method work for larger investments(ie $500k+) or is it only freezable for smaller amounts?


Mostly No. I trade from 1 to 6 contracts at a time and that only requires about $150,000 to stick to reasonable money management. The markets that I trade (SPI & HSI) are pretty thin to scalp so any more than that would require me to change my method. BUT that is what I am working on now. A method to use my scalping execution to build bigger positions and work in and out of them. I am looking forward to the challenge of swinging a much bigger position.;)



Also, is this your personal investment or do you take on investors?

No. As you can see I'm doing OK with my own $'s. BUT you never know maybe......

[MACCA350]

Mostly No. I trade from 1 to 6 contracts at a time and that only requires about $150,000 to stick to reasonable money management. The markets that I trade (SPI & HSI) are pretty thin to scalp so any more than that would require me to change my method. BUT that is what I am working on now. A method to use my scalping execution to build bigger positions and work in and out of them. I am looking forward to the challenge of swinging a much bigger position.;)



No. As you can see I'm doing OK with my own $'s. BUT you never know maybe......Thanks for the reply:xyxthumbs

I have nothing but respect for yourself and others that have the ability increase capital at such rates I could only dream about. There is no way that I could even attempt such a feat.

I have only tried some paper trading on ASX and increased 400k to 488k(and sold a couple of the big winners) and dropped 200k to 186k in the last few days. And thats about the extent of my learning so far :o

I am looking for an investment in about 2 months and really have no idea where to start. We have spoken to a financial adviser from our layers firm and will seek some advise from him when the time comes.

I already have Westpac Broking setup and will probably set aside some of the funds to have a crack myself but as for the rest I am looking for somewhere to invest that will surpass the average interest accounts and investment funds. I have been searching for companies that perform aggressively but I have found it difficult to find such companies(or even where to look) on my own. I suppose the financial adviser may be able to shed some light here.....maybe

Anyway I was quite amazed at what returns some of you are able to achieve that some of us could only dream of......my hat is off to you all :bowdown:

cheers

[Trembling Hand]

I am looking for an investment in about 2 months and really have no idea where to start. We have spoken to a financial adviser from our layers firm and will seek some advise from him when the time comes.

I suppose the financial adviser may be able to shed some light here.....maybe


Actually my opinion about Fin Adviser is that they will not give you any info about out performing anything. At best they can help spread some money around a couple of asset classes that may or may not hit a winner.

I would look at a private client broker with a track record. The last thing you should probably do is rush in with a heap of cash and start trading.

[MACCA350]

Actually my opinion about Fin Adviser is that they will not give you any info about out performing anything. At best they can help spread some money around a couple of asset classes that may or may not hit a winner. Those were my thoughts about financial advisers also based on the kinds of returns that were mentioned in the initial meeting.


I would look at a private client broker with a track record.So that's what they're called :bonk:
Are there any that stand out?
I've heard 'Interactive Brokers' mentioned on the forum. I just found this list (http://www.asx.com.au/professionals/participants/brokers_offering_private_client_services.htm) on the ASX website, would they constitute the majority of private brokers or are there others that should be considered?

............If this discussion is not appropriate please let me know before I get the stick...........


The last thing you should probably do is rush in with a heap of cash and start trading.Absolutely, any investment in my own stock trading would be a small amount that I'd expect to lose.

cheers

[Andy_aus]

Correct me if im wrong but interactive brokers is mainly for execution. What i think TH is referring to is a private broker who will give you advice.

[nathanhulls]

Interactive Brokers is a brokerage who provides individuals and businesses with brokerage accounts and trading accounts - I think the private client broker TH is talking about is more like a company who will manage your investment for you...?

[tech/a]

TH is speaking of a Full Service Broker.

[white_goodman]

TH is speaking of a Full Service Broker.

sounds like it takes the fun out of it