A Daytrading Plan (financials only)

[earth_imperator]

What do you think of this daytrading plan (simulation of finances only)?

Assuming a month has about 20 trading days, and trading US equity options
using a relatively small acct of initially $10k, and possibly using some basic auto-trading.
It targets to make on average only about 2% every second trading day.

Abbrs:
sc          : starting capital
pp          : period%
n_per_month : periods in a month
pl%_tm      : PnL% this month
pl%_tot     : overall performance% (ie. basis sc)

sim_acct_perf(sc=10000.00, pp=2.0000, n_per_month=10.00, add_sub_amt_per_month=0.00, months=12):
gross_pl%_per_month=21.8994
month          sc               ec               pl_tm  pl%_tm           pl_tot    pl%_tot
  1         10000.00         12189.94          2189.94   21.90          2189.94      21.90
  2         12189.94         14859.47          2669.53   21.90          4859.47      48.59
  3         14859.47         18113.62          3254.14   21.90          8113.62      81.14
  4         18113.62         22080.40          3966.78   21.90         12080.40     120.80
  5         22080.40         26915.88          4835.48   21.90         16915.88     169.16
  6         26915.88         32810.31          5894.43   21.90         22810.31     228.10
  7         32810.31         39995.58          7185.27   21.90         29995.58     299.96
  8         39995.58         48754.39          8758.81   21.90         38754.39     387.54
  9         48754.39         59431.33         10676.94   21.90         49431.33     494.31
 10         59431.33         72446.46         13015.13   21.90         62446.46     624.46
 11         72446.46         88311.83         15865.37   21.90         78311.83     783.12
 12         88311.83        107651.63         19339.80   21.90         97651.63     976.52

Can one take some better/higher parameters?

Any other/better alternatives?

 

[Millionaire]

With access to high leverage it is possible to take 10K to 100K in a year.
But the results for each month are likely to vary, some months much better than others with some losing months in there as well.

Unlikely to make a consistent percentage each month (22% in your case). Not unless you have a holy grail trading system.

Having said that, perhaps you can make money every month selling options, without the risk of an eventual big blowup..

 

[earth_imperator]

With access to high leverage it is possible to take 10K to 100K in a year.

In that above example it is even slightly higher (ec=$107k), I hope you didn't overlook that small fact

But the results for each month are likely to vary, some months much better than others with some losing months in there as well.

Unlikely to make a consistent percentage each month (22% in your case). Not unless you have a holy grail trading system.

Understood. Do you mean when trading manually?
Can auto-trading (ie. program trading) not help in this case?
(Since a bot can do much more trades per day than a single human trader manually ever could do.)

 

[Millionaire]

In that above example it is even slightly higher (ec=$107k), I hope you didn't overlook that small fact
Understood. Do you mean when trading manually?
Can auto-trading (ie. program trading) not help in this case?
(Since a bot can do much more trades per day than a single human could do.)

Im not an expert in options trading.
But i do know you can get a high win rate selling options, so maybe you can make money every month, hopefully without the risk of blowing up eventually. Thats the tricky part.

I have a long back test for my automated futures trading system. I can see the dispersion of my monthly results easily.

If you don't have back test data. You could run monte carlo simulations, if you have an idea of your win% and average winner and average loser size. And make sure to also throw in the odd large loser trade into the simulation as well.

 

[ValeryN]

Can auto-trading (ie. program trading) not help in this case?
(Since a bot can do much more trades per day than a single human trader manually ever could do.)

Auto-trading does help with executions consistency and increases the number of opportunities you can take. Though, more trades typically means a broad coverage of markets and shorter timeframes. Shorter timeframes are more noisy and often have amazing backtest results that fall apart in real live due to higher than expected execution costs (slippage, commissions, no fill or partial fills on would be winners).

1% a day is extremely ambitious and will likely come with expected 50-90% drawdown, at least for automated systems. Exceptional discretionary trader can probably pull it off with less DD.

If you're aiming for consistent DAILY returns, IMO you will have to be selling premium, which is generally spoken of as "it works well till you get a big outlier that wipes you out". Or you would have to find/exercise a robust edge 20+ times a day. Which is nearly impossible for retail trader.

 

[earth_imperator]

Auto-trading does help with executions consistency and increases the number of opportunities you can take. Though, more trades typically means a broad coverage of markets and shorter timeframes. Shorter timeframes are more noisy and often have amazing backtest results that fall apart in real live due to higher than expected execution costs (slippage, commissions, no fill or partial fills on would be winners).

1% a day is extremely ambitious and will likely come with expected 50-90% drawdown, at least for automated systems. Exceptional discretionary trader can probably pull it off with less DD.

If you're aiming for consistent DAILY returns, IMO you will have to be selling premium. Or you would have to find/exercise a robust edge 20+ times a day. Which is nearly impossible for retail trader.

Yeah, it's intended for doing mainly options selling (Put selling in a CashAcct).

Ok, these answers show that it's not that easy to make 2% every 2nd day.
Thx everybody.

Similar result when using 1% per day:

sim_acct_perf(sc=10000.00, pp=1.0000, n_per_month=20.00, add_sub_amt_per_month=0.00, months=12):
gross_pl%_per_month=22.0190
month          sc               ec               pl_tm  pl%_tm           pl_tot    pl%_tot
  1         10000.00         12201.90          2201.90   22.02          2201.90      22.02
  2         12201.90         14888.64          2686.74   22.02          4888.64      48.89
  3         14888.64         18166.97          3278.33   22.02          8166.97      81.67
  4         18166.97         22167.15          4000.19   22.02         12167.15     121.67
  5         22167.15         27048.14          4880.99   22.02         17048.14     170.48
  6         27048.14         33003.87          5955.73   22.02         23003.87     230.04
  7         33003.87         40270.99          7267.12   22.02         30270.99     302.71
  8         40270.99         49138.26          8867.27   22.02         39138.26     391.38
  9         49138.26         59958.02         10819.76   22.02         49958.02     499.58
 10         59958.02         73160.18         13202.16   22.02         63160.18     631.60
 11         73160.18         89269.32         16109.14   22.02         79269.32     792.69
 12         89269.32        108925.54         19656.22   22.02         98925.54     989.26

 

[MacBookProHo]

Assuming a month has about 20 trading days, and trading US equity options
using a relatively small acct of initially $10k

It targets to make on average only about 2% every second trading day.

A trader can truly make as much as they want from the market, but that's assuming, of course, they have excellent understanding and timing of the trade.
But knowing the future...is the billion dollar question everyone wishes to know,

 

[ValeryN]

How does your simulation of drawdown look like?

 

[earth_imperator]

How does your simulation of drawdown look like?

Such analysis missing yet...

But do you know this trick regarding "smoothing-out" or "erasing" a bad DD?
Just double-down to halve the relative loss (ie. the percentage loss).... Voila!

 

[earth_imperator]

A trader can truly make as much as they want from the market, but that's assuming, of course, they have excellent understanding and timing of the trade.
But knowing the future...is the billion dollar question everyone wishes to know,

Of course the Holy Grail every trader tries to find.
In my world-view time-travel and looking into the future is impossible, so it's not an easy task to predict the future.