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Exactly; + ditto for your other post= on an additional stream/streams of income. May want to plant a garden+ like the bumper sticker said '' WILL DUCK HUNT for food'' LOL-true
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Any advice for a soon to be full-time trader?
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Exactly; + ditto for your other post= on an additional stream/streams of income. May want to plant a garden+ like the bumper sticker said '' WILL DUCK HUNT for food'' LOL-true
,,Thanks, this is a good post full of good info.
When you say:
" where a successful signal will cascade up several time frames giving you huge reward (like 5x-10x) relative to risk."
Can you please expand on that - what sort of signals are you referring to? Thanks.
Yeup. My firm has been using it on one of our portfolios. We just started a month ago. Heck, I came to Elite Trader, as I was looking up information about them. That's how I ended up here.
But we're not using it to attract money or anything. Besides, our Broker / FCM does not allow read-only to Fund-Seeder, so our data is being entered manually. We're not really using them the way other people may be using them. Our thoughts were ... woah ... this is free, and thus we're using it A) To double check our math on our Sharpe Ratio and Sortino Ratio, and other performance metrics B) Drill down to a daily periodicity to get those statistics. Our firm measures the statistics as they are produced on a monthly time-frame ... to a monthly grid ... as is just about every other firm out there. We calculate all our metrics based on the number that goes in the box at the end of the month. The nice thing about Fund - Seeder is 1) It's Free and 2) it allows us to drill down to that daily periodicity to see the sort of risk we're running into INTRA-month
If it's your goal to use it to raise capital? That's cool ... just know that any serious investor with serious capital behind them is going to want to see at least 3 years of performance, and will want you to be able to explain the strategy in a Quantitative way, and what you do to mitigate risk for your MAE's ... and when you expect to see those MAE's
As they should ...
Thank you for your reply, raVar.
Well, I'd use it to both track performance/build a track record and also the possibillity of raising capital at some point in time.
Why 3 years? Is that some kind of industry standard? It seems a bit arbitrary to me. Trading style and frequency should also be part of the evaluation, IMO.
Let's say some trader were trading a low frequency long only strategy during 2011-2014 with 10 trades per year while another high frequency long/short day trader were executing 1200 trades per year through both market rises and falls and successfully so.
I'd be far more interested in the latter trader and say it's a lot less likely he were lucky compared to the guy who simply went long stocks during a very bullish market period.
I'd in fact be very skeptical in investing my money on the first guy, while I'd be very interested in the latter guy and might not even need to see 3 years of data if he had a diversified strategy that's profitable over a wide range of market conditions.
Well, I'd use it to both track performance/build a track record and also the possibillity of raising capital at some point in time.
Why 3 years? Is that some kind of industry standard? It seems a bit arbitrary to me. Trading style and frequency should also be part of the evaluation, IMO.
Let's say some trader were trading a low frequency long only strategy during 2011-2014 with 10 trades per year while another high frequency long/short day trader were executing 1200 trades per year through both market rises and falls and successfully so.
I'd be far more interested in the latter trader and say it's a lot less likely he were lucky compared to the guy who simply went long stocks during a very bullish market period.
I'd in fact be very skeptical in investing my money on the first guy, while I'd be very interested in the latter guy and might not even need to see 3 years of data if he had a diversified strategy that's profitable over a wide range of market conditions.
Since you are 1) trading futures and 2) looking at raising capital, SCALABILITY is a big concern for potential "investors".
It's one thing to have a successful track record trading 5,10,20, 50 maybe 100 contracts at a whack of a thick product. It's quite another thing to use the same strats with truly large money. First, if your track record doesn't include large size, other than initial first round investors, there is warranted doubt for similar performance. Secondly, your product and instrument mix may need expansion. Position limits can become just as much of a concern as circuit breaker levels!
FWIW, I agree with you, trader #2 is "better". But as an "investment", and applicable to trader #1, AND #2... ONLY IF there is experience with large(r) working capital, larger trade size, and product diversification. I would not want my "investment" to be the push into places of little or no experience. Unlike an investment in a conventional-type business.
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3 years is sort of a 'fall-back' "base" metric.
But it's not an "either" "or" scenario.
To your point, all of those factors would be considered.
This is why I say "base minimum" 3 years, or things like "Bare minimum ... 3 years"
Which incidentally, is why it is so important for any profitable trader, to work, like NOW ... to start building that track record. Every day is important, because it takes a bit of time to build a track record.
But all of the above factors are considered. 3 years, I mention, as a bare minimum because often, newer or aspiring traders do not want to discuss the time it takes to grind a track record. Mentioning "3 years" over and over again, is a way to get ones to think:
"Ok, if you are profitable? Then you best get to it, and get to it right away, because you're going to have to develop a track record, and time is a tickin' away"
Myself? I prefer to see A) 5 Years, and B) What it looks like in a Regime Change, in addition to all of the metrics like Max DD, Sharpe Ratio, Sortino Ratio (what my firm prefers to use), what was going on with the MAE under the hood, etc., number of traders in a period ... all of it. And I want to see C) It backtested, knowing that e-ratio is figured out, the noise ratio, it isn't curve-fit, back to 1998
So to your point all of the above is going to count and what is going to probably happen?
Is neither trader would get that much notice, because one doesn't have 3 years of history, and the other only traded during one regime of the market (that's assuming it was tied to Equities, and wasn't trading something like ... say ... Cotton and Corn)
And yes, as tiddlywinks noted above? Scaleability is almost everything. In all honesty? Strategy is easy. What is hard, is when you have to drop 2,000 contracts, or 3,000? You best pray that the periodicity of the strat can handle that, and know the answers to such questions ahead of time ...
I'm very eager to start doing this and start doing it right, i.e., through Fundseeder, but they currently do not support my brokerage. I've contacted them to see if it's possible somehow. Uploading data manually does not seem like a good option.
Does it have to be 2000 or 3000 contracts?
I also kindly disagree with your statement that 'strategy is easy'. I don't think so. But it is of course increasingly more difficult to create a strategy that is scaleable for trading a large capital base.
I've talked to an investor in Norway earlier who funds traders. His model requires the trader to put up 20% of the capital and if the trader loses money, it's his money first.
Whatever your living expenses are, you need to make sure that much money is coming in from other sources, not just for 6 months but for the rest of your life (or at least until you retire)
That could be rental income or a side business, or a working partner who is happy to cover your living expenses.
But for most people that regular income is going to be a job that pays a regular pay-check.
If you are not in this situation you will almost certainly fail.
As a full time trader with no other income you have to beat:
commissions + slippage + mistakes + taxes + living expenses + inflation
All of those will have a net draining effect on the value of your trading account.
Lets say i have $100,000 in my day trading account.
Assuming i have the skill and edge to turn $100K into $1million over 10 years.
The numbers might look something like this:
I would have paid around $100K in commissions, lost $100K of my gross profits in slippage. $50K in mistakes. $100K paid out in taxes. $250K living expenses. And 33% of my account is 'lost' to inflation.
So even if I can in theory turn a $100K account into $1million over 10 years by day trading.
I will only end up with a fraction of $1million in the end, eg 400K in above example, which will only be worth $250K in todays money after inflation.
So really you don't want living expenses to be coming out of your trading account before you have enough to retire on (a few $million). As there will enough downward pressure on your account already.
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