Average daily profit with $50K account?

[1a2b3cppp]

Quote from RedRat:

I read your "method". The very basic model about the market is "market is random". So when you enter the market with TP = 3 points and SL = 3 points the chances of heating TP and SL are equal.

In fact when ES hits TP it may be not filled. But when ES hits your SL it is 100% get filled and may be with a slippage. And you always substract commissions. So the mathematical expectation is against you.

Max possible winner is still > than max possible loser for any trade, including commissions.

The edge should be to enter the market in such a moment when your chances to reach the Take Profit target are greater then chances to reach the Stop Loss level. But let us suppose the basic model.

Let the ES be at 1000 points level. Then it rise to 1015 and starting to reverse. You place the first enter market order at the 15points * 33% = 5 points, so you place Buy Limit 1 ES at 1010. It got filled. Your Stop Loss is at the 1000 (10 points), your Take Profit is at the 1015 (5 points). But the probability of reaching the TP is higher then reaching SL. In fact the probability of reaching TP is 66% and SL is 33%, so the math expectation is:

E(PnL 1st position) = TP * P(TP) + SL * P(SL) = 5 * .66 + (-10) * 0.33 = 0


Well, market moves further away from 1015 and at the 50% level you enter another 3 contracts. Your TP = 7.5 points, SL = 7.5 points, now the probability for TP = P(SL) = 0.5

E(PnL 2nd position) = 7.5 * 0.5 + (-7.5) * 0.5 = 0

Finally when market moves to 1005 you enter final 5 contracts. Now P(TP) = 0.33 and P(SL) = 0.66. Again E(PnL 3rd position) = 0


You wrote in your journal that "if market moves to the SL I lose only a few points". Do the math, you lose (1 * 10.0 + 3 * 7.5 + 5 * 5.0) * $50 = 57.5 points * $50 = $2875

You had lucky strike for last two weeks and you are already so sure you won the world. I hope this is a demo account, because in my scenario you will lose the last shirt.

The entry points for your 1000 to 1015 range should be:

1009.25
1007.50
1005.50

If all are filled, average buy price becomes 1006.72.

Let's assume that I have a shitty commision rate and pay $5 per round trip. Taking that into account:

Max win = $3,680
Max loss = $2,980

I have a much higher win rate than loss rate.

Follow my journal if you're curious about how I will do in the long run.

 

[RedRat]

Quote from 1a2b3cppp:

Max possible winner is still > than max possible loser for any trade, including commissions.



The entry points for your 1000 to 1015 range should be:

1009.25
1007.50
1005.50

If all are filled, average buy price becomes 1006.72.

Let's assume that I have a shitty commision rate and pay $5 per round trip. Taking that into account:

Max win = $3,680
Max loss = $2,980

I have a much higher win rate than loss rate.

Follow my journal if you're curious about how I will do in the long run.

You do not understand probabilities.
Let us consider an example. You enter the trade at 1000, place TakeProfit at 1025 and StopLoss at 999.75. Your MaxWin = 25 points. Your MaxLoss = 0.25 points. The Ratio = 100.

Why don't you trade such a strategy?

If market is fully random then math expectation should be ZERO always, disregard of your entries and exits. To be profitable you need to have chances in your favour. Averaging multiple entries does not give you an edge.

 

[MikeCU]

I finally read this entire thread.

It had ups. It had downs. It had comical relief. It was like reading an entertaining book.

Why not just say GLTA and let each other trade their method instead of bashing each other? It's clear some of you will *never* agree with each other.

 

[1a2b3cppp]

Quote from RedRat:

You do not understand probabilities.
Let us consider an example. You enter the trade at 1000, place TakeProfit at 1025 and StopLoss at 999.75. Your MaxWin = 25 points. Your MaxLoss = 0.25 points. The Ratio = 100.

Why don't you trade such a strategy?

If market is fully random then math expectation should be ZERO always, disregard of your entries and exits. To be profitable you need to have chances in your favour. Averaging multiple entries does not give you an edge.

Oh I see what you're saying.

GOOD THING FIB NUMBERS ARE MAGIC THEN AND THAT"S WHY THEY WORK

I keed I keed.

 

[simpletrade]

max daily position size 50k daily loss limit $250 min./ weekly target $500. for example you can trade all 50k of your account cumulatively throughout day over a series of trades but never more than 50k at any one given time. Does that make sense.

 

[TraderZones]

Quote from MikeCU:

It had ups. It had downs. It had comical relief. It was like reading an entertaining book.

Why not just say GLTA and let each other trade their method instead of bashing each other? It's clear some of you will *never* agree with each other.

 

[Algo_Design_Kid]

Quote from RedRat:

I agree with you, but MOST traders lose money not because of black-swan events, but because of they do not have an edge.

No doubt, but my main point was that because of HAVING SO MUCH RISK ON THE TABLE AT ONE TIME that when you are encountered with these events you will get hammered, instead of hurt.

 

[Algo_Design_Kid]

Quote from increasenow:

this is totally my opinion so do your own DD...honestly, thinking about a -65 or -114 down ES scenario is crazy during RTH...now after hours, totally different situation...come on...plus, you should have stops set and an auto 'max loss $$'..set and would not get hit that hard...

You are not realizing my point though.

The point is when you are having too much risk on the table in the first place and THEN you encounter one of these very random low prob. situations you will be blown up instead of just a papercut.

Also, what do you think happened to people with "stops" in lumber? Do you think there is a very high probability that most did not get filled, and if they did it was for a very sharp clip?

The point is I guess is if you have $50,000 and that's it you should prob. not be risking 9 contracts in this environment.

 

[RedRat]

Quote from Algo_Design_Kid:

You are not realizing my point though.

The point is when you are having too much risk on the table in the first place and THEN you encounter one of these very random low prob. situations you will be blown up instead of just a papercut.

Also, what do you think happened to people with "stops" in lumber? Do you think there is a very high probability that most did not get filled, and if they did it was for a very sharp clip?

The point is I guess is if you have $50,000 and that's it you should prob. not be risking 9 contracts in this environment.

As far as I remember, last time the limit for ES was on that day when Societe General liquidated its long position. It was a Monday, US holiday. The next day on Tuesday before the opening bell the ES market reached the limit, as well as NQ, Russell2000 and YM contracts. The price was not allowed to move further down and there were huge volumes to sell.

Then helicopter came and decreased the rate. The market moved up - it was all before the open.

AFAIK there is a 5% limitation but only outside of market hours. If market hits this limit inside the trading hours then there is a small stop and continue trading.

ABC and other day traders try to never leave positions overnight. So such scenario is unlikely for day traders. If news come during the trading hours and you have stops, then your position will be liquidated, probably with huge slippage, but hope this would not be the complete disaster.

 

[volente_00]

Quote from RedRat:

As far as I remember, last time the limit for ES was on that day when Societe General liquidated its long position. It was a Monday, US holiday. The next day on Tuesday before the opening bell the ES market reached the limit, as well as NQ, Russell2000 and YM contracts. The price was not allowed to move further down and there were huge volumes to sell.

Then helicopter came and decreased the rate. The market moved up - it was all before the open.

AFAIK there is a 5% limitation but only outside of market hours. If market hits this limit inside the trading hours then there is a small stop and continue trading.

ABC and other day traders try to never leave positions overnight. So such scenario is unlikely for day traders. If news come during the trading hours and you have stops, then your position will be liquidated, probably with huge slippage, but hope this would not be the complete disaster.

I was trading both times when it went limit down. It did not open this way and there was plenty of time for stops to be triggered as long as you had them resting and not set under the limit down price. Of course you could get caught in a 9/11 type event but even then if I recall the dow opened -600 or around -60 es so he would have lost $3000 per contract or 27k of his 50k on an event like that. For this reason alone I know a few index traders who will only take shorts on overnights instead of longs.