I attracted someone who is willing to actually back me. No time limits, just draw-down limits. That's what I'm working on now!
FINALLY passed TopstepTrader's Combine!
- Thread starter JamesEM
- Start date
I attracted someone who is willing to actually back me. No time limits, just draw-down limits. That's what I'm working on now!
Excellent - pleased to hear it - well done.
Yes, sure ... I hear you there (and in many other places).
I think, though, that given that their primary target market comprises people who aren't able to fund their own accounts, that it's not altogether a fair comparison, entirely valid though your point doubtless is, in itself?
I agree unreservedly.
It's always on the tip of my tongue, when people make forum posts saying things like "How am I ever going to make a living from this if all I have is $500 to my name and monthly returns are so slow?" to reply saying - as you just have done - that the hard part isn't raising the funds to trade: it's being able to trade successfully in the first place.
Again, I agree completely.
They would have made money with me had they given me draw-down and time. Their loss I guess
Yes - maybe so. But you can understand that they have to impose simple rules designed to protect their capital over the long-term, and that it makes sense for them, in those circumstances, to let a few people like yourself "slip through the net" even though you actually represent opportunity-cost to them, in the long run. Because the alternative, from their perspective, is much worse. They can't (and wouldn't want to be) "all things to all people". They have to take a view on "what's common" and have a system that's designed around that? And you and I both know that you're not a "common type of aspirant"?
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Cool....best of luck to you James, sounds like you worked into a good situation.
Out of curiosity, what does this 16.2% represent? I ask because when trading futures, its kind of an unnatural way to summarize performance. If you have a 5k account or 10k account, a percentage would be different, but the number of points you make per day would be the same. So I'm just curious what you roughly make in terms of points per day on average and on which instrument. Even a consistent 2 ES points is actually quite nice if you can scale up to trade many contracts once you know you can for the most part get these 2 points by the end of the day regardless of what type of day ends up unfolding.
Thanks for your comment, Gotcha
However, I won't even attempt to calculate points per day because that is a really dangerous way to think. I've been there and done that too many times before and it has always led to me falling off of the wagon. For me (and only for me!), the points-per-day logic plays to the Ego.
I only care about two metrics where this discussion is concerned: (1) What percentage can I achieve monthly over the long haul? (2) How scale-able is the strategy, i.e. How many contracts can I get to and what does that represent in terms of account size?
I do know that most people would balk at my returns because many have already...saying it's too close to b/e or it's not robust enough etc. etc. But I know that that is where most people lose...they expect so much from so little. My job is to remain as consistent as humanly possible so that the "too close to b/e" becomes "enough to pay the bills a few times over" with a large enough account.
So I will share my longer term numbers with you so you get an idea of what I'm talking about without talking about my specific situation:
97% net of all commissions in 5.5 months and 383 trades. Assuming $3K per contract, which is what I personally need to cover draw-downs and buying power for the 3 instruments I trade (6B, 6C and YM), the initial goal is to carry this performance, or anything remotely similar, to 20 contracts or a $60K account. I have a system in place for any issues regarding fills on the way to those bigger lot sizes, but we'll see how it all pans out.
EDIT TO PRIOR POST: I forgot to mention that the %age mentioned was since the 17th Nov, I was in a draw previous to that so, as of today, I'm actually only up ~7.2% not 16% +.
I referenced that date because that's when I banished TST from my trading life and liberated myself of all those distractions. I'll probably pop back in here when I have more days/weeks under my belt so we can see what the longer term MIGHT look like.
Its interesting what you say because my gut feeling is the exact opposite. I didn't know exactly what you were trading before, so the rationale would be different depending on the instrument, but for futures, since I know this is what you trade now, I think what I said above sticks.
Points per day I think is actually the better way because it doesn't really assign a dollar value up front. Sure, you can get ego involved with points, but you can just as easily get ego involved with percentages. If you are just thinking points, and, just as importantly, cumulative points, either per day or total for the week, I think it makes it easier to focus on performance and stats, rather than money gained or lost.
If you had a million dollar account, 10% would be 100k profits, and if it comes to swing trading stocks, fairly respectable I would say. Depending on what stocks you trade, you might actually be hitting a wall when it comes to fills for day trading, if you aren't looking to swing trade and accumulate a position in my opinion. But for futures, making 100k in profits, over 250 trading days lets say, is only $400 per day, or roughly 8 ES points. You could of course break this down as 4 points if always trading 2 contracts, all in and all out, (or even just 2 points if you can trade 4 contracts).
But to trade these 2 contracts would not require more than a 10k account. (yes, I do think a trader who knows what they are doing can average 4 points per day over the long term and work within a 5k margin per contract). Using this number though, the percentage is now 1000% equity gain, since you turned 10k into 110k (as opposed to using a million dollar account to make 100k which would be 10%).
Now granted, if you are day trading stocks, you probably are not using up anywhere close to your 1 million in buying power, and your profits are more than likely much bigger. But if we scale it up to a 10 million account, with 1 million made, this is still 10%, so the percentage is a very funny metric to use in my opinion.
If I'm to use your own numbers, of having 3k per contract, and being up 97%, this means you made roughly 3k, after commissions in 3 months. If this was the ES, and roughly $4 per round trip in commissions, then another 383 trades makes this $1500 in profits you didn't get to keep, but your total profit made would be about 4.5k in 3 months. I assume about 21 trading days per months, so 63 trading days, and hence an average of $71 profit per day.
Now this isn't the ES, but if it was, this would equate to about 6 ticks of profit. And you know what... this would actually sound like a number I've seen before. Of course this breaks down into maybe making 5 points one day, losing 3 points the next day, etc., but as a long term average for the ES, 6 ticks of profit I would say is quite respectable.
If you know that after many trades, you're averaging 6 ticks profit, then scaling up to trading multiple contracts is now very reasonable, and if your account can handle a string of losers in a row, without you now skipping trades according to the plan, then there is no reason why 5 or 10 contracts couldn't be traded.
So in a long winded way, this brings be back now to why talking about points I think is the right way to do it when it comes to futures. Its 100% scale-able to think in terms of points, and as long as your account can handle the margins on multiple contracts, there really is no need to think in terms of percentages, but more so along the lines of points made per week or per month.
A couple of points to note:
1) 97% was over 5.5 months, not 3.
2) I didn't say I was trading $3K
. That's what I need per contract.I respect your opinion, but we'll have to agree to disagree on this one
. I do understand that points per contract, when considered as a stand-alone metric, is more informative. BUT, when tied to other factors such as equity needed per contract and a market's liquidity, it makes more sense for me to think in terms of long-term percentage gains based on what I know about the above factors and the consistency I've shown so far.The fact that the per tick $ value of the instruments are different ($5 and $6.25) and the frequency with which I trade them varies makes an exercise in points per day difficult anyway.
We could look at ticks per day (4.17) and use that, as you did in your example, to make broad assumptions (e.g. 4.17 ticks/day ES= $52.13/contract/day or $48.53 after commissions...scale up to 10 contracts= $485.3/day = $122,295.6/year etc.) but that would be a very rough estimate at best due to the above (instruments, frequency..). There is also the fact that, at this point in time, I still tend to trade with slightly less discipline when watching one market all day as opposed to three.
To summarize, it may well be a more logical way of thinking when emotions aren't considered but I feel much more at ease with the %age based model. After the goal I mentioned in my penultimate post (above), my next one will be to work on transferring this result over to the ES and maxing out the lot size there. i.e 100 contracts with a $300K account with those same 4.17 ticks gross/day. $1.22M a year
....Ohhh.. nice! I do wonder how trading works on this level. First I wonder about fills because although clearly ES can easily handle this volume, it is sometimes difficult to get filled even on just 1 contract when you're at the back of the line and need price to touch this level multiple times until you get a fill. So I wonder what a guy needs to do when trading this many contracts. And also, for my own stats, I see that a 4 tick stop is just incredibly tight, and my trades work much much better when I have an 8 tick stop (which many still consider very tight). But to be swinging 100 contracts with an 8 tick stop is a whole different world!100 contracts with a $300K account with those same 4.17 ticks gross/day. $1.22M a year
Obviously you're not saying this will happen tomorrow, and once you get over the psychological hurdles, and your account is big enough, there really is no reason why this wouldn't be possible. Best of luck!
This is what I find difficult about the ES...it's "chunky". Slippage costs a lot more as a percentage of your stop, but this is less of a problem due to the liquidity. On the flip side, commissions eat into your expectancy a lot less due to the larger tick value.
The fewer ticks per given rally/sell-off as compared to, say, YM, makes it difficult to drill down and find edge. Much more efficient than other markets as a result.
What I would love to see is the introduction of half ticks...the CME did this for 6C this past July. This increased my returns there drastically due to, as they would put it, "more granular pricing".
Thanks for the well-wishes. I'll definitely keep everyone updated!