How little capital could you make a living off?? ;)

[trickshot]

Being under-capitalized is one of the main reasons why so many traders fail, but its not the only reason, IMO edge is more important than capital.

I started with 10k capital and blew up twice (tried many instruments and markets in the process) before I acquired a trading edge, my capital has grown by many times during my 4 years of trading, I think I stopped worrying about making a living once my capital went from 5 digits to 6 digits.

IMO trading is a "winner takes all" industry i.e you either make it or you don't, the traders who are struggling to survive will either blow their account eventually, or they will go on to make loads more money in the future.

 

[Kicking]

this thread is obviously for newbies by newbies. No way you can make a living with this kind of money . Yeah you can make a living for a while maybe but that's not enough to build on.
Then there is the luck factor, sure there must be some traders out there who parlayed 30k into millions, but ask Taleb and he will tell you why. What's more usually those are floor traders and we all know they have (had) an edge.
30k is enough to trade and profit but not enough to go through bad periods (they always come at some point and sometimes it's game over due to new regs for ex.) You need another source of income. That's why all traders who made it, out of a combination of talent, balls, luck and unfair advantage (pick your combination) start putting money into other investments .

 

[nukethewhales31]

Quote from Mr J:

Nukethewhales, 200% is extremely achievable with a shorterm strategy, and it's far from balls to the wall. I would guess that the best traders you have seen aren't really shorterm traders.

not saying it isnt... im sure they could leveraging like most do they like me use at most 2 to 1 leverage... most of the time i do not leverage at all. if i can do 60-80% per year not leveraging at all i could imagine wat people who go "balls to the walls" do.. gotta remember leveraging is double edged... it only takes a couple of freak moments.. market shifting to wipe you out...

also spanish if you look up some of my posts i mentioned i went from 250 to 14ish k my first year trading...i used that 14k to create my whole capital base... but u need to know the difference between speculating, gambling, and trading...
how much capital do you need to trade for a living... thats answered in the post above .. trade for a living... how much capital do i need to maybe make it on a hope and a prayer overextended all the time into the market and risking not paying my bills next month ... go to spanish's post

 

[Mr J]

Quote from crgarcia:

You need $300k+, preferably $500k+ to make a living.

With a 10% yearly return (anything over that is highly speculative, and all lose), you'll get $30k and $50k.

Completely false. Perhaps you need that much and perhaps anything over 10% is highly speculative for you, but to assume that is the case for everyone is extremely ignorant.

Quote from Kicking:

this thread is obviously for newbies by newbies. No way you can make a living with this kind of money . Yeah you can make a living for a while maybe but that's not enough to build on.

As already established, there's a difference between making a living in terms of just getting by, and living comfortably. Spanish89 is talking about the bare minimum to get buy, and it's certainly possible to live off of a smaller 5 figure bankroll.

Quote from nukethewhales31:

not saying it isnt... im sure they could leveraging like most do they like me use at most 2 to 1 leverage... most of the time i do not leverage at all. if i can do 60-80% per year not leveraging at all i could imagine wat people who go "balls to the walls" do.. gotta remember leveraging is double edged... it only takes a couple of freak moments.. market shifting to wipe you out...

I'm not talking about being highly leveraged. If one practises sensible capital management, leverage isn't an issue.

Overall return is an interesting discussion, as the exact same question popped up all the time in sportsbetting, and I can assure you that trading is far more profitable.

Say I make 10 trades a day at 0.5% risk per trade and make 10% of my risk per trade. That's 2.5% per week, or 344% compounded annually (of course it won't be quite this efficient in reality). I'm inexperienced at trading, but I don't believe that any of these statistics are unreasonable.

 

[JB3]

How little capital could you make a living off??

I don't really care, and I don't intend to find out.

 

[fseitun]

It really depends on what you trade and what time horizon you use for your trades.

If you daytrade emini futures like YM ES NQ I think 10K should be enough for a good trader to make 2-3K per month.

It's not about how much you need to make a living, but also how good you are as a trader. If you are a good trader, you don't need much IMO because you can use leverage.

If you are an inconsistent trader who eventually can make some money at the end of the year but must endure a few drawdowns, then you must be well capitalized.

Good daytraders don't have big drawdowns, let alone consecutive drawdowns.

 

[spanish89]

I have to go to sleep nwo sorry cos ive done another 26hour day straight and so am shattered.

But i do have a few questions that i would like to ask some people on here,
as the answers they have given are still the same old cliches that have been floating around about trading for decades,
and yet still they just are incorrect in reality.


I will ask in abit more detail tomorrow-

But the main question i have for the people who know that they wouldnt be able to generate a high enough % return from a lower capital size,
and so they can only get by being granted with loads of money to start with and then making a tiny return on that...

Why are you so impatient??


Seriously, trading isnt an especially hard thing to do.

There are only 2directions, everyone trades in different style, but lets say your gna trade my style and so be an 'opportunist' isnetad of a scalper for the week.
So you have seen the market has moved 15% up very steeply over the last 3days, and so you are now ONLY going to sell.

So now you dont even need to worry about try 'anticipating direction', you already know the direction, so that part of the equation is sorted.

So all you now need to do is just stop being so impatient, let the market exhaust itself, let it make a reversal and start moving down, and then just add your sell as fast as possible.


Its not hard, not complex, stoploss at the high/low of the day so about 10ticks/target 80ticks+ so lots of money to be made.
And providing you did have that patience and didnt rush in and keep throwing trades about like a fool trying to 'test the market,
its EXTREMELY UNLIKELY that you will every get stopped out, even if you use tight stoploss.


All it requires is EXTREME PATIENCE.


But teh reason why most people make such a low return ot even lose money overall is cos they arent willing to put in the hours reuqired for taht patience and instead make foolish 'testing trades', and as a result every little loss form them adds up.



If you dont make those foolish trades,
and isntead focus on ONLY making a trade when it would be extremely difficult for the market to be able to avoid being forced into profit for you,
you will also endup with ALOT high return overall,and extremely few losing trades.

 

[mynd66]

You are implying that capital alone can make a living which is false. A person is stranded on an island which is uninhabited by humans and involves no link to the rest of the world. How much capital do you think this person needs to make a living? What if you add one person? Two, three, four... etc. At which point does capital allow anyone to make a living?

 

[MandelbrotSet]

Just add money management and try to scale-up your trades and you will be fine ...

 

[spanish89]

*Btw i saw a few guys were talking about their leverage.

At the end of the day your leverage is irrelevant though.
Since its not a case of 'bigger leverage easier to make money', since the more leverage teh more risk there is, so that negates the 'extra easiness', and so its just no actual difference overall.

I have an automatic present leverage of 100:1 though through ,y sb firm, and im fine with that as its the standard size.



But more importantly the 2nd question,
which is a question i have thought of before and i may even start seperate topic about it tomorrow....

Everyone who likes to talk like they are the seasoned millionaire trading guru, and so instea do talking lives entires and exits trhoughout the day they just hover on forums calling everyone else ''newbies'' as it makes them feel and look more experienced,
and regulary spary the forums with a fresh coating of the same old trading cliches that have been around for decades and yet are just crap tbh. lol

(Im not naming anyone in particular, since about 90% of people on all trading forums are exactly like, its just how the trading world is).




But heres the 1 rule that really really is confusing me alot now,
since its just doesn't add-up.
_____________________________________


The 2 rules that everyone says are the most key and important 1s, and that everyone says they follow.

1. Risk 2% of your capital per trade.

2. Have a risk reward ration of atleast 1:3.



Im not some kind of maths boffin, i didnt waste my time poncing around at uni getting a PhD in quatum mathematcis or any of that nonsense,
but i can still do basic maths. lol


And the maths fact is-
You risk 2% your capital with the standard 1:3 RR, you should make 6% profit on your capital for each trade.



But then theres blokes posting on here saying they are good sucessful traders, most are nearly millionaires,
and yet they are struggling to make 10% per year on their starting capital.

12% return is seen as very good for ''an entire years work''!! :eek: :eek:



Now someone please tell me if i have some how done my maths wrong,
and that when you risk 2% your capital with your target being 3x that risk, that you wont make 6% return on your capital in that 1trade???


Cos if i am right in that maths, and the people who harp on about those rules actually do them, all they need is to make '1 sucessful trade per year' and they get 6%.



So how exactly do you guys now explain 12% per year (2 sucessful trades) being something to be proud about??? :eek:





*I personally would be disgusted with myself if i couldnt make MINIMUM 300% return per year.

As i have the entire fuking year to make that money and so id have to be a totally lazy incompetent peice of **** if i couldnt get off my arse, knuckle down and just do the job and make tha return.

(But i also know that i have a far stricter self-disciple than most people when it comes to my ambition and forcing myself to get the results that i know im capable of).



However i really really dont get how anyone who claims to be even 'just average' at trading could not be able to just make 2 sucessful trades per year???
(would be a 12% return)