How long will it take to turn a $5,000 account into $100,000?

I daytrade the ES and use a spreadsheet to visualize my results.

The red figures in the sheet you have to add and you will get a better sight at where you are and what will happen if you are stopped out in your last position.

A1 is the euro/dollar rate as i live in the euro zone.
A2 is the margin per contract in $
A3 is the maximum position you think you can take as daytrader
A4 is the stoploss in points
A5 is the starting capital in $
A6 is the $-value of 1 point
A7 is the commission and slippage in $

In the table you will see the following:
column 1 calculates automatically how many contracts you can take according to the parameters you gave in A1-A7

column 2 is always the price at which you bought

column 3 is always the price at which you sold

column 4 is the net profit for this trade in $

column 5 is the net profit for this trade in euros

column 6 is the net equity of the account in euros

column 7 is the net equity of the account in euros if your are stopped out in this trade

column 8 is the net profit for this trade in $ if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

column 9 is the net profit for this trade in euros if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

So when i take a trade, i know exactly how many contracts i can take within my riskmanagement system and i know exactly what i will loose if i'm stopped out.

You can also use this sheet to simulate and test how many time and trades it takes to double your account. Just fill in all the parameters and watch the result.
 

Attachments

Quote from spike500:

I daytrade the ES and use a spreadsheet to visualize my results.

The red figures in the sheet you have to add and you will get a better sight at where you are and what will happen if you are stopped out in your last position.

A1 is the euro/dollar rate as i live in the euro zone.
A2 is the margin per contract in $
A3 is the maximum position you think you can take as daytrader
A4 is the stoploss in points
A5 is the starting capital in $
A6 is the $-value of 1 point
A7 is the commission and slippage in $

In the table you will see the following:
column 1 calculates automatically how many contracts you can take according to the parameters you gave in A1-A7

column 2 is always the price at which you bought

column 3 is always the price at which you sold

column 4 is the net profit for this trade in $

column 5 is the net profit for this trade in euros

column 6 is the net equity of the account in euros

column 7 is the net equity of the account in euros if your are stopped out in this trade

column 8 is the net profit for this trade in $ if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

column 9 is the net profit for this trade in euros if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

So when i take a trade, i know exactly how many contracts i can take within my riskmanagement system and i know exactly what i will loose if i'm stopped out.

You can also use this sheet to simulate and test how many time and trades it takes to double your account. Just fill in all the parameters and watch the result.
More...



SORRY !!!!!

sheet was protected; this one you can open.
 

Attachments

Quote from spike500:

I daytrade the ES and use a spreadsheet to visualize my results.

The red figures in the sheet you have to add and you will get a better sight at where you are and what will happen if you are stopped out in your last position.

A1 is the euro/dollar rate as i live in the euro zone.
A2 is the margin per contract in $
A3 is the maximum position you think you can take as daytrader
A4 is the stoploss in points
A5 is the starting capital in $
A6 is the $-value of 1 point
A7 is the commission and slippage in $

In the table you will see the following:
column 1 calculates automatically how many contracts you can take according to the parameters you gave in A1-A7

column 2 is always the price at which you bought

column 3 is always the price at which you sold

column 4 is the net profit for this trade in $

column 5 is the net profit for this trade in euros

column 6 is the net equity of the account in euros

column 7 is the net equity of the account in euros if your are stopped out in this trade

column 8 is the net profit for this trade in $ if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

column 9 is the net profit for this trade in euros if you keep trading with the initial amount of contracts, so without reinvesting the profit in new contracts

So when i take a trade, i know exactly how many contracts i can take within my riskmanagement system and i know exactly what i will loose if i'm stopped out.

You can also use this sheet to simulate and test how many time and trades it takes to double your account. Just fill in all the parameters and watch the result.
More...

dude - what's the password ffor the spreadsheet?
Otherwise no one can use it.
 
Quote from jbt:

dude - what's the password ffor the spreadsheet?
Otherwise no one can use it.
More...

look at the previous posting.
didn't check my posting on the forum, will do that from now on.

:(
 
Quote from risktaker:

Yeah, you can also win $300million playing the lottery but, so what? The chances of that happening are very, very close to zero.
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%%%

Like that elitertader post who copied ''dream the dream/starrrrr song.:cool:

Risktaker, excellant points on lottery risk/reward;
but dont consider a well researched trading business a lottery,
consider a lottery a stupid tax on people who cant do math.
 
Quote from guy2:

It's no secret how winning traders win and take the profits from everyone else. They have an edge and they exploit that edge day in and day out. It's a number game. If you buy a can of beans for 30 cents and sell it for 40 cents you make a 10 cent profit. Do that 10,000,000 times and you've made $1,000,000. Trading is the same. If you make (on average) $50 for each trade you place then you execute 20,000 trades and you've made $1,000,000. Simple isn't it?

I've written an article called The Edge which explores how long it would take you to start with a $5,000 account and turn it into a $100,000 account trading the ES contract.

I'm not sure if I've posted this in the right forum (should it be in Career Trader?) but I'm sure that a moderator will move it if appropriate.

Comments and criticism welcome.
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Nice car at the bottom of your 'article'.
Nothing wrong with your mathematics if you go by your statistical averages.

This is not how things work though!
If you plan on doing thousands of trades, like you reckon, things may fluctuate quite a bit. You may encounter periods of above average loss reducing your capital to zero. Game is over! Your mathematics is linear in assuming that your capital could become negative for a while in order to recover later.

The correct way to look at this, is to figure out your probability of ruin. Not so easy to do, but a very real threat. You are in fact misleading naive fellows with your spam and its flashy car picture. Very few will ever get to it on $5000.

nononsense
 
Quote from nononsense:

Nice car at the bottom of your 'article'.
Nothing wrong with your mathematics if you go by your statistical averages.

This is not how things work though!
If you plan on doing thousands of trades, like you reckon, things may fluctuate quite a bit. You may encounter periods of above average loss reducing your capital to zero. Game is over! Your mathematics is linear in assuming that your capital could become negative for a while in order to recover later.

The correct way to look at this, is to figure out your probability of ruin. Not so easy to do, but a very real threat. You are in fact misleading naive fellows with your spam and its flashy car picture. Very few will ever get to it on $5000.

nononsense
More...

That's why you have to calculate your maximum drawdown.
At least you will have an idea about the risk you have of losing lots of money.
 
Quote from nononsense:

This is not how things work though!
If you plan on doing thousands of trades, like you reckon, things may fluctuate quite a bit. You may encounter periods of above average loss reducing your capital to zero. Game is over! Your mathematics is linear in assuming that your capital could become negative for a while in order to recover later.

The correct way to look at this, is to figure out your probability of ruin.
More...

That's a very good point and one of the assumptions in the article that I haven't explicitly addressed. The longer you trade and the more trades that you execute the higher the probability of experiencing a long series of losses. I did a quick calculation and it shows that a series of 47 losses in a row would wipe out the account during the initial phase between $5,000 and $10,000. So the probability of ruin during the initial phases would be the equivalent of the probabiltiy of having 47 losses in a row or something close to that (for example 25 losses, 2 wins and 25 losses).

Once you've breached the $10,000 mark and for each $5000 multiple after that the probability of ruin starts to reduce even though you are increasing the number of contracts that you trade. This is because if you have a series of losses that drop you below one of the $5,000 multiples you reduce the number of contracts you are trading and therefore lengthen the number of sequential losses required to wipe out the account.

Is that logic flawed in any way?
 
Quote from guy2:

That's a very good point and one of the assumptions in the article that I haven't explicitly addressed. The longer you trade and the more trades that you execute the higher the probability of experiencing a long series of losses. I did a quick calculation and it shows that a series of 47 losses in a row would wipe out the account during the initial phase between $5,000 and $10,000. So the probability of ruin during the initial phases would be the equivalent of the probability of having 47 losses in a row or something close to that (for example 25 losses, 2 wins and 25 losses).

Once you've breached the $10,000 mark and for each $5000 multiple after that the probability of ruin starts to reduce even though you are increasing the number of contracts that you trade. This is because if you have a series of losses that drop you below one of the $5,000 multiples you reduce the number of contracts you are trading and therefore lengthen the number of sequential losses required to wipe out the account.

Is that logic flawed in any way?
More...
Yes, I think it still is, albeit we continue a discussion without having fully defined the process that we are talking about.

(1) Your calculation of the 47 losses in a row required for ruin assumes that each such loss equals the average loss.
This is at best simplistic.

(2) Again, your strategy of reducing contracts traded is too loosely defined to say anything about.

As I stated before, the calculation of a risk of ruin for a strategy is very difficult. This is certainly the most important qualifier of a strategy. As another poster pointed out, the maximum drawdown also has some bearing but is not the same as risk of ruin.
Often, only approximations based on models are feasible strengthened by judicious simulations. This is why I talked about naive calculations being 'at best simplistic'.
 
This kind of computation is very good to understand basic things, but totally unuseful as a risk management or projection tool. At this point, you need to determine probability densities and do some simulations.

Expectation is the only number you can be sure you will never reach, a little like the peak to peak power :D
 
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