How much capital required to generate $200/day pair trading?

WesSeid · Apr 10, 2009

Quote from bwolinsky:

That's probably one of the stupidest people you could have picked to defend your stance. We're talking about trading and investing here, not gambling, which is what buying any pink sheet stock is.

That was my point, of course. For all the bad words Timmay gets around here, EVEN HE makes fun of those who claim their greatness based on "outperforming."

You keep bringing up Covestor. Hasn't Timmay been #1 on there for a long time? I know, I know, some say he cheats on there. Beats me. I just think it's funny.

Aren't there any daily/weekly journals here of people putting up 50+% a year? People managing big accounts obviously have a harder time putting up a big %.

If only everyone had given me their money a year ago, my patented "Dollars Under the Mattress" trading system would have outperformed the market.

bwolinsky · Apr 10, 2009

Quote from WesSeid:

If only everyone had given me their money a year ago, my patented "Dollars Under the Mattress" trading system would have outperformed the market.

Lol. But then, how will you make more?

I guess I have the last laugh. My APR on covestor is currently:
26,898,931.49%.

Mike805 · Apr 11, 2009

This thread is a bit like a car wreck, I can't keep myself from watching it unfold...

For goodness sake - all of you stop with the % return BS already. % return is such a meaningless number on its own.

Also, it shows a serious lack of knowledge when you throw out a comment like: "if you cant return 50% on a small account then you shouldn't be trading". Whoever said that isn't a pro and likely doesn't trade an account over 10k.

The single most important factor to success is controlling *risk*. That's it. End of discussion. If you get a 50% return with a 50% DD, you're an average trader with an average system/method. If you do 50% with 5% DD then you're among the very best.

And of course leveraged/prop traders are different. If I get 20-1 via a 10k account, then while achieving that 50% @ 200k I better not see a 5% DD. Risk means everything.

To the OP: nobody knows how much capital is required to gain 200/day for *your* system. Its not an answerable question without knowledge of your systems expectancy and risk profile.

WesSeid · Apr 11, 2009

Quote from Mike805:

The single most important factor to success is controlling *risk*. That's it. End of discussion. If you get a 50% return with a 50% DD, you're an average trader with an average system/method. If you do 50% with 5% DD then you're among the very best.

Doesn't that actually give more evidence to what was said? If you say 50%R/50%DD is "an average trader with an average system/method," is it no wonder then if "average or better" traders with "average or better" systems say of course 50% profit isn't a pie-in-the-sky number to achieve?

Mike805 · Apr 11, 2009

Quote from WesSeid:

Doesn't that actually give more evidence to what was said? If you say 50%R/50%DD is "an average trader with an average system/method," is it no wonder then if "average or better" traders with "average or better" systems say of course 50% profit isn't a pie-in-the-sky number to achieve?

No.

Leverage is the issue. That's why %return is irrelevant. If you can make 10% then you can make 20% then you can make 40% etc. *Most* trading strategies are scalable given adequate liquidity.

That's why the raw return is meaningless.

A trader who makes 50%R with a 50% DD is nothing special. A trader who makes 10%R with 0.5% DD is. That's what makes the "quit trading if you can't make 50%" comment so idiotic, it is a pie in the sky number, why not make it 200%?

Look, this is simple stuff, if you plan on trading a system that has 50/50 profit to risk ratio (or invest with a fund that has such a ratio) then you are asking for trouble. That system/fund has no concept of risk control... No skilled/professional trader would ever allow for a 50%DD. Even at 15%DD you'd likely lose most of your smarter clients or stop trading the strategy all together.

C'mon people, get with the program here, good trading has *nothing* to with %return.

WesSeid · Apr 11, 2009

Quote from Mike805:

C'mon people, get with the program here, good trading has *nothing* to with %return.

See, Bwolinsky? You laughed when I said my patented D.U.M. ("Dollars Under the Mattress") trading system is great. 0% drawdown.

bwolinsky · Apr 11, 2009

Quote from Mike805:

This thread is a bit like a car wreck, I can't keep myself from watching it unfold...

For goodness sake - all of you stop with the % return BS already. % return is such a meaningless number on its own.

Also, it shows a serious lack of knowledge when you throw out a comment like: "if you cant return 50% on a small account then you shouldn't be trading". Whoever said that isn't a pro and likely doesn't trade an account over 10k.

The single most important factor to success is controlling *risk*. That's it. End of discussion. If you get a 50% return with a 50% DD, you're an average trader with an average system/method. If you do 50% with 5% DD then you're among the very best.

And of course leveraged/prop traders are different. If I get 20-1 via a 10k account, then while achieving that 50% @ 200k I better not see a 5% DD. Risk means everything.

To the OP: nobody knows how much capital is required to gain 200/day for *your* system. Its not an answerable question without knowledge of your systems expectancy and risk profile.

Thanks for chiming in. I'll introduce Mike as another WL developer whom I respect that has shown success on collective2, and obviously knows it was a joke about my post for 26 million percent APR's.

He said it very well. The calmar ratio is a good one, to be sure, but might be better off with np/dd for longer periods. The calmar ratio of APR/DD I think is a better measure for younger systems, and longer term a ratio above 1 is pretty good.

I agree that no one can answer this statement b/c it's dependent on the level of risk you take. I gave a pretty straight answer and I feel I'm very representative of a "succesful trader" and what their actual equity curves look like. This lead me to throw out the 169909, number. And yes, I think we can spare 9 dollars for some flowers.

bwolinsky · Apr 11, 2009

Quote from WesSeid:

See, Bwolinsky? You laughed when I said my patented D.U.M. ("Dollars Under the Mattress") trading system is great. 0% drawdown.

Don't be such an imbecile. Then you wouldn't have made anything and never will, the real return for cash in a mattres is -3% APR, so in real terms, you're negative.

WesSeid · Apr 12, 2009

Quote from bwolinsky:

Don't be such an imbecile. Then you wouldn't have made anything and never will, the real return for cash in a mattres is -3% APR, so in real terms, you're negative.

Yeah, but I was just told return % is irrelevant and that good trading has nothing to do with % return.

If a full-time, small-account trader makes a yearly .5% return with a .5% drawdown, is he a good trader? How much leverage would he need to be able to eat?

My D.U.M. strategy has 0% drawdown. Does return % matter or not?

Mike805 · Apr 12, 2009

Quote from WesSeid:

Yeah, but I was just told return % is irrelevant and that good trading has nothing to do with % return.

If a full-time, small-account trader makes a yearly .5% return with a .5% drawdown, is he a good trader? How much leverage would he need to be able to eat?

My D.U.M. strategy has 0% drawdown. Does return % matter or not?

You're taking what I'm saying out of context. % return on its own says nothing about a trader's ability. Strategy, DD, Sharpe Ratio, etc. all need to be analyzed. And no, .5%R to .5%DD yearly is not very good. For example, I would not invest in any option selling strategy that returns over 20%/year regardless of DD. Why? Well, if you have to ask, then you shouldn't be investing with anyone trading options nor should you be trading options yourself. My foremost assessment of a traders ability/system's potential is sharpe ratio and DD. Frankly, I hardly pay any attention at all to the %R.

Are you honest with your questions or are you being sarcastic? Assuming you aren't being sarcastic, the I suggest you do some research on the sharpe ratio. http://en.wikipedia.org/wiki/Sharpe_ratio

Mike