My good fortune: Found Mentor. Paid him lots of money. 10 days of training and lots of hours of practice. After that always Profitable. The luck is that the mentor was excellent and well worth the $3500 I paid him. The problem is finding a Really Real Mentor who can also train clearly. So to answer: took me a total of about 30 hours over 2 weeks to be consistently profitable. Wow what good fortune -- pure luck that I found the right mentor and then really did what I was told.
How much did it take to become more or less consistent for you?
- Thread starter prj
- Start date
My good fortune: Found Mentor. Paid him lots of money. 10 days of training and lots of hours of practice. After that always Profitable. The luck is that the mentor was excellent and well worth the $3500 I paid him. The problem is finding a Really Real Mentor who can also train clearly. So to answer: took me a total of about 30 hours over 2 weeks to be consistently profitable. Wow what good fortune -- pure luck that I found the right mentor and then really did what I was told.
You were lucky, because having trading compatibility with your preferred method along with a mentor who thinks along your lines is rare.
For an individual and a mentor pull in the same direction is easier said than done I would think.
The main metric is looking for consistent returns, where consistency here is a statistical measure that rewards returns that 'look' the same over longer periods of time (since you can have a high SR over short periods by making a flukey ton of money in one day, and losing a small amount in others), although it isn't perfect and I have my own measures that I prefer. I believe they penalise drawdowns over about 15% as they are essentially looking for institutional money.
But this particular strategy has never exceeded a 5% drawdown, so it could easily run at 2x3 more leverage. So eithier the capacity is limited, or the trader has no access to leverage, or a very low tolerance to risk.
If you're curious the average % returns, and in $ for the best accounts on FS are:
5.9% on $340K $20k a year, with 4% vol
6.9% on $400K $28k a year, with 2.6% vol
29% on $$180K $52k a year, with 9.9% vol
7.4% on $4.6m $340k a year, with 2.4% vol
44% on $576K $250k a year, with 17% vol
So it's certainly possible to rank more highly even if you're running a reasonable amount of risk (traders 3 and 5). The other traders here are running risk that is low even by institutional standards.
Of those accounts above, really only the last comes close to the ET retail traders dream of making a decent income on limited capital with a reasonable amount of risk (though a little less than I run, albeit I don't live solely off my trading profits, and much less than the average retail trader probably runs). This trader has a SR of 2.5, has never had more than a 6% drawdown, and rarely loses money for more than a few weeks. They have never withdrawn capital from their account, so they aren't living off their earnings, but they probably could.
Their account isn't quite 4 years old, so they haven't yet experienced even a mild crisis never mind a 2008. But on the evidence they are one of the best traders in the world. And yet they aren't consistent under the definition given by the OP
GAT
Whats Vol and SR ?
If vol is volatility then the 4th trader is the best. Hes making 3,08x his vol.
Vol is indeed annualised standard deviation.
SR is Sharpe Ratio, roughly return / vol (ok there should be a risk free rate, but let's not get hung up on details)
So yes the 4th guy has the highest SR, but he's not the best trader. In fact there are traders on FS with even higher SR than the guy above. The 'best' has a SR of 3.7. But they aren't the best trader eithier.
Why not? Well, it's not a good idea to rank anyone on pure Sharpe Ratio. SR isn't the worst measure of performance, but it's not great. It doesn't account for length of track record. The highest SR trader on FS has barely been trading a year. That's nowhere near enough to get a reasonable idea of what their likely skill is.
It doesn't account for assymetric returns (vol selling strategies tend to have inflated SR; LTCM had a SR of about 4 before they blew up).
It doesn't account for consistency of return (if you lose -0.1% a month for 11 years straight, and then make 10% a month for a year, your Sharpe Ratio will be 1.0. This is roughly the same as someone who makes 0.1% in even months, and loses 0.05% in odd months. I know which I'd rather invest in). The highest SR trader on FS made almost all their money in a single month when they made like 220%. And a closer look reveals they withdraw almost their entire account balance before that month began, so the 220% return was on a tiny amount of cash.
The FS measure makes an attempt to deal with these issues, not perfectly, but then there is no perfect measure of risk adjusted performance. On the FS measure the highest SR guy is ranked just 67th overall.
GAT
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On the link you provided I posted a math problem to see how many traders on et can solve it. I actually knew the correct answer. If you did not feel out I already knew the answer, Pity on your reading comprehension. Unfortunately, tens of traders tried to solve the probability problem, at most 1-2 arrived the correct answer. Would you like to give a try? I am not majored in math, and it also took me a while to figure out the answer before I posted it on et. From your post, it is apparently you are a naysayer, which most of time implies you are not a good trader, because a good trader tends to believe someone else can do what he does.
What is it wrong to seek advice on opening a fund? My background is academic. Even if you are a senior on Wall Street does not mean you know everything. You may say there is google.
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Additional information will change the answers
I agree there is better alternatives for SR. Here is a good short article about the problems in SR. I personally don't like it because it doesn't distinguish between upside and downside fluctuations. I am more interested in the downside so some Ulcer Index is a better choice.
Anyway the methods how to evaluate a system quality is a very interesting topic and should be done in a separate thread I think.
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In my opinion, anyone who considers themselves consistently profitable is going to soon learn they aren’t in a big way.
I’ve been trading for 18 years and likely earned more than 99percent of this forum. I still have drawdowns (which can go for months at a time) and I still worry each day will be my last.
I’ve been trading for 18 years and likely earned more than 99percent of this forum. I still have drawdowns (which can go for months at a time) and I still worry each day will be my last.