How much has been enough for you?

emg · Mar 25, 2011

Quote from Gcapman:

So you've spent 5-6 years of your life, spending hours and hours each day studying charts...perfecting your psychology...becoming a more calm person...increasing your overall confidence via various methods...

And now you are able to break-even easily and can make good money when opportunities are there since you see the trends more clearly and even have developed a spidey-sense.

You can interpret economic news into whether you should go long, short or stay on the sidelines.

How much is enough money to start trading full-time again and quit your job?

For me, it's $50K...

Any thoughts? Personal experience?

$500K is the RISK RISK RISK Capital to start to make a comfortable living.

There are opportunity to get $500K capital if that trader knows how the game works.

Unfortunately, more than 90% of small traders do not have that kind of capital still believe $5000 is enough to start trading full time and earn $10K per month income.

Remember, more than 90% of small traders lose. THEY JUST LOSE!!

kipster · Mar 25, 2011

hmm all assuming everyone making consistent money.
that's pretty amazing tho.

heech · Mar 25, 2011

Glad to see the voices of reason in this thread.

Those who claim 30%+ a month, 100%+ gains a year returns are "reasonable" simply haven't been doing this very long. They probably had a 15% month, and are feeling adrenaline coursing through their veins.

Let's put it this way. Babe Ruth's career OPS+ rating is 200 (where 100 is the league average). The financial industry average returns is (generously) around 10-15%.

If you consistently return 30% a year, you're already Babe Ruth. For you to consistently return 100%+ a year, you are 3x better than Babe Ruth... you know, hitting 180 home-runs a season.

Cache Landing · Mar 25, 2011

Quote from heech:

Glad to see the voices of reason in this thread.

Those who claim 30%+ a month, 100%+ gains a year returns are "reasonable" simply haven't been doing this very long. They probably had a 15% month, and are feeling adrenaline coursing through their veins.

Let's put it this way. Babe Ruth's career OPS+ rating is 200 (where 100 is the league average). The financial industry average returns is (generously) around 10-15%.

If you consistently return 30% a year, you're already Babe Ruth. For you to consistently return 100%+ a year, you are 3x better than Babe Ruth... you know, hitting 180 home-runs a season.

Yep, banner years are not only possible, but quite normal. During the past couple years I had a year of +800%. Scaling became an issue in a hurry, and it is still something I'm struggling with. I can pretty much guarantee I won't have a repeat performance this year. Not that I won't make money, but I just accept the fact that it isn't realistic to get those returns every year.

{edit} And I still work a nice comfy day job, and add to my investment accounts every month. "don't eat your children"

stockstalkerv3 · Mar 25, 2011

Quote from heech:

Glad to see the voices of reason in this thread.

Those who claim 30%+ a month, 100%+ gains a year returns are "reasonable" simply haven't been doing this very long. They probably had a 15% month, and are feeling adrenaline coursing through their veins.

Let's put it this way. Babe Ruth's career OPS+ rating is 200 (where 100 is the league average). The financial industry average returns is (generously) around 10-15%.

If you consistently return 30% a year, you're already Babe Ruth. For you to consistently return 100%+ a year, you are 3x better than Babe Ruth... you know, hitting 180 home-runs a season.

Oh, pulleez. Living proof:

http://www.elitetrader.com/vb/showthread.php?threadid=213286

Quote from neke:

Code:

	From		To		StartingBalance			Net P&L		Return%		Net Cash Movement	Closing Balance
	===========	===========	===============		===============		=======		=================	==============
	Nov 2004	Dec 2004	          5,300			  8,700		    164			    1,000		 15,000
	Jan 2005	Dec 2005		 15,000			132,000		    880			  (12,000)		135,000
	Jan 2006	Feb 28 2007		135,000			115,000		     85		 	 (174,000)		 76,000
	Feb 28 2007	Jan 12 2008		 76,000		        138,000		    182			 (111,000)		103,000
	Jan 12 2008	Jan 11 2009		103,000			377,000		    366         	 (160,000)		320,000	    
	Jan 11 2009	Jan 10 2010		320,000			210,000		     65			 (120,000)		410,000
	Jan 10 2010	Jan  9 2011		410,000		        (44,000)	    (11)		  (30,000)		336,000

Discounting last year, his return not less than 65% per annum.

heech · Mar 25, 2011

Quote from stockstalkerv3:

Oh, pulleez. Living proof:

http://www.elitetrader.com/vb/showthread.php?threadid=213286

Discounting last year, his return not less than 65% per annum.

That's interesting choice of "discounting". I'd rather discount his first two years when he had $15k in the bank, than last year when he had $400k. Are you also going to discount where he is this year? (Flat)

neke has had a great run, and I'm a big cheerleader for his continued success. However, 6 good years (4 great years and 2 down years) does *not* a career make, especially in this industry. And the size of the drawdowns he sees are reflective of the risks he puts on.

If he keeps at this for the next 10 years, I see him doing no better than 30% a year annually compounded over the course of his career. And yes, I mean that as a compliment.

Cache Landing · Mar 25, 2011

Quote from stockstalkerv3:

Oh, pulleez. Living proof:

http://www.elitetrader.com/vb/showthread.php?threadid=213286

Discounting last year, his return not less than 65% per annum.

But that is the point. You can't just say, "discounting last year". Last year happened. You might say that it's ok because he had made enough to handle it by then, but that was mainly the result of an 800% year early on that took him from being a minuscule player to simply being a tiny player.

He had no idea when that negative year was gonna happen.

Lucias · Mar 25, 2011

Bone, don't take this the wrong way but you come off as someone who tries to sound like a know-it-all. I have no personal insight into Kingstree. But, I read it was, a long time ago, one of the major sources of volume for the ES E-mini. I also read that many of those big traders didn't save and aren't very well off now.

How do you know that there are "plenty of good traders" who can average $1900 per month on a 2-3k account? Were you told this or did you see the real money track record? I find the latter more difficult to believe as most people aren't willing to show other traders their track records. And, let me be straight we know margin requirement is not account requirement.

Can you do this? Can you teach me how to do this in your mentoring program? I am interested to learn more.

Quote from bone:

Steenbarger's point-of-reference comes from his experience as the staff shrink/educator at Kingstree Trading and the prototypical Chicago prop trading business model. It is not at all unusual to daytrade futures and realize a 100% monthly ROI on your daily performance margin.

For example, the SPAN initial performance bond margin requirement for the US Ten Year Note Future is $2,160 Spec and $1,600 member. There are plenty of good traders at Chicago Prop Firms who can average 3 tics (32'nds) profit per day for a month, and that is $1,875 per month. This is quite common, and not at all a stretch.

This will not compute with most everyone else's (your typical equity trader) ROI benchmark.

jnbadger · Mar 25, 2011

Quote from Gcapman:

For me, it's $50K...

Tell that to szeven.

http://www.elitetrader.com/vb/showt...perpage=6&highlight=trader p/l&pagenumber=874

bone · Mar 25, 2011

Quote from Lucias:

Bone, don't take this the wrong way but you come off as someone who tries to sound like a know-it-all. I have no personal insight into Kingstree.

I know Chuck McElveen personally, so I guess that I do have some insight into what was the Kingstree Business Model. You're the name dropper, not me.

I was a Chicago prop trader for several years myself, and I have clients who are currently Chicago prop traders. I have clients in the UK and Gibraltar who are prop traders at Schneider, and I have Australian clients who are prop traders at Silk Road. I have two clients in Singapore who are prop traders.

It is a big mistake to compare futures ROI's with equity portfolio ROI's. And given the fact that I have a very good idea about what kind of returns get generated, I have no reason to fabricate stuff.

Any average futures trader can generate a couple tics a day in profit on average. Shouldn't matter if he's a scalper or a position trader or a spread trader. The performance bond margin requirements are a matter of record posted and updated on the exchange website.