How should a newb trade 50 K

Quote from jomama:

could someone quickly give a definition of "edge" and how it's used in context to these forums?

From what I'm hearing in multiple threads it's just a system that works to make money consistently, but I keep wondering if there isn't an extra part to it I'm missing.
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********

MrFong88;

All right lets say you NOW have brains enough to trade 100 shares because most of us were not smart enough to trade that small or much smaller. Now get an edge or better yet,
get
an edge before trading!!!!!!!

:cool:

MrFong;
Trading a king kong
size position could be dangerous @ this stage of education.

Jomama ;cant give you a quick definition of edge cause we could write a valuable book on the subject.


Get, study today
or monday,
study ,study
study,study /underline, study until you profit-''The Market Makers Edge by Joshua Lukeman.

The principles apply to most any market/timeframe ,NYSE,NASDAQQQ, derivatives.


Mr Fong;
trading any king kong
size positions could be counterproductive/dangerous @ this part of your education.:cool:
 
My advice is to leave where you are, find a futures shop, and trade NQ. Put 45k away and play with 5k. Trade 1 lots with a stop on the floor for every trade. Don't make more than 1 or 2 trades a day. That way you can learn as you go without too much risk and no one will be pressuring you to trade volume. Unless you use very wide stops, you can make that 5k last at least a year until you find your "edge"


Tbill
 
Quote from mrfong8:

i had another thread but it wasn't written very good, so i figure i try another thread and address my situation more specifically.

i am new to prop trading and getting confused in a mixed up working environment. There isnt any mentor i can seek out for , nor are there any traders that like to discuss things.

I can't seem to get good advice from manager either because he seems to only offer advice that encourage heavy volume trading.
He kept emphasizing the effect of making 1, 2 pennies on millons of shares.

So what can i do to improve trading? I have read lot of fundamental, TA, market psychology and some other market books, but not many directly target at trading. i do buy every issue of SFO, ActiveTrader, and i still find nothing very useful .

So please if any one can give me some points on how to pick a direction, form a plan and system

I will greatly appreciate

PS i have about 50K w/ the firm. i think should would give me a lot intraday BP, by i don't want to use too much leverage on it for now. How big of a position should i take?
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I think mschey and spike500 gave some good advice. To thier advice i would add, deposit the minimum amount you have to deposit in order to trade 100 share lots. If its 2k then only deposit 2k. That way you'll have to blowout 25 accounts before you blow your brains out.
As for mentor, forget about it...you have to develop a method/system that is consistant with your goals and your personality. What you need is not a mentor but a risk manager instead, someone who will tell you that you're overtrading, not using stops, not following your method, etc - basically someone to tell you that your trading against yourself and if that's what you really want to do then your better off packing up and going home.
 
Quote from TooL:

I think mschey and spike500 gave some good advice. To thier advice i would add, deposit the minimum amount you have to deposit in order to trade 100 share lots. If its 2k then only deposit 2k. That way you'll have to blowout 25 accounts before you blow your brains out.
As for mentor, forget about it...you have to develop a method/system that is consistant with your goals and your personality. What you need is not a mentor but a risk manager instead, someone who will tell you that you're overtrading, not using stops, not following your method, etc - basically someone to tell you that your trading against yourself and if that's what you really want to do then your better off packing up and going home.
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What you describe is exactly what a mentor does. But he needs to find an edge above all else, with no edge, nothing can help him make money, not money management or risk management, nor praying to the trading gods.

Once you have and edge, that is something that works and makes some money, then you simply scale the business and grow your revenues.

One other important point, and this applies to most traders out there. You must be able to make money on a frequent and consistent basis for it to be a tradeable edge. A system that makes money 1 in 5 trades, and trades only 10 or 15 times ( regardless of how profitable is) a year is untradable for new traders IMO and especially for a prop trader that has chosen this as a serious business. Very few traders will be able to consistently follow the approach after taking a few losers in row.

Good trading!

Mike
 
Quote from nononsense:

that's certainly one way of trying to 'learn'. However, after you lost your 'initial tuition', chances are that you will not have learned a lot, if anything at all. If you're smart - not many are - open a savings account and deposit your $50,000 till such day that you're sure you know what you're doing. That's the only true secret of trading.
This is NONONSENSE advice!
:cool:

PS:
if you lose 25K, you'll have to double what's left to get it back;
if you lose 40K, you'll have to quintuple (*5) what's left to get it back;
if you lose 45K, you'll have to decituple(? :) ) (*10) what's left to get it back;
if you lose 50K, you'll have no tuition money left to keep on learning! :D
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Well, if we assume that he is like most, he probably won't succeed so opening a savings account is a sure bet, however, trading does offer the advantage of unlimited upside and very little downside(your risk capital), and given that I think he should continue to learn the trading business.

My initial capital contribution was 25k, and within three months of trading, I lost half of my money. Faced with losing my trading business, I got serious, focused on finding only tradeable edges, and then focused on constantly developing new distinctions and strategies to improve my edge. Within a matter of 2 months I had made my money back, and just 3 months after that I achieved my first double. The second doubling of my account only took 4 months, the third double I did in a single month. My point is this, once you have a strategy to make money, the prop model allows you to very quickly and aggressively build capital because the business is scaleable. It worked for me and continus to do so.

Good trading!

Mike
 
It doesn't sound like a prop firm you are at. Are you licensed? If not, you are definitely not a prop trader. My firm only requires $5K but you have to have series 7.

You are probably getting a lot of advics now on how to trade, but I think you'll have to develope your own style and that's going to take time and effort. THERE IS NO SHORT CUT. No one who makes money is going to tell you how to make money exactly. So be very skeptical if someone is offfering a very specific strategy.

But there are a few things you should remember. Keep your expectations low but hopes high. There are day traders who make a lot of money but most of them either lose money or don't make that much. TRADE SMALL to begin with. And keep it small until you find your rythem and consistency. Sizing up your trades gradually. Trading 100 share lots is very different from trading 1000 share lots which is again different from trading 10,000 share lots. Find your comfort zone and stick with it. You don't have to trade big to make big money. Two traders in my group rarely trade more than 2000 shares at a time and they take home more than $300K a year. Don't laugh. Making $300K in this market is no small feat. Million dollar babies don't come around that often anymore. Good risk management is paramount. Good trader's downside swing is only a fraction of their upside potential.
 
i am licensed, and i don't have to deposit that much, that's how much i have altogether including my checking .

yea, seems like most people do get burned out within a year, i will work hard at it but i am not looking forward to beat the odds.

So i decided getting another job, i do have a college degree.

any job that pay between 1000 to 1500 a month will do me pretty good, then i don't have to fight to try to make up for the desk fee.

So my strategy now is to sit tight, wait for a year ........

thanks everyone
 
Quote from Rearden Metal:

Richard Dennis is the master of making people think he knows how to trade, and then taking quick 50%+ drawdowns.

http://www.elitetrader.com/vb/showthread.php?s=&postid=479098
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I still like his contra-thinking.... useful for me growing a small account... as I am prepared to take a possible 30-50% hit at some point for some crazy geometric growth rate.... But I think my stuff would stop working quickly after certain size because the inefficiency comes mainly from the big guys who can't move very well... and you can't exploit certain edge if you are becoming part of that big money.

Managing large amount of OPM is light years beyond me... tough to be different... probably why we have so many quasi-index funds in disguise... charging management fees... Are they doing the better things for their clients?

:confused:
 
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