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Quote from Hitnruntrader:

Hey bud.

I disagree with what you are saying.

We can debate this forever and there will be no winner.

If someone is new and losing 300-500 per day, they are probably not cut out for this biz.

There are many different styles of trading. I happen to scalp the naz. I like to scalp anything in play and I prefer stocks in the 3$ to 10$ price range.

For a newbie to learn this style is not to difficult. To master it will take a very long time. The key is not to make to many trades and to have fairly tight stops. The trader will never make that much trading 100 lots but they will not lose alot either. If they are patient and don't smash keys all day, they can easily survive. The key is to get consistant profits over time. Then they can slowly increase size. Even going from 100 to 200 shares is a huge step. They are actually putting on twice as much size.

This is one method where it could work.

As far as trading pairs and opens, I would think the trader would need to put on selective trades and really define his risk tolerance. If he is going to try opens, then only put bids and offers on a few stocks so they get very few fills in the start. The last thing you want is a newbie with 5 open positions.

Maybe they could put there bids and offers even a little further outside the area where most open order traders put theres. THis way they will have fewer fills. Its hard for me to really know if it would work for opens cuz I have never traded them. I am just throwing out possibilities.

As for my method, I know it can work. To start with 25K and being prepared to lose it sounds nuts to me. I think it is better to go in very light and just install major rules into your makeup.

Just my opinion.

Happy Trading.
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No, there is a winner. It's ME! LOL. Kidding aside, look, even losing $100 a day over 6 months will cost you 12k. That is enough to blow out a 5k or 12k account. It's very easy to talk about what traders shouldn't do, the bottom line is, that's not reality. All new traders make the same mistakes, which is fine. It's just that 5k and 10k just isn't enough.

I also disagree with the notion that guys that lose 300 to 500 a day are not cut out for this business. When I worked at Worldco, the best traders went knee deep in the hole. Some guys were down 50k to 100k before they got out. They turned out to be our best traders. The guys that actually were playing it safe never really made it. Sure they never went that deep in the hole but they made anything either. Sooner or later you need to get aggressive and trade. If you think a guy is going to learn how to trade and keep his losses to under $50 a day, well, I guess we are going to have to agree to disagree. I run a prop office and I've traded with hundreds of guys in the prop world. I know the reality of the business.

Are there outlier guys out there on the far end of the bell curve that by chance made it through 6 months losing less then 5k who also became profitable traders and are very successful today? Sure, statistically speaking there must be. But I think it's disingenuous to use an outlier to make an argument.

Nobody wants to lose 25k. Hell, nobody wants to lose 1k. But that is not how you look at it. You are not going to LOSE 25k. You are going to learn how to trade. I didn't go to college saying, wow, I'm going to lose 100k to get this degree. I PAID for that degree. With the idea that the degree would pay me dividends in the future. That is the same with trading. You are not going to LOSE 25k. You are going to LEARN how to trade. Some guys that education might only cost them 10k or 15k, some guys it might cost 100k. Does the guy that went to Harvard and paid 100k for his education feel worse then the guy that paid 20k to go to Northern Illinois. Probably not. Different people need different things. You are acting as if they are throwing that money into the wind betting on black at the roulette table. That is not the case.
 
Addressing "living expenses" - well, we have quite a number of newer traders who are transitioning as we speak. Keep their jobs, start trading, transition when time is right. We have the additional benefit of living in a "24 Hour Town" - and the market closes at 1PM.

Nobody that I know of ever got rich working only 40 hours per week.

Don
 
Quote from Maverick74:

Jugi,

The problem is it takes most people on average 100k in losses to learn to trade. It's not an issue of leverage, but losses. Someone could offer you 1 million to 1 leverage, it's not going to help. At the end of the day, someone has to write a check for losses. Whether it be Don Bright or you. In my opinion 25k is even not enough. Just do some simple math here. If you lose just $500 a day including fees, and that is not a lot of money btw, you could be gone in 2 months. With 5k you could be gone in 2 weeks.

Here are some numbers to chew on. I think it takes most guys at least 12 months to learn to be consistently profitable. I'm not even saying a good living, I'm saying consistent. So what you need to figure out is how much on average could you lose a day. Then multiply that times 100 or 200 and see what that number is. And that is probably the cash you want to have on hand.

I think the ideal amount is around 50k to 100k. I'm not saying it's not possible to be successful with less, it's just the odds are very poor. The best solution for a lot of guys if you really believe in yourself is maybe to raise some money from friends and family and bring 50k to 100k to the table. Just one man's advice. And yes, like Don, I run a prop firm too so I'm all too aware of the numbers.
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best post of the day.
 
Quote from Don Bright:

Addressing "living expenses" - well, we have quite a number of newer traders who are transitioning as we speak. Keep their jobs, start trading, transition when time is right. We have the additional benefit of living in a "24 Hour Town" - and the market closes at 1PM.

Nobody that I know of ever got rich working only 40 hours per week.

Don
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Don,

Do you let traders carry positions overnight consistenly? (i.e. if I enter a trade with a 40 day plan, will you let me carry it 40 nights?)



Regards,
 
Nobody wants to lose 25k. Hell, nobody wants to lose 1k. But that is not how you look at it. You are not going to LOSE 25k. You are going to learn how to trade. I didn't go to college saying, wow, I'm going to lose 100k to get this degree. I PAID for that degree. With the idea that the degree would pay me dividends in the future. That is the same with trading. You are not going to LOSE 25k. You are going to LEARN how to trade. Some guys that education might only cost them 10k or 15k, some guys it might cost 100k. Does the guy that went to Harvard and paid 100k for his education feel worse then the guy that paid 20k to go to Northern Illinois. Probably not. Different people need different things. You are acting as if they are throwing that money into the wind betting on black at the roulette table. That is not the case.

A very well tought out response to the difficult decisions wanna be traders have to make. Invest in yourself! Invest in your choice of education! Make these decisions while you are young. If you wait, life has a way of making your decisions for you.
 
Quote from Don Bright:

Addressing "living expenses" - well, we have quite a number of newer traders who are transitioning as we speak. Keep their jobs, start trading, transition when time is right. We have the additional benefit of living in a "24 Hour Town" - and the market closes at 1PM.

Nobody that I know of ever got rich working only 40 hours per week.

Don
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What time does the bunny ranch close? :eek: :D
 
Very interesting conversation going on here :)

I agree with Mav and Don that if a trader who just started out is left alone to trade his $5k account then I would assure you that he will blow it out in less than 2 weeks.

But :) if someone is disciplined enough (at the end of the bell curve as Mav pointed out) or if he has a good Mentor who really in keen to make him succeed then I would say that $5k is enough to know if this new guy will make it or not.

Here is the plan for a day trader who wants to scalp (can be tweaked to fit any other strategy):

Phase 1) 2 weeks of theoretical background, this is where he will learn what is it all about, what are ECNs ? what is Ask, Bid, blah blah blah, all the basic theoretical information that he will need

Phase 2) 2 weeks of simulated monkey trading, this is where he will be taught how to use the software to watch the quotes, place orders and tracks his positions, in this period he will learn to use the keys and do most of the order entry mistakes, get real familiar with the software and feel ok with placing orders

Phase 3) 2 weeks of simulated disciplined trading, in this phase the trader will learn to stick to a plan, what is this plan ? very simple, the trader will trade only one stock something like "VLO", give him a time sheet with something like: 9:50 Long, 10:30 Short, 11:10 Short and so on, so at each time he will enter a trade in the direction that you randomly predetermined for him, stop loss @ $0.05 and take profits @ $0.1


Phase 4) 2 weeks same like phase 3 but on live account, with only 20 predefined trades, this phase will really teach him to cut his losses short and not to fear losses, with this random entry he will not lose much every day, I would say maximum $100 including all commissions and fees

Phase 5) 2 months of live rationale trading, in this phase he will learn some real techniques that makes the odd better than random, maximum number of daily orders 10, at this stage with only 10 trades and supposedly good discipline (learned from the previous phases), he would lose maximum $50

Phase 6) Either quit or live on :)

so here are the expenses:

Phase 1) zero
Phase 2) zero
Phase 3) zero
Phase 4) 10 days x $100 = $1k
Phase 5) 40 days x $50 = $2k

Total expenses = $3k

ok, is this a bullet proof plan, definitely not, but believe me when I tell you that if you first teach your traders to cut the losses short and not to fear them you would be doing them a big favor.

If a trader is patient enough to do the above full time working not less than 10 hours each day (6.5 trading, 1.5 reading books or other resources, 1.5 reviewing every tick of his traded stock during the day, 0.5 sitting down with his mentor to get some real hard spanking if he break any of the rules) , if he is patient and disciplined to do so for 4 months as stated above then I assure you he will make it IF HE WOULD EVER MAKE IT , if not then better for him to save his time and money and go search for another business.

Now the above plan is veryyyyy hard to be followed by someone who is trading remotely, this is the guy who will definitely need more than $10k to make it.

just my 2 cents ;)
 
Quote from krazykarl:

Don,

Do you let traders carry positions overnight consistenly? (i.e. if I enter a trade with a 40 day plan, will you let me carry it 40 nights?)



Regards,
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Of course we do...heck, our Pairs traders keep hundreds of positions for months...obviously they make much more money from the frequency of trading, but keeping core positions is part of most traders business plans.

Don
 
Quote from Don Bright:

Of course we do...heck, our Pairs traders keep hundreds of positions for months...obviously they make much more money from the frequency of trading, but keeping core positions is part of most traders business plans.

Don
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Sorry if I did not gleam that - most of the posts I have read regarding prop firms focus on traders closing out positions intraday.


I will be sending the signed account papers next week.


Best Regards,
 
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