I am sorry, allow me to clarify further. I realized that in reading some responses, that what i had hoped to go in with (10k) would not be enough. Instead, I intend to paper trade for quite some time, develop a strategy, and then slowly and hopefully build up my disposable income to an amount that would be large enough to do more serious trading. Until then, my tiny amount of money with have to sit and grow interest while I "learn the ropes"
Making $200-$400 a day (average), realistic goal for a new trader to grow into?
- Thread starter bryan942
- Start date
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My thinking was to make $100 per day and I ended up losing over 150k in the process. Trading is a tough business.
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Thats a lot of money to lose. How did you manage to lose that much?
My thinking was to make $100 per day and I ended up losing over 150k in the process. Trading is a tough business.
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Thats a lot of money to lose. How did you manage to lose that much?
I second this opinion. Makloda's post is a very reasonable assessment of what this game is all about. Understand the game before you play the game.
"During the past few months, our company has hit a dry spell and has had me thinking about ways to generate alternate income."
It would be to your advantage to explore possibilities of trading something that is familiar to your business. You don't say what business your in or what has caused the "dry spell" but if it is economically related chances are you could trade it. Your insight as a business owner could provide an edge.
It would be to your advantage to explore possibilities of trading something that is familiar to your business. You don't say what business your in or what has caused the "dry spell" but if it is economically related chances are you could trade it. Your insight as a business owner could provide an edge.
It is inaccurate to say that you want to make $x a day. You need to say, e.g., I have $25k. I will make no use of leverage, or I will use 4:1 intra-day leverage giving me $100k of usable buying power, etc. Is $x a day returns on that amount of money in play realistic?
The correct figure is the percent return on money in play, or leveraged used.
Consistent 1% returns a day of money in play would make you a superstar. So if you had $25k, and consistently returned $250 a day on that money using no leverage, you would be the equivalent of Michael Jordan. f you went to Bright Trading, made use of $1M of buying power using your $25k, and returned $250 a day consistantly, that would be 1/4 of 1/10 of 1% return, a reasonable goal well within the average trader returns at these firms.
To be really accurate, compute the dollar value of the contract traded. For equities, it is easy since it is just the price of the equity times number of shares owned. So if you traded 100 shares of IBM at $100, that is $10k of money in play. For futures, you need to multiply the price of the future contrat times the value of a 1 handle times number of contracts traded to get money in play. So for example, if you traded 1 ES (assuming ES is trading at 1519) it would be 1 * 1519 * $50 = $75950 of money in play. For options it is even more complicated, but perhaps you should try to come up with that value on your own.
nitro
The correct figure is the percent return on money in play, or leveraged used.
Consistent 1% returns a day of money in play would make you a superstar. So if you had $25k, and consistently returned $250 a day on that money using no leverage, you would be the equivalent of Michael Jordan. f you went to Bright Trading, made use of $1M of buying power using your $25k, and returned $250 a day consistantly, that would be 1/4 of 1/10 of 1% return, a reasonable goal well within the average trader returns at these firms.
To be really accurate, compute the dollar value of the contract traded. For equities, it is easy since it is just the price of the equity times number of shares owned. So if you traded 100 shares of IBM at $100, that is $10k of money in play. For futures, you need to multiply the price of the future contrat times the value of a 1 handle times number of contracts traded to get money in play. So for example, if you traded 1 ES (assuming ES is trading at 1519) it would be 1 * 1519 * $50 = $75950 of money in play. For options it is even more complicated, but perhaps you should try to come up with that value on your own.
nitro
Bryan,
Make sure you look into the X_Trader simulator. It is the most realistic trading simulator there is.
Also, there is alot of educational information on the following sites:
http://www.cme.com/edu/
http://www.cbot.com/cbot/pub/page/0,3181,1058,00.html
http://www.brettsteenbarger.com/
There is alot of really good information here and it is free and much better information then what you will get out of your standard "daytrading book" Watch all of those webinars on the first two sites and then watch again and again...lol
This is a link to a book that I read and I think it is a pretty good book to read:
http://www.amazon.com/Trading-Excha...4491941?ie=UTF8&s=books&qid=1181485858&sr=1-3
Make sure you look into the X_Trader simulator. It is the most realistic trading simulator there is.
Also, there is alot of educational information on the following sites:
http://www.cme.com/edu/
http://www.cbot.com/cbot/pub/page/0,3181,1058,00.html
http://www.brettsteenbarger.com/
There is alot of really good information here and it is free and much better information then what you will get out of your standard "daytrading book" Watch all of those webinars on the first two sites and then watch again and again...lol
This is a link to a book that I read and I think it is a pretty good book to read:
http://www.amazon.com/Trading-Excha...4491941?ie=UTF8&s=books&qid=1181485858&sr=1-3
A set dollar figure target PER DAY is unrealistic. Everyone in the business talks about it to the newbies to get them interested in how much you can make PER DAY then multiply it by the number of days in a month/year and voila, >$100k/yr.
Where do you account for the loss days? And don't get forget to factor in transaction costs, ie. commissions.
Keeping with your PER DAY analogy, if you make $200 for 4 out of 5 days in a week, and you pay about $20 in commissions each day, you net $180/day or $720 in the week. You lose $400 1 out of 5 days in a week and you pay $20 in commission so you net -$420. For that week you're 720-420=$300/wk
Winning 4 of 5 days for a newbie is pretty good. If you're not that good (don't take it personally, but just a statement on newbies in general with $$$ in their eyes), then you might only be positive 3 of 5 days (which is more realistic) and if you do the math, you'll be lucky to break even for that week after factoring all your transaction costs.
What I'm trying to prove is that as a newbie, you need to hear this and have realistic expectations. Winning 3 of 5 days a week will likely only break even.
You should realistically think of this as a business, since you are a business man. Revenues and expenses should be measured monthly like any other business. You should have a set goal on how much you need/expect per month and adjust your risk/reward to achieve that goal.
Where do you account for the loss days? And don't get forget to factor in transaction costs, ie. commissions.
Keeping with your PER DAY analogy, if you make $200 for 4 out of 5 days in a week, and you pay about $20 in commissions each day, you net $180/day or $720 in the week. You lose $400 1 out of 5 days in a week and you pay $20 in commission so you net -$420. For that week you're 720-420=$300/wk
Winning 4 of 5 days for a newbie is pretty good. If you're not that good (don't take it personally, but just a statement on newbies in general with $$$ in their eyes), then you might only be positive 3 of 5 days (which is more realistic) and if you do the math, you'll be lucky to break even for that week after factoring all your transaction costs.
What I'm trying to prove is that as a newbie, you need to hear this and have realistic expectations. Winning 3 of 5 days a week will likely only break even.
You should realistically think of this as a business, since you are a business man. Revenues and expenses should be measured monthly like any other business. You should have a set goal on how much you need/expect per month and adjust your risk/reward to achieve that goal.
Basically a retail broker is one where you have to put up your own money to trade. You pay commissions to the broker when you trade, but you keep all your profits. Having a standard Internet brokerage account like IB would be retail. My understanding is that a firm like Bright trading is technically also retail, but shares a lot of similarities with proprietary trading.
A proprietary trading firm is one where you are given your buying power by the firm. You still pay commissions out of your net profits, but those commissions are generally very low. In exchange, the firm takes a percentage (usually a large one, at least at first) of the money you make. You keep the rest. The firm will give you more buying power the better you do, so the potential to springboard if you turn out to be a great trader is huge. If you show promise and hook up with the right firm the prospect of having a million dollars or more of BP in your first year is realistic.
I can't speak for all prop firms, but I can tell you that a computer engineer turned business owner, with an alternate source of income to support himself while he learns to trade, and some previous trading experience, would be a very attractive prospect for my boss. We actually have two guys in our office that pretty much fit your description exactly.
I'm not sure what the prop firm situation is the the US as I don't live there, but I'm pretty sure just about any major city would have something. Whether that it's a good "something" I'm not sure. I'm not in a position to recommended any specific prop firm but my own, and they don't operate in the states. I'm sure you'd be flooded with firm specific recommendations if you posted a thread about it.
Good luck man. Once again you'll be doing yourself a huge favor by joining some kind of organized firm that can train you. I just can't stress this enough.