Need Advice

Xela said:
Sounds absolutely right, to me.

Percentages: the increase from 1 lot to 2, in that sense, is the biggest.

If you have the funds, and the evidence, and the proven edge, and are planning to increase to 10 lots (barring accidents), I'd honestly be more inclined to start at 3-4 lots and increase gradually from there. Just my perspective (and doubtless one with which some will disagree.)

Great update post, above - and thanks for it. :cool:
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Agreed. I think I will max out at 5. Given my current edge and if all holds, 5 lot will generate plenty of profits. I want a nice cushion before going to 10 on a retail account. Because we all know market prices do not follow normal distribution. Fat tails exist! So even for a good setup and entry and proper exit, random sh*t can happen and on 10 lots the damages can be big even if it was the right trade with proper stops.

One can't use the minimum margin required on IB. That's too risky as I've learned.

I don't know what a good ratio should be. Obviously the bigger the better. $10K per 1 lot seems too risky. $25K per lot is safer but that requires a lot of capital...
 
From my experience working with clients who are going live and are funding accounts - comfort level and minimal anxiety is mandatory.

Again, I'm going to pound this home: find consistency.

Everything changes for the better with consistency. Your confidence, your quality of life, your ability to grow your account equity... just everything.
 
bone said:
From my experience working with clients who are going live and are funding accounts - comfort level and minimal anxiety is mandatory.

Again, I'm going to pound this home: find consistency.

Everything changes for the better with consistency. Your confidence, your quality of life, your ability to grow your account equity... just everything.
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Agreed. Consistency is the keystone to success in trading and in life. Identifying the edge in real-time and executing it each and every time with proper entry and exit and risk management.

I've been restructuring my entire life/lifestyle to be more disciplined. I get up pretty early now. I alternate between cardio and yoga in the morning. To keep my mind and body in shape. I have a spreadsheet where I keep track of my daily habits to make sure it's executed consistently.

In addition to a few hours in the morning of live trading(the rest of the day I have other non-trading things to attend to), I practice sim trading at night for a few hours. Practice multiplies experience.

This morning I was able to successfully apply one of the patterns I found in my sim practice. Ka-ching.

Wash. Rinse. Repeat.

I don't need to scale to 10 lots now. I will continue to hone my game and consistency. I have traded 10-20 lots before in my personal account. With wildly swinging P&L because I didn't know what I was doing. I was up huge one day and down huge the next day. So I know what it feels to trade these sizes. I just didn't hone my edge back then or even execute against my stated edge.

My long term goal is to get good enough to get back to my institutional level when I was at a small hf swinging 80-100 lots a clip... This will take time. First off I don't have that kind of capital as an institution. Secondly, I need to be really good and sure before I want to swing that kind of size for anyone.

All of life comes down to habits. While I might be "book smart" in the classical sense, for years I couldn't execute what I know due to emotional biases or what not. I knew countertrending was wrong thing to do but I couldn't get myself to do undo this bad habit. Until this year. It all starts and ends with habits and discipline.

Of course in the meantime, I have discover a handful of useful insights too.

let's see where this journey goes..
 
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[QUOTE+Ela="trader99, post: 4665026, member: 9059"]Agreed. I think I will max out at 5. Given my current edge and if all holds, 5 lot will generate plenty of profits. I want a nice cushion before going to 10 on a retail account. Because we all know market prices do not follow normal distribution. Fat tails exist! So even for a good setup and entry and proper exit, random sh*t can happen and on 10 lots the damages can be big even if it was the right trade with proper stops.

One can't use the minimum margin required on IB. That's too risky as I've learned.

I don't know what a good ratio should be. Obviously the bigger the better. $10K per 1 lot seems too risky. $25K per lot is safer but that requires a lot of capital...[/QUOTE]
%%
And dont trade/invest with money that you cant afford to lose.
WE can demand speed with a market order+ demand our price with a limit order, but can not not demand the market OR EVERTHING OUT OF LIFE-that's why we don't trade with money we cant afford to lose.

The saying ''your biggest drawdown is in your future''; may or may not be true...... But for sure,good reason , WHY ANY insurance co charge$ young[more risk] drivers much more premium , on insurance policy.Good question
 
trader99 said:
All of life comes down to habits. While I might be "book smart" in the classical sense, for years I couldn't execute what I know due to emotional biases or what not.
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Have 3 friends...Two old roommates and one son in law. Two got into Berkeley and one into UCLA. To get into these places took great smarts. They all three dropped out. All three got their degrees at a state college...Did fine career wise afterwards. At the UCs they were smart...In their careers (and years later) they became wise...
 
Cabin111 said:
Have 3 friends...Two old roommates and one son in law. Two got into Berkeley and one into UCLA. To get into these places took great smarts. They all three dropped out. All three got their degrees at a state college...Did fine career wise afterwards. At the UCs they were smart...In their careers (and years later) they became wise...
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Interesting story. I'm not sure if it's the same analogy. I did fine at my top tier undergrad and graduate school. Careerwise there has been some ups and downs just like any professional who have been in Corporate America long enough.

Trading, on the other hand, was where all these emotional biases came in. Wrong thinking about how market works...

Trading well sometimes means going against your human nature. There are well known cognitive biases that lead people to cut their winners short and ride their losers. Read up on Kahneman & Tversky work.

In that sense, it has less to do with academic abilities. More with psychological biases inherent in all humans...
 
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bone said:
If academic credentials or high IQ automatically made a good trader, then there would be no challenge in trading markets. Plenty of those types try and fail at it - some spectacularly. Google ‘LTCM’.
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True. A college classmate of mine went to LTCM. He was there for like 5 months then the thing imploded. haha.

LTCM was run by economists. That's where the problem was. Economists create models then try to fit reality into it. That's not how markets work.

People like to use LTCM as an example of why quants suck. Perhaps.

Rentec, on the other hand, is another quant hf who has done extremely well with no blowup. Average 40% annual returns after 5/40 fee structure.

Rentec is run by mathematicians, physicists and computer scientists. Huge difference. They look at data then build models based on that data. Not the other way around like economists. Also, they are more humble because maybe they are outsiders. Whereas LTCM was run by a bunch of big ego ex-Wall Street Saloman Brothers guys who like to gamble big and lose big.

Also having partners at the firm who won the Nobel Prize in Economics and on the faculty of the top econ&biz schools in the country probably made them believe they can't do no wrong. Gotta keep your ego in check.
 
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