On the Path to Profitability

[i am nobody]

I am nobody,

Please clarify somethins for me. I appreciate that everyone has their own way of doing things and although I would consider myself a successful trader that routinely beats the market I am on ET to talk with like minded people (as you know it gets boring trading by yourself) and sometimes give advice but also to learn. So my question is not meant to be negative as It appears you are trying to offer good info. What I don't understand may come partly from the fact that I do not trade ES. I trade stocks and ETFs. Having said that, when you say acct is $326500 and margin requirements is $1306 I appreciate that allows you to trade 250 contracts. You mention that you trade 200 contracts at a time and have a 3 point stop even if it's a mental stop. That means you are risking $50/point on ES or $150 per contract times 200 contracts that is $30,000/trade you are risking. That is 9.2% of your account per trade. I know most people would agree that that level of risk is FAR too high for an account.

Many would suggest starting with 1% or less risk per trade and then after you have hundreds or thousands of trades with data of your system, THEN analyze the data with Monte Carlo type of analysis to see how much more or less you should risk to maximize returns and minimize losses. Also, this analysis looks at maximum number of losing trades you could have before being ruin. Not everyone defines ruin at 100% loss of their capital as you mentioned. But I tend to define "ruin" as losing 16% because that is the max I think I can tolerate and still make it back. My analysis has given me the 95% confidence that if I saw as many as 19 losers in a row I would max out at 16% loss of my initial capital if they mostly occurred at the beginning.

So,... How can you reasonably take 9% risk per trade? 2 losers in a row and I would define as ruin. Even if you take larger definition of ruin you could have 4 losers in a row and be down about 37%. But that means you need to make back >50% return to get back to even. Please elaborate on this. Most people don't believe there are or have a system with 95% win rate, which is about the only way you can risk 9% per trade in my opinion.

Lastly, you mentioned a margin rate of $1306. Again, I don't trade ES, but my understanding of ES rules is you need ~$5000 margin for trading 1 contract. Please clarify.

Thanks

Can somebody show me where I wrote that I trade this account in reality? I wrote clearly HYPOTHETICAL, you can check it. I have learned long time ago already not to give any real and private information anymore on ET. Only the proportions between account, margin and number of contracts are real. I did not say I trade small, big or in between, I said nothing at all about my accounts. I never discuss my accounts with anybody.

I can however tell that the first time I bought 100 contracts at a time was around or before 1995, before the Emini existed. I traded the old $500 per point contract in 20 contract lots. I was $10,000 a point at risk. Orders were placed by phone and fills were made in 20-60 seconds in various different sized packages. 3 points loss would have cost me $30,000.

I cannot remember having had a 20% drawdown in the last 10 years. I know that I never had 2 consecutive 3 points losses. If I have a three points loss, I always shift from trend following to profit taking. I have alot of modules that are created for specific situations. I don't trade everything with one module that should fit all. That's what most traders do wrong. Different situations require different solutions.
With profit taking I mean that I try to take quickly 3 points and don't stay in for the complete move according to my system. Priority at that time is to wipe out the 3 points loss to get out of the danger zone. Normally I recover and even make additional profits within the next 2 trades.It takes on average between 24-48 hours to do that. I have a very high number of winning trades. Because of shifting from trendfollowing to profit taking I do more trades than usual at that moment.

As I can lower margins without any problem I don't have (within my 20% limits) the problem of reducing size as a result of losses. As my drawdown is always less than 20% I can continue to trade full size because my minimal margin will always stay above $1000 per contract. So losing 20% does not imply that I have to recover 20% losses with only 80% of my capital, which would imply making 25% profit. Makes a huge difference. If I lose more than 20% I have a problem. But then I can fall back on my accumulated profits of previous periods. So a 50% loss does not mean that I have to make 100% with the remaining capital to recover. I have deep pockets thanks to putting away profits continuously and can just add cash from my reserves. Only at the start of this way of working you are vulnerable as you don't have any build up reserves. But you can counter that by gradually building up positions based on profits that are put away. In fact the biggest part of my margin is in my reserves, not in my trading accounts. So in reality I have huge margins, but don't block them as margin. What is the difference between $10,000 margin per contract and $1,306 margin combined with $8,694 in put away reserve? The first situation is accepted as much safer than the second one? Why? In both cases the total financial backup is identical and in case of a big loss the financial result is also identical. Both situations lose the same amount of money.

Building up should be done with a small account for three reasons:

1. if you cannot build up with a starting capital of $3-5000 this system is not good for you and will ruin you 100%. So no need ti risk more at once.
2. if things go wrong you can try again with $3-5000, so you know your risk in advance.
3. you only do this with money you can afford to lose, so probably you have enough money to try this out a few times and limiting the loss each time to $3-5000.

95% win rate is not necessary. All depends on the combination of average loss per losing trade, average profit per winning trade and win rate.

ES has three margins:

• initial margin: margin to open a position that can go outside of RTH.
• maintenance margin:margin to maintain an open position that can go outside of RTH.
• daytrading margin: margin for positions that are taken within RTH (sometimes should be closed 15 min before the close of RTH)

Daytrading margin can even go to $300-500 a contract. This depends of your agreement with your broker. $300-500 is what the newbies always want, and also why they wipe out. Q3D apparently uses this $300 margin if you read his posting just after your posting. My margin is more than 4 times bigger, but nevertheless I am the idiot and he is not. He probably is the Pope.

This is a model of building up positions to arrive at what I do; within 150 calendar days my margins are a multitude from what most people use.

 

[i am nobody]

You need $300 to trade ES. If I am nobody is so good I'll fund him for $300 and we'll see what he can do, $30,000 by next year is what he suggests.

Are you Marketsurfer? You use the same unethical practice to twist words and manipulate postings from others. I never spoke about $300 but about $1,306 to be exact.
I don't need your $300, you can keep it as you will need it much more than I do.
Your $300 trading account proofs that you are in the 95% losers group as I suggested before. This is confirmed by your posting:"You need $300 to trade ES."

As I am apparently an idiot or a papertrader, I think it is better that I share nothing anymore. Real traders should do that, not me.

 

[jl1575]

If you call Schizo a trader it is clear we have a different definition of what a trader is.
He had not only his first three trades in loss, most of the rest too. He was just clueless jumping around. If he was a typical futures trader for you it means you are surrounded by losers. The +90% that never make money. They make indeed 10+ trades a day, like throwing darts.

You are probably a profitable and quite experienced trader, but your comments on Schizo is unfair. Lets consider these:

1) you claimed that you can double your trading capital in 4 month, in your posting about half year ago; So that would be average 25% gain per month, that is pretty good.

2) Schizo posted LIVE trading and he made >$5000/monthly for two consecutive months, that is more than $10000 in a two month period. By your margin standard, $1306 per emini ES, that is a gain of more than 300% per month. These are facts and posted in REAL TIME on ET.

3) You both trade the same instrument: E-mini ES.

 

[i am nobody]

You are probably a profitable and quite experienced trader, but your comments on Schizo is unfair. Lets consider these:

1) you claimed that you can double your trading capital in 4 month, in your posting about half year ago; So that would be average 25% gain per month, that is pretty good.

2) Schizo posted LIVE trading and he made >$5000/monthly for two consecutive months, that is more than $10000 in a two month period. By your margin standard, $1306 per emini ES, that is a gain of more than 300% per month. These are facts and posted in REAL TIME on ET.

3) You both trade the same instrument: E-mini ES.

So 2 months are a reliable trackrecord for you? If bashers would answer they would say: Schizo was lucky.
At least that is what they tell about me, even if speaking over a period of more than a decade. I was lucky.

My statements are build on years of trading, not on two months. A hell of a difference.

Schizo never showed a statement. Because of the very low average profit per trade his REAL results could be dramatically less if he was cheating just 1 tick on every posted price. You can never check if he did this or not. I remember that I calculated his result by just reducing every trade by 1-2 ticks. His total result would be a loss, not a profit of >$5000/month.
Posting signals is not reliable because it is impossible to check the validity of the price posted. Especially if trading microscopic timeframes correct prices are very important. I can post in that way too. I will post an entry and post next an exit with a 2 tick profit. I should just watch that the market did move at least 2 ticks. Would you accept that as proof? That's what Schizo maybe did and you accepted that as proof???
Sometimes I don't understand why certain uncontrolable statements are accepted without any critical reflection while others are defined as impossible. All with the same kind of "proof".

Where is Schizo now? If he is so succesful he should be trading.
I clearly told why I commented on Schizo. He could change three times in two minutes his position. That's proof of gambling. Nobody, except of HFT, trades so fast. And the most important is that in this three switches he lost money most of the time and should sometimes have stayed in his first or second one. He did not know what to do so he jumped around. And statistically it was sure that he would have some winning trades. You should watch the distribution of his profits and losses.
Even throwing darts blindfold will result in sometimes hitting the board.

 

[Q3D]

Are you Marketsurfer? You use the same unethical practice to twist words and manipulate postings from others. I never spoke about $300 but about $1,306 to be exact.
I don't need your $300, you can keep it as you will need it much more than I do.
Your $300 trading account proofs that you are in the 95% losers group as I suggested before. This is confirmed by your posting:"You need $300 to trade ES."

As I am apparently an idiot or a papertrader, I think it is better that I share nothing anymore. Real traders should do that, not me.

An Elitetrader sponsor boasts of $300 ES margins, therefore an elite trader should be able to use $300 ES margins successfully.

You said you never have had 2 consecutive losses on the ES of 3 points or more and that you have thousand-plus-fold returns on your initial capital. Therefore you have a high probability of turning $300 into $30,000.

 

[Turveyd]

An Elitetrader sponsor boasts of $300 ES margins, therefore an elite trader should be able to use $300 ES margins successfully.

You said you never have had 2 consecutive losses on the ES of 3 points or more and that you have thousand-plus-fold returns on your initial capital. Therefore you have a high probability of turning $300 into $30,000.

Never taking 2 losses in a row over 20years is where i tuned out and classified him as demo loser, trying to create guropu status for OPM.

I never discuss my account, but i trade at $10,000 per pt and I post on ET despite being a millionaire.

 

[Q3D]

Never taking 2 losses in a row over 20years is where i tuned out and classified him as demo loser, trying to create guropu status for OPM.

I never discuss my account, but i trade at $10,000 per pt and I post on ET despite being a millionaire.

Demo loser and suspected vendor

 

[wrbtrader]

...Daytrading margin can even go to $300-500 a contract. This depends of your agreement with your broker. $300-500 is what the newbies always want, and also why they wipe out...

Those low margins of $300 - $500 per contract should be outlawed because they are abused by traders that have discipline problems.

There was once a congressional debate about predatory practices by brokers after the day trader Atlanta shootings and one of those practices involved the availability of low margins to all when it should only be available to a select few.

I'm sure someone like Bernie Sanders would love to see margins like 10k per contract considering he's a proponent of taxing anything and everything involving trading as a way to discourage trading.

What happened since that debate...margins became cheaper for the wrong type of traders and brokers play the volatility lag game instead. Thus, when market conditions become too volatile, brokers will change the margin requirements for day and after maintenance but the damage has already been done prior to them making that decision.

I just find it almost like a conflict that so many talk about "risk management" or "risk of ruin" and then many traders abuse their use of the $300 - $500 margins. Yet, I don't really understand the broker business model for such...not sure if its based upon liquidity, volume, typical account size, clearing house, private exchange agreements, forecasting or what.

Thus, I do not know what can done to protect the trader that's not discipline enough to manage $300 - $500 margins while at the same time it will not put the broker out of business or force them to layoff a ton of people.

Similar, can we really ask the lottery offices to determine who should be allowed to play the lottery and who should not be allowed to play the lottery.

P.S. Beware of the next U.S. president...things could change dramatically for us retail traders involving taxes that may also impact margin rules. In fact, I remember when the last big changes occurred (special trading privileges involving fees and taxes) for institutional firms...it was a lift off for algo trading.

 

[i am nobody]

An Elitetrader sponsor boasts of $300 ES margins, therefore an elite trader should be able to use $300 ES margins successfully.

You said you never have had 2 consecutive losses on the ES of 3 points or more and that you have thousand-plus-fold returns on your initial capital. Therefore you have a high probability of turning $300 into $30,000.

My trading is based on $1.306 margins. Not $300.
As I told before lying, manipulating and twisting words is all you can. Confirmed again by your posting.

 

[i am nobody]

Never taking 2 losses in a row over 20years is where i tuned out and classified him as demo loser, trying to create guropu status for OPM.

I never discuss my account, but i trade at $10,000 per pt and I post on ET despite being a millionaire.

Same reply for you.

My trading is based on $1.306 margins. Not $300.
As I told before lying, manipulating and twisting words is all you can. Confirmed again by your posting.

But you probably miss the intelligence, correction you DO MISS the intelligence to understand the huge difference between: never 2 losses in a row and never 2 losses OF 3 POINTS in a row. You even cannot read what is posted in simple language.