Robert Morse
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Tuesday’sEdit: FWIW Does Bob Morse ever sleep?
Tell me why I can't grow my account to $1M in 12 years
- Thread starter jeffbader
- Start date
so you do think like an engineer
- why day trading? the potential to make a lot of money? usually that's the wrong motive lol.. them who make it into the 1% usually just have insane obsession so they make it despite all the fails and pain.... this biz is literally the hardest way to make an easy buck.
- the earning potential - you can't simply extrapolate like a piece of engineering... on paper yes if you can make money with 100 shares, you can just size up and make unlimited.. but everyone has a pain threshold beyond which sizing up becomes counter productive...
- confidence is irrelevant as you don't know the biz yet.
- mentor - I can't speak for others.. my thread 'trading is easy' lays out a certain style...and I will be glad to answer any specific questions.. heck if your goal was $1m and you already know a math to reach 1.7m, why still bother
.... if you stay as an amateur trader it's actually difficult to find one. Many short term traders have certain methods that are liquidity dependent, so they certainly wouldn't want to have a potential competitor.. and if liquidity is not an issue, that just means they can size up for more profit, they stand to gain nothing by taking on a student... this logic also kills any 'education/forecast' services out there.. if anyone has a working method, why do they need to sell it for a fee.. the market has all the money they can pull.
To put Robert's post in other words: At this point you don't know what you don't know. Projecting potential levels of profit and loss is a meaningless exercise until you've spent a LOT of time in the markets to build a base of knowledge and experience. And that comes with a cost, which the "tuition" of losses and the time required to devote to study.
This is the "Catch 22" of trading. You can't succeed without knowledge and experience. But to get there, you need to first need to put in the time and be prepared for significant periods of flat to negative performance. And still, no guarantees at all of success.
If all of this sounds daunting, well, accept the reality that it is.
If you don't need the money, don't take the risk.
I just did a little pythoning and here is what I came up with. If you can return, after taxes and other expenses, 0.1% per day profit on what initially is a $30k account, and leave it in there to compound, after 10 years of trading every single trading day which I think is 250 days or near that per year, you will end up with an account valued at $365,018. Not too shabby... definitely outpacing inflation. But if you double your average daily profit to 0.2% you will have at the end of 10 years, $4,430,217. You reach $1M after 1756 trading days. That's more like it, huh? The magic of compounding.
How about 0.5%? I make it to be $7,803,252,245, Mr. Buffet. Now that is half of one percent profit on the entire account, every day. Net profit. Pretty hard to do. Impossible? Technically maybe no. In the practical world once you have grown your account to a respectable size it becomes difficult to trade it fully with the same returns I think. Your position sizes would move the markets and you would get big price slides when entering and exiting. You would have too many positions open at once to manually monitor and trade them to greatest effect. And so you would also take a lot of swing trades and you would of course buy and hold to put dead money to work for you. But let's say you are able, whether manually or automatically, to trade with an average daily profit after all expenses of 1.0%. That would give you $1,907,900,453,894,625. Approximately. I kinda have to think that if it could be done, someone would have already done it. Hey I'm just crunching numbers.
The following python code was used, with the variables just hard coded. Should work in Python2 or Python3.
MyAccount = float(30000)
Ret = float(1.1) # 1 + percent profit X 100
Added = float(12000) # how much principal gets added to the acct every year
for i in range(40): # how many trading days or years
MyAccount = MyAccount * Ret + Added
print(i+1, MyAccount) # prints on each line the consecutive days or years or other periods, and the resulting account sizes.
But back to practical. One internet trading guru famously traded I think $583 into $1M in 500-something trading days. Less than three years, anyway. However this was an experienced trader who could afford to try this several times and just publish the youtubes of the one that successfully grew to the critical mass point of being able to transition from an offshore brokerage to a domestic one. Who knows what happened behind the scenes. But the P&L for an account is there for anyone to see. Such things are empirically proven to possible.
With discipline and good money/risk management, you might well be able to realize $1M in 12 years, yeah. If you are one of the minority who is able to learn to trade profitably and consistently. For that matter, just buying and holding $30k in equities that return a long term average of 10% annually will see your account at $94,152 after 12 years, and after say 30 years you end up with $523,482. But if you add $12k to the account every year from wages, etc then your 12yr level would be a bit over $350k and you would see $1M in 22 years. After 40 years call it $6.7M. A young guy who can develop the discipline to invest $250/week could well see such returns from buy-and-hold with maybe a bit of a proactive slant to handling major market declines.
So obviously the human element comes in to play. Can you trade every day and consistently make .5% on your entire account balance? Can you without any exception leave all your profits in your account where they can compound? Not so hard in the beginning... that's what... $150 profit the first day on $30k? Well within the realm of probability. If you are a good trader. If you are one of the 10% to 20% or so who actually become consistently profitable. Taxes and other expenses are limiting factors. Markets don't always oblige you with trader-friendly price and volume action. The biggest factor is the human element. Can you make a plan and trade the plan precisely. Can you devote time to study. Can you spend every morning trading, either on paper or live. Can you add to your account after the nearly inevitable beginner losses.
Keep in mind that this thing of ours is for most intents and purposes a zero sum game. Some guys win. Most guys lose. The brokers and the tax man take their rake from the pot. The strong players eat up the weak players and send them home crying. The big dogs want to take your money and are pretty good at doing so. If you can out trade the strong players that are experienced and skilled at taking your money, then you can do well. It's not a given. It's not easy. If you want to start trading just because you have a goal of raising $1M then you have your work cut out for you and I would be betting against you. If you are already a profitable trader then you have already crunched the numbers and also watched other traders do or fail to do what you want to do.
How about 0.5%? I make it to be $7,803,252,245, Mr. Buffet. Now that is half of one percent profit on the entire account, every day. Net profit. Pretty hard to do. Impossible? Technically maybe no. In the practical world once you have grown your account to a respectable size it becomes difficult to trade it fully with the same returns I think. Your position sizes would move the markets and you would get big price slides when entering and exiting. You would have too many positions open at once to manually monitor and trade them to greatest effect. And so you would also take a lot of swing trades and you would of course buy and hold to put dead money to work for you. But let's say you are able, whether manually or automatically, to trade with an average daily profit after all expenses of 1.0%. That would give you $1,907,900,453,894,625. Approximately. I kinda have to think that if it could be done, someone would have already done it. Hey I'm just crunching numbers.
The following python code was used, with the variables just hard coded. Should work in Python2 or Python3.
MyAccount = float(30000)
Ret = float(1.1) # 1 + percent profit X 100
Added = float(12000) # how much principal gets added to the acct every year
for i in range(40): # how many trading days or years
MyAccount = MyAccount * Ret + Added
print(i+1, MyAccount) # prints on each line the consecutive days or years or other periods, and the resulting account sizes.
But back to practical. One internet trading guru famously traded I think $583 into $1M in 500-something trading days. Less than three years, anyway. However this was an experienced trader who could afford to try this several times and just publish the youtubes of the one that successfully grew to the critical mass point of being able to transition from an offshore brokerage to a domestic one. Who knows what happened behind the scenes. But the P&L for an account is there for anyone to see. Such things are empirically proven to possible.
With discipline and good money/risk management, you might well be able to realize $1M in 12 years, yeah. If you are one of the minority who is able to learn to trade profitably and consistently. For that matter, just buying and holding $30k in equities that return a long term average of 10% annually will see your account at $94,152 after 12 years, and after say 30 years you end up with $523,482. But if you add $12k to the account every year from wages, etc then your 12yr level would be a bit over $350k and you would see $1M in 22 years. After 40 years call it $6.7M. A young guy who can develop the discipline to invest $250/week could well see such returns from buy-and-hold with maybe a bit of a proactive slant to handling major market declines.
So obviously the human element comes in to play. Can you trade every day and consistently make .5% on your entire account balance? Can you without any exception leave all your profits in your account where they can compound? Not so hard in the beginning... that's what... $150 profit the first day on $30k? Well within the realm of probability. If you are a good trader. If you are one of the 10% to 20% or so who actually become consistently profitable. Taxes and other expenses are limiting factors. Markets don't always oblige you with trader-friendly price and volume action. The biggest factor is the human element. Can you make a plan and trade the plan precisely. Can you devote time to study. Can you spend every morning trading, either on paper or live. Can you add to your account after the nearly inevitable beginner losses.
Keep in mind that this thing of ours is for most intents and purposes a zero sum game. Some guys win. Most guys lose. The brokers and the tax man take their rake from the pot. The strong players eat up the weak players and send them home crying. The big dogs want to take your money and are pretty good at doing so. If you can out trade the strong players that are experienced and skilled at taking your money, then you can do well. It's not a given. It's not easy. If you want to start trading just because you have a goal of raising $1M then you have your work cut out for you and I would be betting against you. If you are already a profitable trader then you have already crunched the numbers and also watched other traders do or fail to do what you want to do.
Arguably the main risk is not the money put in, rather it is time spent. You only live once. Trading only makes sense as a venture if you enjoy it.
I, too, started out as an engineer. These are my takeaways as a converted trader -
1. You have to treat this like a business.
2. You have to find a strategy that works for you BEFORE you trade real money.
3. You MUST put together a trading plan and stick to it.
4. You MUST put hundreds (some say thousands) of hours watching the market you want to trade before ever putting a dime in the market.
I have learned a lot from people here, but what the single thing I have learned that is the most valuable is that screen time is not negotiable.
Good luck.
1. You have to treat this like a business.
2. You have to find a strategy that works for you BEFORE you trade real money.
3. You MUST put together a trading plan and stick to it.
4. You MUST put hundreds (some say thousands) of hours watching the market you want to trade before ever putting a dime in the market.
I have learned a lot from people here, but what the single thing I have learned that is the most valuable is that screen time is not negotiable.
Good luck.
There's that, too, yeah. If you devote an hour every morning, not so bad. If you are making anything at all, it is worth it, for an hour of your time. If you get up 3 hours before the market and read the news or tweak your scanner or whatever, and sit in front of your monitor array from bell to bell, and you aren't making at least a few hundred a day average, then if your time is worth anything you aren't doing so hot. If you enjoy it then that's different. Me, I enjoy it. It's like poker, with no distractions and no face to face interaction with rude or ignorant asshats who should just opt out of the gene pool in the interests of humanity. And trading I don't even have to get dressed for, much less leave the house. What's not to like?
I agree risk management is important.... however it is not an edge, the definition of which is a statistical advantage that puts you on the winning side, which certainly cannot be done by say 'only lose 1% per trade'.