The Billion Dollar Club

OnTrial · Nov 21, 2007

Quote from Joab:

...but you need to be more specific on your fills and exits.

Hi Joab,

Do you mind elaborating?

Quote from Joab:

... IF your able to average 10% monthly...

Are you serious about the 10% monthly (200+% p.a.) bit? If so what kind of leverage are we talking?

OnTrial · Nov 21, 2007

Current Team ERIC Drtn: Short Entry: 29.93 Date: 07/11/2007 Disaster Stop: 31.43 Qty: 300 Cost: $8,979.00LCAV Drtn: Short Entry: 17.48 Date: 08/11/2007 Disaster Stop: 18.35 Qty: 600 Cost: $10,488.00ALTR Drtn: Short Entry: 18.66 Date: 09/11/2007 Disaster Stop: 19.82 Qty: 250 Cost: $4,665.00XLNX Drtn: Short Entry: 22.83 Date: 09/11/2007 Disaster Stop: 24.74 Qty: 200 Cost: $4,566.00NDAQ Drtn: Long Entry: 41.83 Date: 13/11/2007 Disaster Stop: 37.96 Qty: 470 Cost: $19,660.10SYNA Drtn: Long Entry: 55.60 Date: 13/11/2007 Disaster Stop: 50.51 Qty: 360 Cost: $20,016.00AG Drtn: Long Entry: 59.36 Date: 14/11/2007 Disaster Stop: 55.20 Qty: 330 Cost: $19,588.80MTG Drtn: Short Entry: 23.01 Date: 15/11/2007 Disaster Stop: 25.33 Qty: 210 Cost: $4,832.10MER Drtn: Short Entry: 56.67 Date: 15/11/2007 Disaster Stop: 62.35 Qty: 90 Cost: $5,100.30

OnTrial · Nov 21, 2007

Ex Players CIEN Drtn: Long Entry: 45.33 Date: 13/11/2007 Disaster Stop: 42.54 Qty: 440 Cost: $19,945.20 Exit: 42.54 Date: 19/11/2007 Return (pts): -2.79 Return (%): -6.15% Return ($): -$1,227.60AIZ Drtn: Long Entry: 64.75 Date: 12/11/2007 Disaster Stop: 60.99 Qty: 300 Cost: $19,425.00 Exit: 64.22 Date: 14/11/2007 Return (pts): -0.53 Return (%): -0.82% Return ($): -$159.00MLNM Drtn: Long Entry: 13.90 Date: 13/11/2007 Disaster Stop: 12.67 Qty: 1400 Cost: $19,460.00 Exit: 14.02 Date: 14/11/2007 Return (pts): 0.12 Return (%): 0.86% Return ($): $168.00JEF Drtn: Short Entry: 23.67 Date: 13/11/2007 Disaster Stop: 25.39 Qty: 210 Cost: $4,970.70 Exit: 25.39 Date: 14/11/2007 Return (pts): -1.72 Return (%): -7.27% Return ($): -$361.20TKC Drtn: Long Entry: 23.93 Date: 08/11/2007 Disaster Stop: 22.73 Qty: 830 Cost: $19,861.90 Exit: 25.46 Date: 13/11/2007 Return (pts): 1.53 Return (%): 6.39% Return ($): $1,269.90CIEN Drtn: Long Entry: 47.07 Date: 05/11/2007 Disaster Stop: 44.24 Qty: 350 Cost: $16,474.50 Exit: 44.24 Date: 09/11/2007 Return (pts): -2.83 Return (%): -6.01% Return ($): -$990.50MON Drtn: Long Entry: 94.38 Date: 06/11/2007 Disaster Stop: 89.66 Qty: 210 Cost: $19,820.46 Exit: 96.73 Date: 09/11/2007 Return (pts): 2.35 Return (%): 2.49% Return ($): $492.84MTG Drtn: Short Entry: 19.21 Date: 08/11/2007 Disaster Stop: 20.17 Qty: 550 Cost: $10,565.50 Exit: 20.17 Date: 09/11/2007 Return (pts): -0.96 Return (%): -5.00% Return ($): -$528.00MOS Drtn: Long Entry: 69.03 Date: 06/11/2007 Disaster Stop: 65.58 Qty: 280 Cost: $19,329.46 Exit: 71.09 Date: 08/11/2007 Return (pts): 2.06 Return (%): 2.98% Return ($): $575.74IBKR Drtn: Long Entry: 29.15 Date: 05/11/2007 Disaster Stop: 26.23 Qty: 340 Cost: $9,911.00 Exit: 28.99 Date: 06/11/2007 Return (pts): -0.16 Return (%): -0.55% Return ($): -$54.40

OnTrial · Nov 21, 2007

Current Bench BMC Drtn: Long Entry: 33.33 Date: 13/11/2007 Disaster Stop: 31.46SOHU Drtn: Long Entry: 52.12 Date: 13/11/2007 Disaster Stop: 46.88TGIC Drtn: Short Entry: 9.32 Date: 15/11/2007 Disaster Stop: 10.27AG Drtn: Long Entry: 58.59 Date: 20/11/2007 Disaster Stop: 55.19

OnTrial · Nov 21, 2007

Ex Benchers BGC Drtn: Long Entry: 72.12 Date: 14/11/2007 Disaster Stop: 66.99 Exit: 66.99 Date: 21/11/2007 Return (pts): -5.13 Return (%): -7.11%ZRAN Drtn: Long Entry: 23.38 Date: 14/11/2007 Disaster Stop: 21.99 Exit: 21.99 Date: 21/11/2007 Return (pts): -1.39 Return (%): -5.95%ODP Drtn: Short Entry: 19.27 Date: 15/11/2007 Disaster Stop: 20.51 Exit: 16.72 Date: 21/11/2007 Return (pts): 2.55 Return (%): 13.23%CKFR Drtn: Long Entry: 47.53 Date: 13/11/2007 Disaster Stop: 45.10 Exit: 47.49 Date: 20/11/2007 Return (pts): -0.04 Return (%): -0.08%FWLT Drtn: Long Entry: 144.45 Date: 14/11/2007 Disaster Stop: 129.98 Exit: 129.98 Date: 20/11/2007 Return (pts): -14.47 Return (%): -10.02%CY Drtn: Long Entry: 34.00 Date: 14/11/2007 Disaster Stop: 30.59 Exit: 30.59 Date: 20/11/2007 Return (pts): -3.41 Return (%): -10.03%CCRT Drtn: Short Entry: 13.29 Date: 15/11/2007 Disaster Stop: 14.63 Exit: 12.42 Date: 20/11/2007 Return (pts): 0.87 Return (%): 6.55%MS Drtn: Short Entry: 54.72 Date: 15/11/2007 Disaster Stop: 59.23 Exit: 50.36 Date: 20/11/2007 Return (pts): 4.36 Return (%): 7.97%ABK Drtn: Short Entry: 29.69 Date: 15/11/2007 Disaster Stop: 32.67 Exit: 24.90 Date: 20/11/2007 Return (pts): 4.79 Return (%): 16.13%ACF Drtn: Short Entry: 11.89 Date: 15/11/2007 Disaster Stop: 13.09 Exit: 10.41 Date: 19/11/2007 Return (pts): 1.48 Return (%): 12.45%LEN Drtn: Short Entry: 20.61 Date: 15/11/2007 Disaster Stop: 22.68 Exit: 17.60 Date: 19/11/2007 Return (pts): 3.01 Return (%): 14.60%RAD Drtn: Short Entry: 3.70 Date: 15/11/2007 Disaster Stop: 3.97 Exit: 3.53 Date: 19/11/2007 Return (pts): 0.17 Return (%): 4.59%NTRI Drtn: Short Entry: 24.30 Date: 15/11/2007 Disaster Stop: 26.74 Exit: 23.33 Date: 16/11/2007 Return (pts): 0.97 Return (%): 3.99%OI Drtn: Long Entry: 45.24 Date: 16/11/2007 Disaster Stop: 42.88 Exit: 42.88 Date: 16/11/2007 Return (pts): -2.36 Return (%): -5.22%TX Drtn: Long Entry: 36.22 Date: 06/11/2007 Disaster Stop: 34.40 Exit: 38.00 Date: 09/11/2007 Return (pts): 1.78 Return (%): 4.91%KLBAY Drtn: Long Entry: 41.10 Date: 06/11/2007 Disaster Stop: 39.04 Exit: 41.00 Date: 07/11/2007 Return (pts): -0.10 Return (%): -0.24%

Joab · Nov 21, 2007

Quote from OnTrial:

Hi Joab,

Do you mind elaborating?



Are you serious about the 10% monthly (200+% p.a.) bit? If so what kind of leverage are we talking?

Yes, I am serious !

Use 2:1 leverage starting with 500k and see IF you can get that return never risking more then 5% max per trade.

If you can post your fills as soon as you can that would be great.

OnTrial · Nov 22, 2007

Quote from Joab:

Yes, I am serious !

Use 2:1 leverage starting with 500k and see IF you can get that return never risking more then 5% max per trade.

If you can post your fills as soon as you can that would be great.

A lot of the 'experts' advise that it is not prudent to risk more than 2% on any trade. Infact, I have read that professional traders often risk much less than 1% per trade. I am sticking to the 2% guideline, at the moment.

However, my gut instinct is that 5% is an acceptable risk for small accounts IF and ONLY IF a system with a quantifiable edge and low historical drawdowns is being employed. I know that acrary has a thread on position sizing with some very interesting and original ideas. From what I remember, the thread suggests it is ok to risk more than 2% depending on the performance characteristics of the system employed. I intend to study acrary's position sizing ideas in the near future and see if I can incorporate them in FAB TEAM.

Even if I do decide to risk more than 2%, I will still be limited by the amount of capital available, unless I significantly reduce my stop sizes and/or the number of stocks I trade at a time. My model allows me to have 10 or more open positions, which means I can not allocate (assuming 2:1 leverage) more than 20% (it can even be as low as 5% when I have more than 10 open positions) of my capital to one position. Sometimes, this means that I am compelled to risk less than 2% of my capital on a particular position.

Having said that, I believe this obstacle can be overcome with the intelligent use of options. It is one avenue I am keen to pursue, particularly since I will be able to apply some of the stuff I learnt on the CQF.

Joab, what are your views on the 2% risk guideline?

Joab · Nov 22, 2007

Quote from OnTrial:

Joab, what are your views on the 2% risk guideline?

Your correct 2% is the industry standard so to speak BUT in my experiences I have found that with no more then 20 positions (at one time) and with accounts under 5 million and highly liquid stocks (as yours seem to be) then 5% is the ONLY way that you can consistently produce returns in excess of 10% per month.

I currently manage 5 million now (up from 2 million) and it is getting more and more difficult to maintain these returns.

The biggest problem is not size but rather asset.

Just because a stock has the correct edge technically speaking doesn't mean it's trade worthy.

OnTrial · Nov 22, 2007

Quote from Joab:

Your correct 2% is the industry standard so to speak BUT in my experiences I have found that with no more then 20 positions (at one time) and with accounts under 5 million and highly liquid stocks (as yours seem to be) then 5% is the ONLY way that you can consistently produce returns in excess of 10% per month.

I currently manage 5 million now (up from 2 million) and it is getting more and more difficult to maintain these returns.

The biggest problem is not size but rather asset.

Just because a stock has the correct edge technically speaking doesn't mean it's trade worthy.

Assuming you allocate equal capital to each position, I don't see how you can have as many as 20 open positions and still risk up to 5% per position.

For a 5m account with 20 equally funded positions and assuming 2:1 leverage:

Capital for each position = 5m x 2/20 = 500,000
5% risk = 5/100 x 5m = 250,000

To calculate risk in each position (i.e stop size) = 250,000/500,00 = 50%

In other words, to risk 5% when you have 20 positions you will need to have a 50% stop. Is this how you go about it, or am I just being dense?

hajimow · Nov 22, 2007

Quote from OnTrial:

Assuming you allocate equal capital to each position, I don't see how you can have as many as 20 open positions and still risk up to 5% per position.

For a 5m account with 20 equally funded positions and assuming 2:1 leverage:

Capital for each position = 5m x 2/20 = 500,000
5% risk = 5/100 x 5m = 250,000

To calculate risk in each position (i.e stop size) = 250,000/500,00 = 50%

In other words, to risk 5% when you have 20 positions you will need to have a 50% stop. Is this how you go about it, or am I just being dense?

I thought when they talk about 2% or 5% risk they mean 2% or 5% of the value of that position and not the value of the account. So for a 5 million account with 2:1 leverage and 20 equal positions, 5% risk would be 5% of 500,000= $25000. Since you are using leverage of 2, from $500,000 in each position, only 250,000 is yours. So 5% of each position would be only $12500 !!