the risk of not taking enough risk starting out

Assuming you have the trading rules taken care of, you really have to decide if a $5000 account can handle the drawdowns associated with frequent leveraged trading. You'll make more profit but the dollar value of your losses will increase accordingly.

Using intraday margin you can easily trade 10+ contracts in a $5000 account, and this gives you tremendous buying power and profit potential. However, a few points in the wrong direction will bankrupt you.

Do you think you could limit yourself to 1 contract? This will limit your equity swings, keep fees low, and give you a bit more room with your stops.

Mark
 
Quote from monee:

I have also taken a small account and made a large % gain.

For example suppose you had a 5k account and made 50% on it in a few months.

Each trade had a maximum risk of 10%.

I would not be able to trade the same strategy using a 50k account.

Just due to the fact that with a 10% max risk per trade a string of losers could kill the account very quickly.

I could handle killing a 5k account but not killing a 50k account.

It is annoying to know that one could have really made big money quickly but you never know when the mkt is not going to do what you think it is going to do.
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monee, where do you feel you are at now then? What is your next move? I know i have taken a rather different aproach as most new traders i read about seem to try to make money, where i was simply trying to trade as if i had a big roll to learn the game.

This is really my dilemma, i think there is something missing with what i am doing currently. Almost like with my current strategy I have a very low risk of blowing up but the opportunity risk i am eating of not hitting the home run in order to have the big roll is a risk the greats have taken and done. I mean what I am currently doing is not what PTJ, Soros, Niederhoffer or Livermore did starting out.
 
Quote from ER2:

Assuming you have the trading rules taken care of, you really have to decide if a $5000 account can handle the drawdowns associated with frequent leveraged trading. You'll make more profit but the dollar value of your losses will increase accordingly.

Using intraday margin you can easily trade 10+ contracts in a $5000 account, and this gives you tremendous buying power and profit potential. However, a few points in the wrong direction will bankrupt you.

Do you think you could limit yourself to 1 contract? This will limit your equity swings, keep fees low, and give you a bit more room with your stops.

Mark
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In all honesty, i could psychologically handle blowing up a 5k account, working at mcdonalds for 6 months, and then repeating this process 10x over. Thats why that throwing in the towle post got me thinking. I cant imagine ever throwing in the towel, i think i would rather be homeless and trading from a library computer than to stop playing "the great game".
What do you think about trading 3 mini gold contracts on 5k? I would not want to trade 1 contract because i want to be able to scale in and out.
 
If it's money you can afford to lose then be as aggressive as you wish. In fact, blowing up account can be a very good learning experience (assuming it doesn't put your family on the street).

Each person has a different comfort level. For me, it may be one contract per $10,000 in my trading account. For you it could be six per $10,000 (three contracts for $5000).

The biggest problem I experienced in the beginning was trading with scared money. Overleveraging and taking large losses caused me to alter good setups rather than planning the trade and trading the plan.

Trading by a system is one away around the scared money problem, assuming you religiously follow your system even when it gives you six losses in a row.

Mark
 
edit...

ok, anyone here who swings 100k plus want to convince me to not try trading 3 mini gold or silver contracts on 5k? If so what would you do with 5k instead?
 
you bring up a great point in risk when your account is rather paltry. I think you should continue to use your same level of risk overall. However i think there are special circumstances when you should get aggressive. These circumstances are not for the new trader. Under these circumstances everything should line up and it will look like the perfect trade. Whatever the system is you use, when all factors line up thats when you should press. What is crucial is that when your betting the most you should be making money instantly so i would suggest exploring whats known as a Time stop.

Essentially what you are looking to bet the most when everything falls into place. But its imperative that your making money nearly instantly, or you should immediately reduce your size. I would suggest reading "the logical trader" by Mark Fisher he talks more about this.
 
You face the problem that every small time trader faces. You have a system that works, but it just takes to damn long to make any real money. Impatience takes over and the inevitable blow up follows. No one, I repeat no one, can can handle the psychological trauma of taking years to make a few grand, only to see it evaporate in a couple months. That event WILL change your style of trading, and it will change it for the worse. You will either become more aggressive or more tame. Both emotional states will destroy your system. You'll blow up taking a gambling approach, or you slowly go bust taking profits too early.
The only way is to continue to build your account slowly and try to add additional funds through working extra hours at some job. It just boils down to patience and discipline. Your only other alternative is to hope for some dumb luck. It does happen, but it's too rare to count on.
Take this post for what it's worth. It's just been my personal experience and observation over nearly 10 years of trading. The faster I've tried to make this happen, the further I've fallen behind. Had I simply followed what I stated above I would now be properly capitalized to give full time trading a real shot. As it is, I'm starting over again for the 5th fucking time. Do what you will. Good luck either way!
 
It seems you really want to trade 2-3 contracts with $5000, so maybe the next step is to backtest your system (using that many contracts) and determine what the worst drawdown is. Then you have something objective to go by, and can then decide if your trading method is appropriate.

For all I know, your method could involve one tick stops that allow you to be wrong 95% of the time and still turn a profit. Just do some testing and see what happens before putting real money into it.

Mark
 
Quote from jdeezero05:

monee, where do you feel you are at now then? What is your next move? I know i have taken a rather different aproach as most new traders i read about seem to try to make money, where i was simply trying to trade as if i had a big roll to learn the game.

This is really my dilemma, i think there is something missing with what i am doing currently. Almost like with my current strategy I have a very low risk of blowing up but the opportunity risk i am eating of not hitting the home run in order to have the big roll is a risk the greats have taken and done. I mean what I am currently doing is not what PTJ, Soros, Niederhoffer or Livermore did starting out.
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For what ever reason as my account grows I tend to grow my position size very slowly.

I still risk about the same amount per trade and am very cautious increasing position size.

Weird how I an not willing to increase position size based on increased account size.

I think it has to do with the fact that if it took x months to make this amount of money it could be a fraction of x to lose it with increased position size.
 
sorry guys, i have to take this advice here over the ones who want me to stray into more risk:
" The faster I've tried to make this happen, the further I've fallen behind. " by CaptainObvious....
i mean thats a bit comic...hahaha.
 
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