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The small account catch 22...which market?
- Thread starter spinn
- Start date
I have a problem. I am using a method I have complete confidence <b>(?)</b> in that allows me to trade with a tight stop. The problem is, I have to be perfect due to small account size.
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A typical example of my trading is my going long ym at 333 EST, having it go 7 ticks in my favor and placing my stop at +2 ticks. <b><i>my decision to crowd the stop out of fear</b></i>It then took me out <u>before running 50 ticks in my favor.</u>
I do that on a daily basis.<b><i>my decision to crowd the stops based solely on fear</b></i>
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I am not new at this. I do need to take the psychology out of this as much as possible because quite frankly, my fears are justified.
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spinn, what happens when you papertrade this approach of yours? When there is no excessive fear of loss weighing on you like a meteor, how does your approach perform?
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A typical example of my trading is my going long ym at 333 EST, having it go 7 ticks in my favor and placing my stop at +2 ticks. <b><i>my decision to crowd the stop out of fear</b></i>It then took me out <u>before running 50 ticks in my favor.</u>
I do that on a daily basis.<b><i>my decision to crowd the stops based solely on fear</b></i>
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I am not new at this. I do need to take the psychology out of this as much as possible because quite frankly, my fears are justified.
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spinn, what happens when you papertrade this approach of yours? When there is no excessive fear of loss weighing on you like a meteor, how does your approach perform?
I just called Oanda and they said to buy 10 onces of Gold you pay about $1 per day interest, if short you get paid 79 cents per day. Since I am as likely to go long as short, I think this would be a minimal expense.
In answer to the other question, when I paper trade the YM, I generally make 50-75 points per day, but I let a very fewl of those trades go 15 or so tick against me. Live, my stop is 8 ticks on ym.
In answer to the other question, when I paper trade the YM, I generally make 50-75 points per day, but I let a very fewl of those trades go 15 or so tick against me. Live, my stop is 8 ticks on ym.
In answer to the other question, when I paper trade the YM, I generally <b>make 50-75 points per day</b>
<i>but I let a very few of those trades go 15 or so tick against me. Live, my stop is 8 ticks on ym.</i>
With all due & utmost respect, why do you trade the methodical approach differently in demo = research versus realtime? Doesn't your utmost confidence come from performance in demo, which scientifically in this example should be close if not identical to real price action?
In other words, either the Universal Laws of mathematics are repealed when you trade real money, or you consciously change your method parameters out of psychological fear. Agreed?
With that being the case, do you think it is easier to learn an entire new market = symbol = everything, or might it be make more sense to trade the YM with -$75 or smaller stops and trust your law of large numbers result?
spinn, it's your research that gives you evidence of probable success. A $2,000 account balance risking -$75 per trade can absorb twenty consecutive max-loss trades and still have $500 left for one more intraday trade. Right or right?
Have you ever experienced 20 straight -$75 losses in your research? Do you really have the utmost confidence in all aspects of your trading approach?
These are the important questions to ask yourself. Searching for some other market is like treating hay fever when your arm has spouted an arterial bleed.
<i>but I let a very few of those trades go 15 or so tick against me. Live, my stop is 8 ticks on ym.</i>
With all due & utmost respect, why do you trade the methodical approach differently in demo = research versus realtime? Doesn't your utmost confidence come from performance in demo, which scientifically in this example should be close if not identical to real price action?
In other words, either the Universal Laws of mathematics are repealed when you trade real money, or you consciously change your method parameters out of psychological fear. Agreed?
With that being the case, do you think it is easier to learn an entire new market = symbol = everything, or might it be make more sense to trade the YM with -$75 or smaller stops and trust your law of large numbers result?
spinn, it's your research that gives you evidence of probable success. A $2,000 account balance risking -$75 per trade can absorb twenty consecutive max-loss trades and still have $500 left for one more intraday trade. Right or right?
Have you ever experienced 20 straight -$75 losses in your research? Do you really have the utmost confidence in all aspects of your trading approach?
These are the important questions to ask yourself. Searching for some other market is like treating hay fever when your arm has spouted an arterial bleed.
Quote from Rearden Metal:
Meanwhile, GLD is $61.68 x 61.69.
Unfortunately, it's not a leveraged instrument.
EDIT: "pays/receives carry on shorts/longs."
Say for example I'm long gold (at Oanda), leveraged 10-1.
How much am I paying to carry this position? Like 7% APR?
RM, it's much more than 7%. Right now, it would cost you 5.875% x 10 = 58.75% APR.
Here 5.375% - (-0.5%) = 5.875% is the net debit of an XAU/USD long, per each 1:1 unit of leverage. If you were short instead, you'd receive credit of 4.825% - 0.5% = 4.325% per each unit of leverage. Whether debit or credit, it's computed continuously and posted to your account daily at 4 pm ET or whenener there's a change in position size.
For example, using your specified leverage: $100,000 account balance, long $1M worth of gold, i.e., about 1,609 oz. It would cost you $161 daily (0.16% of your account balance), or ~$58,750 annually (58.75%) to keep that position, assuming no change in those lend and borrow rates.
http://www.oanda.com/products/fxmath/interest.shtml
In terms of the b/a spreads, they come down as low as $0.50 and $0.05 for gold and silver, respectively, for several hours daily, but widen to 3-4 times that during the least liquid times. As riskarb mentioned, the commission is built in.
Personally, I find Oanda's platform particularly well suited for short-term (intraday to a few days) trading of gold, compared to futures. Not silver, though, due to its disproportionately wide spreads, as a % of either ATR or price itself.
A couple of things to look at;
Firstly with volatility being very low on ZN (ten year future) you could buy options on ZN in the direction that you think the market is moving. Over at briefing.com they do some good TA that you could use as a guide.
The other place you could look is K200 options (KOSPI). At the money options in the near month trade almost 1000 times a minute. Options contracts are 1/5 the size of the future, so without me doing a lot of conversion it is a small contract size.
I find it much easier to trade directionally with options than to trade with a stop loss. I would really recommend staying away from forex. Sure there are a few good trades a year but to trade it day in and day out I think you are in big trouble trading single lots.
Firstly with volatility being very low on ZN (ten year future) you could buy options on ZN in the direction that you think the market is moving. Over at briefing.com they do some good TA that you could use as a guide.
The other place you could look is K200 options (KOSPI). At the money options in the near month trade almost 1000 times a minute. Options contracts are 1/5 the size of the future, so without me doing a lot of conversion it is a small contract size.
I find it much easier to trade directionally with options than to trade with a stop loss. I would really recommend staying away from forex. Sure there are a few good trades a year but to trade it day in and day out I think you are in big trouble trading single lots.
Thanks for the encouragement Austin.
I agree with you but want a smaller dollar per tick market because I am having a hard time with the psychologogy of having to be perfect.
In other words.....when live I tend to get anxious and enter early to avoid missing the trade because even a few ticks can mean I wont enter because I dont chase.
The four red arrows on this chart indicate my last entry today.
Not a bad trade huh....well um....it went 8 ticks against me and I was stopped out before the trade went 24 ticks in my favor.
This is not the only chart I use for entry but is easist to see.
I want to be able to hold trades for 15 or so ticks.
And I use IB as a broker and data source so cant go below $2000, although I guess I could keep small money in IB and get a different broker but dont want to go that route.
I agree with you but want a smaller dollar per tick market because I am having a hard time with the psychologogy of having to be perfect.
In other words.....when live I tend to get anxious and enter early to avoid missing the trade because even a few ticks can mean I wont enter because I dont chase.
The four red arrows on this chart indicate my last entry today.
Not a bad trade huh....well um....it went 8 ticks against me and I was stopped out before the trade went 24 ticks in my favor.
This is not the only chart I use for entry but is easist to see.
I want to be able to hold trades for 15 or so ticks.
And I use IB as a broker and data source so cant go below $2000, although I guess I could keep small money in IB and get a different broker but dont want to go that route.