Trading for a living....full time....only income

[schweiz]

The hard part is to keep going in spite of horrendous drawdowns.

I never understood how you can have horrendous drawdowns. The first thing a good (day)trader should be able to do is keep drawdowns within an acceptable level.

I once wiped out my account a long time ago (early 90's). Since that moment I never ever had a drawdown of even 20%. After my wipe out I understood that the first thing to avoid is losing lots of money; it is even more important then high returns.

I don't have an "edge", just riding this bull market.

If it works and makes money it is also an edge, but not a very good one.

 

[ironchef]

Salaried employees will always beat traders on earning a good living hands down on a risk-adjusted basis. The keyword is risk-adjusted. All employees, as long as they can keep their jobs, will be guaranteed a stable income at the end of the month even if they are terrible at their jobs, make lots of mistakes and are poor performers.

I suspect most that are able to trade full time for a living beat most salaried employees on a risk-adjusted basis, especially during the great recession when millions of salaried employees lost their job.

Another point: Given the same risk-adjusted return, I go with the one that gives the highest absolute return. Don't know if that make sense for professionals since I am just a retail trading my own funds.

 

[ironchef]

I never understood how you can have horrendous drawdowns.

I do not day trade, I swing trade making directional bets with options, mostly riding the up trends. Drawdowns can be huge in volatile market down turns, like Feb-Mar and Oct of this year.

I tried to modify the method but all it did was limiting my gains, so I came to accept huge drawdowns and used Kelly Criterion to manage my risks instead.

 

[ironchef]

I was on board until the last point. So he's not even a trader, just hoping for the bull to continue. Obviously he only started in 2010, if he started two years earlier, he would not be speaking about trading at all.

Point number 3 is extremely important and underestimated by most. It's devastating to get up to trade after a very very long period in a drawdown, you'll feel dead inside.

I am a full time "trader" retired from my day job a long long time ago. The only difference between you and I is my trading methodology is nothing fancy, just riding the up trend - bull market. I have no doubt one of these days it will fail but still I am happy with a 9+ year run.

In the mean time I keep looking for a market neutral strategy and that is why I am here.

Regards,

 

[comingkingofisrael]

Someone told me a friend of theirs made a £million/year trading US treasuries and found it very boring.I don't think he was lying.This was a few years ago now and I don't know if things changed for better or worse.

 

[helpme_please]

Someone told me a friend of theirs made a £million/year trading US treasuries and found it very boring.I don't think he was lying.This was a few years ago now and I don't know if things changed for better or worse.

How much was his capital? using $1m capital to make $1m is very impressive. Using $20m capital to make $1m is mediocre.

 

[Overnight]

How much was his capital? using $1m capital to make $1m is very impressive. Using $20m capital to make $1m is mediocre.

I would feel WAY more comfortable using 20 million to make 1 million, than 1 million to make 1 million.

Think about it, chew it over, and you will clearly see why the former is way more comfortable than the latter.

 

[helpme_please]

I would feel WAY more comfortable using 20 million to make 1 million, than 1 million to make 1 million.

Think about it, chew it over, and you will clearly see why the former is way more comfortable than the latter.

Sure, that's my preference too. My point is if my target is to make $1m from $20m, a passive approach will be preferred. If I am highly active and hardworking, I would aim for higher returns.

 

[comingkingofisrael]

How much was his capital? using $1m capital to make $1m is very impressive. Using $20m capital to make $1m is mediocre.

I don't know if it was a true story or a tale to get information so take it as a tale but it's the only story I can add to the thread.Greenblatt made a lot doing value investing though.

 

[Evermore2017]

I would like to ask the full-time elite traders here a question.

How do you cope with a drawdown? For those who do part-time, they still have jobs who pay a stable income. For full-timers, that is going to be difficult psychologically.

What about the gnawing feeling that maybe the edge is gone, after experiencing a drawdown?

-If you have savings equivalent to 6 months or more of expenses, drawdowns are ok.
-If the trading capital is less than 20% of your money maybe you can sleep nice despite the drawdowns.