Trading, Taking and Income, and Capital Requirements
- Thread starter raVar
- Start date
I didn't see any signs from raVar of a con job, he was blunt but he warned on that.
I'd prefer to see someone on ET talk technical aspects of trading from pulpit of experience even if it's controversial rather than limp wristed 'yes mama no mama' waffle.
If he's got a thick skin hopefully he'll be back to give ya's another serve.
View attachment 212411
I'd work with someone who microwaved and ate a baby before I would let him near me. Any type of dishonesty or fraud is a non-starter. This guy is clearly copy and pasting someone else's work. Some of it quite good. But he himself is an ignorant moron. Zero understanding of those topics. Zero!!!
So ... now that one is blocked as well, maybe I don't know ...
Back to the topic for aspiring traders? Since traders in that other thread were talking about doing this?
So you have $25,000.00
Let's pick, I don't know ... what I said on page one ... and actually run the math.
This has been done at the University Level on several papers ( https://books.google.com/books?id=9...ce=gbs_ge_summary_r&cad=0#v=onepage&q&f=false ) is just one. But to make it simple and clear. Let's take one of the top Alternative Ranked for Established Funds Firm ... by return. (You can find this for yourself at: https://app.coquesttradersresearch.com/ ) Millburn. I could take Tactical Investment Management Corp, but their DD's are a little worse; so let's make it a little easier on you. Let's say you have $25,000.00, and you are as skilled, as one of the top firms in the world (which as stated previously, is the whole point of this. To demonstrate what is reasonable. If you are just starting out with $25,000.00 ... do you honestly think you are as talented as Millburn? Honestly?)
You have $25,000, and you started out this year. And heck, let's say you only need $900.00 a month. I think someone said that earlier in the thread. I don't understand how that is possible? But let's take it there.
Ok, so $25,000 ... you started this year.
Well, you need your $900.00.
So now you are down to $24,100.
January, you returned -2.05%
Oops. But as you check through the databases ... like ... everyone ... even those traders with the most linear returns possible? You see that -2.05% isn't even that bad. Statistically normal. Some might even say "good" (By the way, many don't know this, but you can also rank managers by who has the lowest drawdowns).
So now, you are down to $23,605.95.
Ah, so what ... that's just a month, and you still have $23,605.95. Of course, that's down over -5% from where you began, because you are taking a draw each month.
But you begin the next month, with $23,605.95.
You take your draw of $900.00
You're down to $22,705.95. Plenty of money right?
February, you return +1.08%.
Awesome. Now you UP to $22,951.17. But you're still down -8%.
Hrm. You had an up month, but you're down even more. See the hole you are digging for yourself?
That's ok. March is another up month. You start out with $22,951.17, but you have to take your monthly draw of $900.00. Now you are down to $22,051,17.
March, you return +2.29%. That's a good month by the way.
So now, after two good months, one not so bad month ... and three months of living off of only $900.00? You are down to $22,556.14.
Let's stop right here. You are having a so-so quarter, and are UP on the Quarter with your trading, along side Millburn for pities sake. You really are. And yet, you are down -9.77%.
And it gets worse.
April, you return again, a positive month! Good for you right? April, you return +0.97%. Oops. We forgot something. We forgot to take your draw. So before you get that +0.97%, you have to take your $900.00 draw. Now you are down to $21,656.00. Then add your gain? You are standing at $21,866.00. Down -12.00%. I'm not going to continue, because if you are new, or one of the folks that were talking about doing this?
I hope you are seeing reality at this point.
You are barely eaking out, with $900.00. Kicking out, at the least, statistically normal and even good performance ... you are UP on trading gains, after 4 months? And you are down -12% from where you started out.
This isn't cherry picking data. As noted above, many Scholarly papers have been written on the subject around "Risk of Ruin".
Math says ... you're just not going to be able to do it.
Now, as mentioned earlier when we discussing, I don't know ... the topic? You CAN start off small ... grind for years ... add capital to your trading account. Many, many guys got started in the business that way. Then when you have a built track record? Attract capital. Then when you have $800,000 or a few million? Live off of that, via some method for draw. Either in a Closed Prop relationship, or if you go Institutional.
But live off of $25,000 and trade? Again ... the math says ... no.
Back to the topic for aspiring traders? Since traders in that other thread were talking about doing this?
So you have $25,000.00
Let's pick, I don't know ... what I said on page one ... and actually run the math.
This has been done at the University Level on several papers ( https://books.google.com/books?id=9...ce=gbs_ge_summary_r&cad=0#v=onepage&q&f=false ) is just one. But to make it simple and clear. Let's take one of the top Alternative Ranked for Established Funds Firm ... by return. (You can find this for yourself at: https://app.coquesttradersresearch.com/ ) Millburn. I could take Tactical Investment Management Corp, but their DD's are a little worse; so let's make it a little easier on you. Let's say you have $25,000.00, and you are as skilled, as one of the top firms in the world (which as stated previously, is the whole point of this. To demonstrate what is reasonable. If you are just starting out with $25,000.00 ... do you honestly think you are as talented as Millburn? Honestly?)
You have $25,000, and you started out this year. And heck, let's say you only need $900.00 a month. I think someone said that earlier in the thread. I don't understand how that is possible? But let's take it there.
Ok, so $25,000 ... you started this year.
Well, you need your $900.00.
So now you are down to $24,100.
January, you returned -2.05%
Oops. But as you check through the databases ... like ... everyone ... even those traders with the most linear returns possible? You see that -2.05% isn't even that bad. Statistically normal. Some might even say "good" (By the way, many don't know this, but you can also rank managers by who has the lowest drawdowns).
So now, you are down to $23,605.95.
Ah, so what ... that's just a month, and you still have $23,605.95. Of course, that's down over -5% from where you began, because you are taking a draw each month.
But you begin the next month, with $23,605.95.
You take your draw of $900.00
You're down to $22,705.95. Plenty of money right?
February, you return +1.08%.
Awesome. Now you UP to $22,951.17. But you're still down -8%.
Hrm. You had an up month, but you're down even more. See the hole you are digging for yourself?
That's ok. March is another up month. You start out with $22,951.17, but you have to take your monthly draw of $900.00. Now you are down to $22,051,17.
March, you return +2.29%. That's a good month by the way.
So now, after two good months, one not so bad month ... and three months of living off of only $900.00? You are down to $22,556.14.
Let's stop right here. You are having a so-so quarter, and are UP on the Quarter with your trading, along side Millburn for pities sake. You really are. And yet, you are down -9.77%.
And it gets worse.
April, you return again, a positive month! Good for you right? April, you return +0.97%. Oops. We forgot something. We forgot to take your draw. So before you get that +0.97%, you have to take your $900.00 draw. Now you are down to $21,656.00. Then add your gain? You are standing at $21,866.00. Down -12.00%. I'm not going to continue, because if you are new, or one of the folks that were talking about doing this?
I hope you are seeing reality at this point.
You are barely eaking out, with $900.00. Kicking out, at the least, statistically normal and even good performance ... you are UP on trading gains, after 4 months? And you are down -12% from where you started out.
This isn't cherry picking data. As noted above, many Scholarly papers have been written on the subject around "Risk of Ruin".
Math says ... you're just not going to be able to do it.
Now, as mentioned earlier when we discussing, I don't know ... the topic? You CAN start off small ... grind for years ... add capital to your trading account. Many, many guys got started in the business that way. Then when you have a built track record? Attract capital. Then when you have $800,000 or a few million? Live off of that, via some method for draw. Either in a Closed Prop relationship, or if you go Institutional.
But live off of $25,000 and trade? Again ... the math says ... no.
Dinner's ready!
This thread is spooky. Responses to the OP but no posts from the op as everyone is blocked.
Tits are optional.
In general, when you see running paragraphs and long posts with zero conciseness, it becomes apparent you’re dealing with a professional bullshitter.
I haven't read through all of this thread but my take on it is that it's a slippery question that depends on the timeframe across which you're considering "averages."
For example, if you "needed" to clear $5k in cash each month, what happens if some given 6 months look like this?
+ 5,100
+ 5,200
+ 5,000
+ 5,100
+ 2,500
+ 4,000
This failed to hit $30k across six months. Do you start adjusting your strategy? Freezing all trading until you're comfortable in a new strategy on sim?
Also, consider 6 months that look like this:
+ 12,000
- 1,000
+ 18,000
- 2,000
- 1,000
+ 5,000
This netted a profit above $30k across six months, but with some red months. Is that okay? Maybe it's okay because you started with the $12k cushion to work with. But suppose I re-arranged those same numbers such that all the negative months came first?
IMO a trader's edge will come out over time, and the key is figuring out when to scale up to start exploiting it as much as possible. The actual month-to-month P&L and drawdown numbers are all "arbitrary" time horizons (goal posts) that you can move indefinitely to frame something as a success or failure.
Of course, this is my opinion on discretionary traders. I don't have much of a stance on highly automated strategies that rigidly make X or lose Y every single day.
For example, if you "needed" to clear $5k in cash each month, what happens if some given 6 months look like this?
+ 5,100
+ 5,200
+ 5,000
+ 5,100
+ 2,500
+ 4,000
This failed to hit $30k across six months. Do you start adjusting your strategy? Freezing all trading until you're comfortable in a new strategy on sim?
Also, consider 6 months that look like this:
+ 12,000
- 1,000
+ 18,000
- 2,000
- 1,000
+ 5,000
This netted a profit above $30k across six months, but with some red months. Is that okay? Maybe it's okay because you started with the $12k cushion to work with. But suppose I re-arranged those same numbers such that all the negative months came first?
IMO a trader's edge will come out over time, and the key is figuring out when to scale up to start exploiting it as much as possible. The actual month-to-month P&L and drawdown numbers are all "arbitrary" time horizons (goal posts) that you can move indefinitely to frame something as a success or failure.
Of course, this is my opinion on discretionary traders. I don't have much of a stance on highly automated strategies that rigidly make X or lose Y every single day.