Totally understandable. One must employ methods that make sense to him and that work for him. Only when I traded stocks was I comforable holding days and weeks at a time. I have never held a single futures contract from one session to the next. Or one RTH session to the next. I make sure I am always flat before the RTH day session ends. Without exception.
What Really Counts Getting Started
- Thread starter bone
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I agree with you over the long haul....you reap what you sow..but in the short run some of the meanest..most narsisstic...arrogant..traders make the money. But they also tend to blow up LOL!
You know many of those "rules" are promoted by brokers and others who have a vested interest in you losing the maximum amount in the shortest time frame possible.
Having a fat futures account makes mr. market more coin than a small one-- so keep thinking for yourself rather than being influenced by the greedy infrastructure.
surf
There are no rules you need to impose on yourself when trading, but there are general advices that will avoid noobs blowing up first time they try. If you lose 20 times in a row, will that be a catastrophic loss for you? Btw, 1-3% is meant to be from total account size, aka all your money, not just a small trading account ready to be comfortably blown up.
Likewise, rules such as decreasing trading size when "doing bad" are cruches, since it'll decrease profits or increase loss if your trading rules do have an edge after all.
So I agree it's silly to impose such rules without regard to overall trading plan, but they are better than nothing in the beginning.
Likewise, rules such as decreasing trading size when "doing bad" are cruches, since it'll decrease profits or increase loss if your trading rules do have an edge after all.
So I agree it's silly to impose such rules without regard to overall trading plan, but they are better than nothing in the beginning.
The problem is that you don't know your win rate in advance. In fact, you don't know anything about the future.
Not true...you calculate percentage risk based on the trading acct.
Why would a broker, who lives off commissions only, want you to lose money? If you lose all your money, no more trading and no more commissions for the broker.
A broker has incentive for you to trade and more frequently and bigger the better, true...but if you keep losing money, you'll trade smaller and stop eventually.
Ed Seykota View on Short Term Trading
An email question sent to Ed Seykota:
I have a simple question regarding short term trading. You and others have stated that short term trading cannot be as profitable as long term trading since transaction costs eat into profits and magnify losses. It is not because trends do not occur in short time frames as they clearly do. Since markets are fractal in nature, this makes sense. Therefore, if transaction costs could be reduced proportionately such that a reduction in timeframe did not lead to them being a larger part of costs incurred, then short term trading could be just as profitable as long term trading. Is that a correct conclusion to draw?
Seykota’s response:
Check your feelings about wanting to justify your positions by using qualifications and excuses. If pigs had wings, they could fly.
Seykota clarifies later on his site:
Intraday trading is tough since the moves are not as big as for long-term trading and there is no comparable reduction in transaction cost. In general, short-term trading systems succumb to transaction costs and execution friction. You might simulate your system over historical data and notice how sensitive it is to assumptions about where you get your fills. The shorter the term, the smaller the move. So profit potential decreases with trading frequency. Meanwhile, transaction costs stay the same. To compensate for profit roll-off, short-term traders have to be very good guessers. To improve guessing skills, you can practice dealing cards from a standard deck, one at a time. When you become very good at it you might be able to make money with short term trading.
Just a side note about independents holding fat accounts: I've had several clients get caught up in the Man Financial and PFG Best shit show. And to say the least it really sucked for them through no fault of their own. I personally got caught up in the Griffin mess in the late '90's but the CBOT took over made me whole and transferred me over to Kottke overnight (which was amazing). I think having a T-Bill in my account helped. But to have to have gone through a long, convoluted, tortuous process to get back to me what was legally mine I can't contemplate.
The really good, high earning independents I've come across the past several years are using multiple modest accounts of (say) $50K each, or they're keeping some amount like $50-75K (pick some number) in an account and if their FCM's Risk Dept. wants more capital you can wire it to them in an hour. Personally, I have just NOT seen big independents keep fat trading accounts with sizable portions of that capital not being utilized. These days guys do a lot of wire transfers, and given recent history FCM's don't have the moral high ground to bitch about it.
The really good, high earning independents I've come across the past several years are using multiple modest accounts of (say) $50K each, or they're keeping some amount like $50-75K (pick some number) in an account and if their FCM's Risk Dept. wants more capital you can wire it to them in an hour. Personally, I have just NOT seen big independents keep fat trading accounts with sizable portions of that capital not being utilized. These days guys do a lot of wire transfers, and given recent history FCM's don't have the moral high ground to bitch about it.
Most will trade bigger and with higher frequency with a large account--- when I said "broker" my meaning is the entire market infrastructure--- do you really think the kingdoms of wall street are built solely on commission?