What's The Best Way To Convert This Edge Into Money?

[SplawnDarts]

Quote from NoDoji:

With $13K and trading the morning session hours you indicate, your edge should take care of your P/L readily. I don't think you'd be able to qualify with TopStep trader as a micro-scalper.

Although it's rare, I've been slipped between 8 and 21 ticks trading CL and that was on minimal size.

So the answer to your question is to trade your edge in the mornings and watch the money appear

Useful info on the slippage - thanks. Do you happen to remember what some of the underlying events were?

 

[Arnie]

Quote from SplawnDarts:

I'll take that bet - flip a RNG "coin" with the reverse of my win_size/loss_size ratio (41% chance of "win" on each flip). Do a run of 106 "flips". If you can find any run of 53 consecutive flips with at least 33 winners, I'll pay you $X. If you can't find one, you pay me $X.

You game?

You're missing the point. You don't have a true edge. If you did you wouldn't be posting here. You would have already quit your job and borrowed every penny you could to trade. What you have found is not an "edge" like a casino has. Its market action and its likely very temporary.

 

[gmst]

Quote from murrica:

Unless you are not worried about the long term financial (and life/family/marriage/health/etc.) risks, this is probably the most important advice here.. how can it be justified to leave a $200k salary job (very enviable to most) unless you are pulling in significantly more (think millions per year) trading to offset the long term risks?

If you can automate your strategy and/or do it part time in a way that does not interfere with your lucrative career, why not do so?

Again, just my $0.02.

Yes I will reinforce this point. Keep your day job until you have proven and made some money. Hire someone to execute for you if you can't execute yourself because of your job, and put more money in your trading account.

Thats all I had to say and now I am out of the discussion.

 

[SplawnDarts]

Quote from Arnie:

You're missing the point. You don't have a true edge. If you did you wouldn't be posting here. You would have already quit your job and borrowed every penny you could to trade. What you have found is not an "edge" like a casino has. Its market action and its likely very temporary.

Every part of a casino except possibly the keno lounge has a much weaker edge that what's being described here.

And it's trivial to buy equity in an edge like a casino has - plenty of them are publicly traded. I doubt anyone rational is suggesting levering up to do that.

 

[murrica]

Quote from gmst:

In general, you are correct. But his salary is 200k, a 50k loan is just 5% of his annual salary. Plus, he has been trading real money with PF > 2, and he wants backing. Assuming his edge exists, A lot of effort must have gone into developing a PF 2+ strategy on liquid markets like CL/ES. He should feel confident to risk at least 50k on this business. Otherwise, why will people take him seriously if he has only 13k in his trading account.

My main point is if he is a college student with 13k in his trading account, people might still talk to him, but 200k salary common he shiold be able to put in 50-60k in his account, especially when he has the strategy and the execution worked out. Thats all I am saying

The reality is that a lot is riding on the assumptions of future results, and the wild card factors in the case of failure are not immediately evident to those who have not experienced it first hand. Risks/stakes in the case of a loan would be immediately compounded, quite unnecessarily, and life implications cannot be understated in case of failure. (hint: I have been down this path, so I am giving honest life advice here).

Agree 100.00% with Maverick74. Keep the job. I would trade on the side and get enough money ahead to create a large, safe runway (at least seven figures of after-tax trading profits based on OP's salary/career path) to truly justify making a major life decision based on a career in gambling with (or should I say, against) the big boys.

 

[Arnie]

Just an aside about risk.

The 1987 Stock market crash was 20 standard deviations from the mean, and statistically impossible, but it happened.

 

[NoDoji]

Quote from SplawnDarts:

Useful info on the slippage - thanks. Do you happen to remember what some of the underlying events were?

The 21-tick slippage happened when I had an initiating buy stop 1-tick above a small symmetrical triangle in the middle of nothing special (in other words it wasn't a break of a high or low in a strong trend or anything like that).

If your strategy uses hard stop loss orders and you were short (and it was a setup where a micro-scalper would very likely have been short, rather than looking to go long like I was), then your loss was at least 21 ticks more than you expected.

The other larger slippage events were pure breakouts where I sold 1 tick below the LOD or bought 1 tick above the HOD and I made the mistake of placing my order kind of at the last minute, LOL! (However, the good news is when you're slipped like that there's usually a lot more profit on the way).

 

[SplawnDarts]

Quote from Arnie:

Just an aside about risk.

The 1987 Stock market crash was 20 standard deviations from the mean, and statistically impossible, but it happened.

Which is all well and good, but not really relevant to discussing a scalping method that protects itself with stops held at the exchange. My understanding is that SP that day traded in ~10 tick jumps, but was liquid.

 

[SplawnDarts]

Thanks again, NoDoji.

 

[murrica]

Quote from SplawnDarts:

Which is all well and good, but not really relevant to discussing a scalping method that protects itself with stops held at the exchange. My understanding is that SP that day traded in ~10 tick jumps, but was liquid.

This is an interesting point of discussion that I think about from time to time.

What if there was the black hole swan where liquidity disappeared completely?

Likely? Probably not. But I bet some risk manager out there is pondering such a scenario, and figuring out what event(s) would cause something like that to occur.