I`d say 30k
Why 90% of traders burn out?
- Thread starter fordewind
- Start date
I`d say 30k
Agreed.
Most traders spend 50 years (from 30 to 80), with expense of at least 500K (based on my friends) in tax and commission.
Trading is one of zero-sum game (with respect index in equity trading), so he should win 500K before expense to make it even after expense.
Therefore 90% of traders are losers after expense (50% should be above water BEFORE expense)
L
lovethetrade
I think it depends on the skill of the trader or profitability/draw down of the system. $5K is more than enough for some traders/systems.
People on this thread are just pulling numbers out of the air without any money management math:
If you assume average 5pt stop loss in ES ($250 risk per contract).
Then:
$12,500 needed if you want to risk 2% per trade.
$25,000 needed if you want to risk 1% per trade.
$50,000 needed if you want to risk 0.5% per trade.
$100,000 needed if you want to risk 0.25% per trade.
Now commissions: if you do 250 trades per year = $1,000 commission per contract. Which is just about doable with a $12,500 per contract account.
But if you do 1000 trades per year (ie $4000 a year comms), then $12,500 per contract isn't really enough, 50K is needed to keep annual commissions below 10% of the starting account value.
Who cares about % commission if profits are increasing.
Trading isn't that easy, traders have losing periods too. You dont want to churn your account in commissions during a protracted losing period.
I agree, with this sentiment.
If you're a trader who's concerned with % commissions either making or breaking you...then you need to rethink your overall strategy
Trading commissions should be a relatively small/tiny % of your profits. Your time and focus should mainly be on the actual trading.
I personally 'risk' way more than that typical, proverbial trading rule of not risking more than 2% of your account on any one trade. If you're a skilled trader who is confident in their abilities and system...then I see no reason not to be more aggressive.
I'm not a stock scalper -- my % returns are much bigger. So for me, trading commissions are kind of a non-issue.
Some people pickup pennies and nickles in front of a steam roller ....I'm more like a tornado picking up dollars.
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Lets say you have a 100K trading account at the start of the year.
Now you if you are going to pay 50K a year in commissions that is madness if you ask me.
Look at nekes journal, he paid 350K in commissions over the last 7 years or so, and made hardly any profit for himself.
That is the real world of day trading, but you guys are living in some holy grail fantasy land where you make so much in profit every year that commissions dont matter.
I have a strategy that costs end up higher than my net profit (for example 11k costs and 4K net profit after costs on a 1 lot) month in month out but it works much more than it doesn't. This is also a borderline high frequency strat trading 150+ times a day.
Would you consider this strategy not usable if it churns out allot of costs but also regular profits?
And if you do think it's usable, this is why I don't like blanket statements like "only 10% net capital in costs".
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