Why do 5% of Traders Win?
- Thread starter oldtime
- Start date
March over to the World Cup sir.. The thing is that if this were "realistically feasible" one would think it'd be easy for the guys who enter these contests to do that and more. But some years they only managed to do 50% and they are swinging for fences.. These are guys who have 500k base accounts. They are not concerned about blowing out the account.
Is it possible? Again, I don't think so.. not "normally" or "consistently"... and definitely not at keeping account at 10k. I might could do it if I hit a good swing and got the account to 25k-30k.. So again.. if it is even conceivable then NO WITHDRAWALS. I consider a decent living 55k (the median in US) but even if one could do 40k I'd be impressed.
IF possible, I believe the only way this is possible is in micro-trading/scalping.. The reason being is that if you can reduce the risk per trade and take more trades then the entire dynamics change for the calculations. This is why scalping is sorta the "holy grail" of trading because it promises to allow one to make small bets and compound.. providing smoother equity curve. The problem is that for most it just sounds good on paper because it forces one to be making decisions/taking trades all day.. so one has to be able to "get edge" constantly.. and 1 mistake and you're forced to take a bad price or a large intraday drawdown.
Anyway, let's take the 40k number, you need to clear $3,333/month for that. Now let's assume your edge is $5-$15 per trade, we'll go with $10/trade = 3333/10 = 333 trades + 333 * .3 = 435 trades per month or 22 trades per day...
Is it possible? Again, I don't think so.. not "normally" or "consistently"... and definitely not at keeping account at 10k. I might could do it if I hit a good swing and got the account to 25k-30k.. So again.. if it is even conceivable then NO WITHDRAWALS. I consider a decent living 55k (the median in US) but even if one could do 40k I'd be impressed.
IF possible, I believe the only way this is possible is in micro-trading/scalping.. The reason being is that if you can reduce the risk per trade and take more trades then the entire dynamics change for the calculations. This is why scalping is sorta the "holy grail" of trading because it promises to allow one to make small bets and compound.. providing smoother equity curve. The problem is that for most it just sounds good on paper because it forces one to be making decisions/taking trades all day.. so one has to be able to "get edge" constantly.. and 1 mistake and you're forced to take a bad price or a large intraday drawdown.
Anyway, let's take the 40k number, you need to clear $3,333/month for that. Now let's assume your edge is $5-$15 per trade, we'll go with $10/trade = 3333/10 = 333 trades + 333 * .3 = 435 trades per month or 22 trades per day...
I certainly do a fairly large number of trades. Usually I am trading about 3 gold contracts per trade. 20 trades a day. Average profit per trade 5$ Average loss $12. Successful trade rate is more than 75%.
I know this sounds like peanuts, but this is with a deposit of only $100 to $300.
Today was an unsual day; tripled my account in less than two minutes.
Okay, so your average loss when you first started that mini account is 10%. Would you be willing to do that same risk at 10k? At what point do you lower that risk tolerance? You can't continually risk 5-10% of your account per trade and be consistently profitable as a day trader imo. You will have those bad days where you just can't get it right.
This paragraph is also very misleading. The psychology of trading a $500,000 account is completely different. Very few people can handle the psychology of 2, 3, 400 percent returns on accounts like that. Even 50% is a lot!
Its just the opposite of what you think. $10,000 is much, much, much more easily replaced than $500,000. Replacing my piddly $100 to $300 accounts is absolutely trivial. Consequently, the level of risk one is willing to assume is much greater. Quadrupaling $10,000 is way easier than doing the same with $500,000.
Quote from ocean5:
What kind of broker allow you to trade 3 gold cars with the $300 bucks deposit?
MickeyMouseFutures.com
I can trade 3 ounces of gold with a $10 deposit.
fxcm.co.uk.
Depends what you trade. It is that type of thinking that limits a person's ability. Why is 500k harder to quadruple than 10k? If it is only about liquidity, ES and 10yr note have more than enough liquidity to make you rich or ruin your account in a day. Scared money doesn't make money, and I think you do yourself a disservice by throwing around those small accounts. It augments your growth as a trader if you can't take it seriously, or you'll still have those new trader pains once your account gets larger.
I don't agree with this. One learns best by starting small and gradually increasing their position as they get better.
Fear isn't the issue. Replaceability is the issue. I can replace $10,000 pretty quickly. Replacing $500,000 will take a long time. Risk should be adjusted accordingly.