Why Is The Obvious Not So Obvious?

[ironchef]

If you can grow that much per day, sure you could eventually have some nice coin built up. But, there will come a time where you can't just easily move your millions through certain VOLATILE instruments.

I too like to play around with the compounding formulas, to just dream about insane profits... but they are not really realistic. They are almost pointless to think about imo. Real world trading probably just isn't going to work out for most of us that way. When I see one of those compounded, theoretical, billion dollar amounts, its like "LOL!!! " There are just too many overlapping trades, which you are in for various amounts of time, varying amounts of ROI, and varying SIZE, that make real-world trading and compounding difficult, and managing your bankroll tougher.

Some of the things I've realized recently, I see where I've been going wrong trying to trade futures for years... I simply don't have the money for it.

Just a note, the example I used with 2% gain, showing what you'd actually accrue after 30 trades... those are not my numbers. I was just using a theoretical example b/c it seems like guys like that theoretical stuff? My numbers are way better than that luckily(for now). I was just trying to explain how to calculate your Profit/Loss, which is something I thought EVERYBODY already knew how to do? Maybe the obvious pre-requisite is to know how to calculate your P/L... LOL. Like the distinction between 10 to 15, and 15 to 10.

My apology. I thought those were your numbers since you said so.

Peace and best of luck to you.

 

[MrScalper]

Common sense though many might have,

Won't help a poor soul trade good or bad.

The poems that work cut to the heart,

Like price in a simple small box it might make you fart.

The shock of simple many can't see,

Like blades of grass or forest from trees.

Price moves around with something behind it,

If SCALPER told US we just might heed it.

But as good things go I'm hoping this ends,

With an answer or two that might get rid of these friends.

The journey is rough for most if not all,

So enjoy the process and even the falls.

You can love unconditional with no return,

But love price and well surely burn.

The answers you seek are simply inside,

Admittedly so simple they just can't hide..

Unless it is ego,

Then yes let him go.

Unless one is humble,

Then yes up he go.

To end a rhyme in conspicuous manner,

The journey continues and so must the banter.

keep it small
to grow tall
the big desire
will you retire

so what this pre
that all can't see
and why so few
can work out clue

first step is pass
thru the high grass
keep in the way
as grass do sway

to think you know
is but a show
to really see
think A..B..C

first 3 alone
will not you hone
your best of friend
is always trend

so trend you see
not really be
and reason such
read book too much

 

[theapprentice]

to make good money, eat the honey

 

[Ed48]

No it is not. If you make 8% on a trade(as in the trade from its open till your closing it moved 8%), and you risk 2% of your INITIAL bankroll, you have grown your account by 0.16%.

Wouldn't that only be the case if your position size was 2%?

Eg.
bankroll $100,000
open trade with $2,000 (2%)
moves 8% to $2,160
profit $160 (0.16% of bankroll)

 

[Pelt]

Wouldn't that only be the case if your position size was 2%?

Eg.
bankroll $100,000
open trade with $2,000 (2%)
moves 8% to $2,160
profit $160 (0.16% of bankroll)

Yeah, I just used 2% as an example, b/c it's the number I see thrown about forums a lot.

I don't use 2% myself, it varies quite a bit depending on what I'm doing. But really you can RISK whatever you want... if you want to make more, you can RISK more.

Obviously, there are limits to it though. Especially low volume, highly volatile instruments.

Also: I know you know, but you don't even need a dollar amount or you bankroll amount, just use percentages. RISK(%) * Move(%) = profit.

 

[Pelt]

Wouldn't that only be the case if your position size was 2%?

Eg.
bankroll $100,000
open trade with $2,000 (2%)
moves 8% to $2,160
profit $160 (0.16% of bankroll)

I think I misunderstood your question initially? But I get what you are saying now.

But ya... position size, amount risked, RISK, stake size, bet size, whatever you wanna call it.

When I refer to RISK, I'm just saying whatever amount your position size is, or how much you can lose, or your stake size.

The calculation you did many posts ago, assumed a risk of 100% of your bankroll on every trade. The calculation I then did, and the one you just did above, you have added the RISK component in.

I usually just refer to % that the instrument moved from the open to close(ROI in %), and then the RISK(stake/bet size per trade in %). When you have those two numbers, you have all the info you need w/o talking personal details, or dollar amounts.

 

[Ed48]

But ya... position size, amount risked, RISK, stake size, bet size, whatever you wanna call it.

What confused me slightly is that "amount risked" is usually a fraction of "position size", determined by where you place a stoploss.

Eg.
bankroll $100,000
position size $10,000
opening price of stock $10
stoploss $8
amount risked $2,000 (2% of bankroll)

 

[Pelt]

Your stoploss would just be a negative ROI. Would be the exact same calculation.

AccountGrowth = -ROI(% moved) * RISK(% of Account)

 

[Ed48]

Yeah, I just used 2% as an example, b/c it's the number I see thrown about forums a lot.

When people talk about risking 2%, they don't normally mean the bet size.

For example, with a bankroll of $100,000, risking 2% on an AAPL long trade doesn't mean buying $2000 of stock.

 

[bogan22]

keep it small
to grow tall
the big desire
will you retire

so what this pre
that all can't see
and why so few
can work out clue

first step is pass
thru the high grass
keep in the way
as grass do sway

to think you know
is but a show
to really see
think A..B..C

first 3 alone
will not you hone
your best of friend
is always trend

so trend you see
not really be
and reason such
read book too much

forget the book,
unveil the peeps,
to watch where the buzzy bee flies,