You Only Need $5000 to Make a Living

[jazzsax]

Quote from 4DTrader:



Jumping from 1 to 10 contracts is only part of the story, I once buried myself deep in a hole of 16 contracts (yep, refusing to take the loss and then averaging in). I was not myself when emotions took control of me.

Something good coming out of those losses is that I have come up with the concept of Precision Trading, which is to use a minimun amount of trading capital to achieve a consistent daily income on the condition of avoiding all 4 trading mistakes. Hence the thread.

No More Mistakes!!! (only a slogan I came up with, I still make mistakes).

Averaging is the devil. fortunately for me over the last few weeks it has worked but i could have been on the nasty side of some nasty losses on the CL.

 

[TraderZones]

Quote from Jayford:

That is actually the definition of not having a system.

Good catch. That is why I questioned this thread based on his thread 2 weeks ago that he was giving up. 4D is a very confused rabbit.

He has a "very successful system"

BUT

He cannot make it work

 

[4DTrader]

Quote from TraderZones:

Good catch. That is why I questioned this thread based on his thread 2 weeks ago that he was giving up. 4D is a very confused rabbit.

He has a "very successful system"

BUT

He cannot make it work

Do I have to prove to you? If you answer yes, give me a good reason.

 

[TraderZones]

Quote from 4DTrader:

Do I have to prove to you? If you answer yes, give me a good reason.

No, I think you said it best yourself:

"I have to say that among all the things I have tried, trading is the most difficult. For several times, I thought I got it, but then I made some horrible mistakes that reminded me that I don't know what I am doing."

 

[Jayford]

Quote from 4DTrader:

After so many years of trading, you are still making the two entry mistakes of the 4 mistakes.

Do you know why? For your first mistake, it's fear to enter. For your seond mistake, it's greed to enter. If you have a large trading capital, it's ok. But if you have $5000 and need to make a living ($200-$500 per day), you just cannot afford these two mistakes, because missed opportunities=money on the table.

Tell us about your ka boom 10 years ago, how did it happen? I assume you were already profitable at that time?

First of all, you have no idea what you are talking about. I have no problem pulling the trigger. I just like to go home with a winner when its late in the day. I like the guarantee when there isn't a huge chance of making a big gain anyway. Earlier in the day, and I don't even think about it.

Secondly, boredom trading has ZERO to do with greed. It has everything to do with boredom, hence the name. I also told you I have negative expectations for the trade, and thus only trade singles in those situations (which is very small for me). If greed was the issue, why would I employ a negative expectancy strategy? Greed is an issue for people that trade too large, or hold a trade too long. Not a problem in my case.

How did I blow up twice? Well, the first was your run of the mill death of a thousand cuts where I just had a crapload of small losses, and not too many big ones. I didn't know what I was doing.

The second time, after 10 years trading full time, was much more interesting. It was during the Asian currency crisis in late 1997, and I took an overly large long position in the dollar/yen pair thinking it was way over done by the news. It was just getting started. I was way too cocky to get out with a moderate loss as I had been doing very well for quite some time. By the time I realized (or accepted) I was wrong, I was so much in the red that I just said "what the fuck, do or die", and let it ride. ka boom. Luckily, I didn't have a large % of my net worth in the acct. I took some time off and haven't had a large loss since. I put stops in with every fill immediately, no exceptions. I also trade at a size conducive to my acct.

 

[traderyin]

$5000 is enough to make a living where? Trailer home in Alabama?

 

[rozar s'macco]

How do you trade a $5000 account and only risk 1.0-2.5% on each position? You dollar limit per trade is $50-125.

 

[4DTrader]

Quote from rozar s'macco:

How do you trade a $5000 account and only risk 1.0-2.5% on each position? You dollar limit per trade is $50-125.

Lots of BS about risking a small percent of your capital, also totally different situation. In trading, you will spend a lot of time being misled and finding a way out of the maze. You are very confused now, but it's ok, that's learning.

 

[eagle]

You assumed like a bet on horse racing, each bet ($50-125) is an ALL win or loss.

He's talking about two possible scenarios for each long trade for example:

- Bet all the $5000 and get out if price fell by 1.0-2.5%
- Bet a portion of $5000, say $500 (10% of $5000) and get out if price fell by 10-25%. Thats called Money Management, how much you afford to lose per trade (10-25%) and how much you afford to lose per account (1.0-2.5%) as in this example using 10% of account fund for each trade.

PS: Replace 'fell' by 'increased' for shorting. Short selling is another story, you need a margin account.

Quote from rozar s'macco:

How do you trade a $5000 account and only risk 1.0-2.5% on each position? You dollar limit per trade is $50-125.

 

[SicilianTM]

Quote from eagle:

- Bet all the $5000 and get out if price fell by 1.0-2.5%
- Bet a portion of $5000, say $500 (10% of $5000) and get out if price fell by 10-25%.

Or, in the case of futures, use your $5000 to bet $60,000, and get out if the price falls 0.2%.