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Day trading - Considering throwing in the towel for good.
Agreed. And it's been a long while since I've focused on other traders. I've been mostly focusing on my own process and studying the markets for a long while now.
However, I don't think it's entirely irrelevant as the results other people are able to achieve (or not achieve) can tell me something about what's reasonable to expect.
Maybe I'd find it motivating if some other trader checked in here and said he was in a similar situation, but continued to push on and finally had a breakthrough and is now making more money than he ever imagined possible.
Or maybe I'll take it as a confirmation that I should let it go if several other traders come on here and say they've been at it for 20 years and still don't have much to show for it.
Can you help answer these questions from other members on NexusFi?
That's a good question. I'm not sure I can give you an exact number, but let's just say I was hoping I could take a smaller sum of money and grow it into a large sum of money and eventually get rich.
For example, I think I could fund a small account now at say $5K and maybe average $50-100 per day trading 1-2 MES/MNQ, but that doesn't amount to much. Of course, if I'm patient and accept it will take a few years, I could get somewhere eventually.
Now, if I had an account at say $50K, I could instead trade 1-2 ES/NQ and maybe average around $500-1000 per day.
Last year, I had a period where I was averaging $500 per day over nearly 2 months starting out with only $6K, but it was obviously a very high leverage and I eventually entered a drawdown which simply cascaded to the point where I closed down the account just a bit over where I started out.
So, I've been wondering if it perhaps would be better for me to focus on building income and saving up for a bigger account for a while instead of trading these smaller accounts.
If I could consistently net $500 per day I would be very, very happy, because it would be enough money that it would mean something and I would also know that if I could maintain that consistency then $500 per day could eventually become $1000 per day and even more.
If you made 500 a day for 2 months thats about 20k plus the 6 grand you started with ; so you had a 25K accout and managed to lose most of it.
Probably not the amount of capital that is the problem.
What did you or the market do differnetly that led to the drawdown?
I'm not a futures trader. I swing trade stocks, I'm very well capitalized and don't need a great return to make ends meet.
I can't give you advise on futures but my guess is that it's the trader not the market that is the problem.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
Your strategy is important. But a recovery plan may be more important. Have you developed a recovery plan after a draw down? It sounds like your draw downs kill off all your profits. If that's the case, then your calculation for an acceptable win/loss ratio is off.
You might consider posting your strategy with a couple trade examples, including a draw down. We might be able to calculate a workable win/loss ratio that makes sense.
Also, your point about under capitalization is true. But if you can be consistently profitable with a couple of MES contracts, you can do it with the MINI as well. It's the statistics and ratios that you develop around your strategy that should enable you to live with a draw down and come back tomorrow.
Honestly I feel great about trading but I will probably never make money at it and I realize that. The futures markets are fascinating to me and I will probably always study the DOM even when I can't trade. I never really make any money and I blow up my account quite often. I go through periods when I can't trade because I have no money but always watch the price action in the DOM.
I think the simple answer is that I started thinking I knew something since I had such got results and got both sloppy and greedy.
I do of course 100 % agree that it's the trader that's the problem, but being well capitalized sure helps. Granted, I traded that account fairly aggressively, so the plan was pretty much to stay at my same size while growing the account such that my % risk gradually got smaller while still reeling in a decent amount of cash.
I don't have a recovery plan per se. Maybe that's something I didn't learn about yet. Can you show with an example?
I'm on holiday now, but I could consider posting something. At the same time, I'm not sure how much I want to divulge about my specific strategy as in many ways it's a proprietary system. But basically, I'm trading or trying to trade the larger intraday moves.
As for MES and ES being equivalent, I agree, but like I alluded to earlier I probably need a far larger account than I currently have to trade the ES really comfortably. Trading 1-2 ES per $5K is risky unless you have a massive, massive edge, IMO.
That's a really cool perspective. I share it in some respects.
What's the size of the account you blow up quite often? If you still find the markets fascinating without trading real money, maybe it's not worth putting your money at risk if you don't feel you have an edge?
I save a couple hundred dollars, throw it in my account and lose it in a couple of days trading the micros. I don't know if that is technically blowing up because it's such a small amount but it still hurts lol. You might be right maybe I should just study the market and not trade because I have no edge.
Try with one thing to repair, not all of them at same time.
Reading what you have wrote, I can see that you are simply using WAY, WAY to big risk/leverage!
Starting with $6k account, making $500day, means you archive almost 10%/day (later less)
Forget how much you lost, forget how long you trade, forget about how much you want to make.
Just focus of doing good job, means execute your plan. Even if trade is a looser and you stick to your plan, you should be happy, because you lost, what you have planned.
