Is a profit of 100% per year good enough?

[NickF]

You seem excited about this, which seems to imply you've come across things that were interesting to you from a trading perspective. I was wondering what they might be.

I'm doing virtual trades on Forex based loosely on setting stops smaller than limits. I'm attempting to grow a bit every day, which is not as easy as it may appear...
Where there are big jumps, I placed bids of $100000, instead of the usual $10000. The demo account gives a very high leverage, I think 1:100. I usually choose my bids based on the candlebars set to 1 minute, which is sometimes a bit shortsighted...
So far I've been lucky, I'm curious to see how long my luck lasts.

Nick

 

[Wysiwyg]

Hi Minwa

I worked as hard as I could and did it as smartly as I could the whole time. In reality, I passed most of the types of financial goals mentioned in this forum, $1m etc, by around 28 and just kept going because we tend to be highly driven at that sort of age, although exceptions do occur.

Hello. I am intrigued. Your experiences are unique. Would I be accurate in assuming you excelled at taking money out of the financial markets like very few people know how to? Other questions if you would be so kind? In the beginning did you borrow to take large positions or was an accumulated hefty salary the stepping stone to large position trading? Were fundamentals the analysis of success? I appreciate an individuals time is precious so a brief reply or none at all is understandable.

 

[DeepState]

Hello. I am intrigued. Your experiences are unique.

1. Would I be accurate in assuming you excelled at taking money out of the financial markets like very few people know how to?

2. In the beginning did you borrow to take large positions or was an accumulated hefty salary the stepping stone to large position trading?

3. Were fundamentals the analysis of success?

Hi

Everyone walks their own journey. Mine is just one. Yours is unique too.

1. We did some pretty funky stuff that the insto market liked. It was very leading edge in areas and was copied by others eventually. Our original clients still seek my advice now. In a number of cases, they still use products which my former team play a role in managing or which are connected to the organisation that we were/are part of. It's gratifying when you can know you did it right.

We used other methods that were also cutting edge at the time. The idea was mostly to acknowledge that our edge in a single stock was tiny. We did things cross-sectionally. That is, one stock vs another. Pair/cluster trading en masse. This is a type of approach that might be called statistical arbitrage. It worked. I also held broader responsibilities.

2. I accumulated by personal exertion in the first instance. This sounds bad...but it wasn't worth my time to manage our own assets when I was working. Plumber's house has leaking taps etc.. My family portfolio consisted of a pile of TDs which my wife rolled, a stack of stock which formed part of my compensation and whatever was placed into super. I never looked at it when the statements came in. Given the company I worked for was a rather large financial entity, the stock was essentially a mutual fund into the world market. With leverage. My salary was a levered play on my ability to generate returns. In that way, I suppose, I was a levered investor. It really felt that way too as I don't think I felt I would definitely have a job at the end of a year in all except 2 years. We were always on the line.

Institutional funds management has a bad name in terms of just being asset gathers etc. The reality, which I experienced anyway, was that benchmark hugging guaranteed loss of the client. They can run your portfolio through risk systems (or their advisers can) and see what is going on. If you don't do well, your business shutters in just a few years. The typical period of assessment is just 3 years. If something goes wrong, that period can be shortened to tomorrow.

I am not a punter. I would hazard to guess that I would be around the bottom 10% in terms of risk appetite in this forum. I do not take monster positions. That gold position, which I think you must be referring to, will be a fractional exposure when completed. 90% of forum participants would not get out of bed in the morning to make that kind of adjustment, proportionately. Those that do might just have nothing particular to do that day/minute. They might be large dollar positions, but my objective is really to add a margin to inflation which is like saying our wealth should grow in-line with GDP. We don't spend our income. We have means, but we're just not that kind of people. If you looked at me, you'd see nothing at all. So this will lead to an increasing multiple of expenditure. It will eventually be passed along - I hope. I am also Slowly Walking the Road to (more) Riches, like Ryan C. I'm just taking a slightly different path because I have some more latitude available.

Leverage does form part of this, but this is because the risk management processes I use are targets towards dollar wins and losses. Then the positions are taken to respect those limits and this allows for some leverage (It's around 0-10% net, but can be much larger 'gross notional') in effective exposure terms. I don't actually borrow money from a bank. It occurs because my proportional holdings in the relatively high volatility class of equities is surprisingly low compared to what might be regarded as normal by the general populace. So I lever a bit to utilise the risk budget.

3. For me, everything boils down to fundamentals and risk management/deployment. Even if some the techniques I use do not explicitly include fundamentals in their formulation, it is there before the code was written or the general shape of a decision was made. There must be an economically coherent reason why something should work and this must be backed by solid reasoning/evidence that it has worked, with the conditions still prevailing in which it can. The FX thing previously posted is just one such idea. The reasons it works are visible. You can check that the conditions are actually present. You can risk manage it. I do not play at the casino until I have confirmed I am the house. In this house, I can count cards too. There are many games on offer. I don't need to play them all. There are more than I am not good at than which I can make a fist of.


My wife is still my Head of Investment. She is still too big to fail...


How about you? What's your approach/development been?

 

[Wysiwyg]

Hi
Everyone walks their own journey. Mine is just one. Yours is unique too.
How about you? What's your approach/development been?

Thank you. Well I am from the other side of the track so to speak and feel hopeless, slightly envious, even intimidated by your presence in regard to financial market knowledge, experience and success. You made it where I am still trying. In the past I have extracted a years earnings in physical work terms from the stock market in a few months and made a thousand dollars an hour on other trades, only to give it all back plus more. I lost more often because I lacked experience, matter of fact I didn't know what I didn't know, particularly risk management and strategy. Big swings up (for me anyway) bigger swings down. My experience gathering has cost over 100 thousand dollars since 2006. Gave up in 2012 to focus on first home purchase.

I am going down the price and volume analysis road because repetition is evident in charts. Am spending much spare time on signal creation with a final discretionary execution style. Manage risk with position size/loss control. I play very small nowadays while I gain experiences, trial and error strategies and build a bankroll to participate on a scale that will supplement my day job.

Thank you again for sharing your experiences and yes, everyone makes their own way.

 

[skc]

There must be an economically coherent reason why something should work and this must be backed by solid reasoning/evidence that it has worked, with the conditions still prevailing in which it can.

One of the wisest things ever posted. It applies to trading and investing. Commonsense + logic are the foundation to success. The rest are just enablers imo.

My wife is still my Head of Investment. She is still too big to fail...

The least wise thing ever posted... calling your wife too big! She's in complete rage after reading the word big and didn't finish reading the rest of that sentence.