Large capital base vs. small capital base returns

[Spongle]

2 at the absoloute most... pointless otherwise i figure.

There is obvious risk involved but I have a fair bit of time before I attain these funds anyway.

I don't intend to make stupid mistakes but if I do who cares? Better to lose 10k and learn stuff than 200k and learn stuff

 

[skc]

Sorry you've misunderstood, i didn't explain myself properly.

the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is... i chose a large number of stocks so i had a larger data set.

OK so lets take 10k to trade with 2% increase over a 3week period. 80% succsess rate. 10 (x2) brokerage. stop loss at -2%.

52weeks divided by 3weeks = 17.3 weeks. 17.3weeks multiplied by $20 brokerage = $346.66

$10000 x .02 = $200 (1st 3week period) + 204 + 208 + 212 + 216.5 + 216.8 + 221.15 + 225 + 230 + 234.6 + 239.3
+ 244 + 249 + 254 (14week series = 80% success rate

Total gain = $12946 - 346.66 (brokerage) - approx $589 at 20% fail rate = 12010.34

17% increase from 10k

My 3week fake trades thus far are closer to 4% so the above example is a modest estimate

These calculations are all very wrong...

Why are you applying $20 brokerage per 3 week period? Are you only intending to trade 17 times a year?

I don't know over what period was your 50-100 paper trades, but you need to know that the market is correlated. If you chose a period where the overall market rose, then 80% win rate may be easily achieved. Do the same exercise over a month where the market tanked and you will find your win rate is a lot lower.

You need to properly read up about backtest, position sizing, expectancy etc etc so you can conduct proper assessment of what to expect.

And once you've done that, be happy if you can breakeven on $10k, long only in this market.

 

[tech/a]

Sorry you've misunderstood, i didn't explain myself properly.

the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is... i chose a large number of stocks so i had a larger data set.

OK so lets take 10k to trade with 2% increase over a 3week period. 80% succsess rate. 10 (x2) brokerage. stop loss at -2%.

52weeks divided by 3weeks = 17.3 weeks. 17.3weeks multiplied by $20 brokerage = $346.66

$10000 x .02 = $200 (1st 3week period) + 204 + 208 + 212 + 216.5 + 216.8 + 221.15 + 225 + 230 + 234.6 + 239.3
+ 244 + 249 + 254 (14week series = 80% success rate

Total gain = $12946 - 346.66 (brokerage) - approx $589 at 20% fail rate = 12010.34

17% increase from 10k

My 3week fake trades thus far are closer to 4% so the above example is a modest estimate

Wow could you do my books!

I don't intend to make stupid mistakes

Best start again.

but if I do who cares?

You will

Better to lose 10k and learn stuff than 200k and learn stuff .

They say fools and their money are easily parted
In the above case a Fool wouldnt have $200K.
But the guy who did would have a 5% drawdown on 10k loss.
The fool 100%
Suggest you take a lot more time.

 

[Trembling Hand]

You need to properly read up about backtest, position sizing, expectancy etc etc so you can conduct proper assessment of what to expect.

And once you've done that..............

And once you've done that? You'll be like the rest of us and know you need heaps more money, lots of time AND the right market before you order your Ferrari. :guitar::car:

 

[Spongle]

That makes so much sense i've been thinking about this way too ridgidly.

So What would you guys advise for trading with such small amounts

I know bugger all about this stuff but am keen to learn


Thanks

 

[CanOz]

That makes so much sense i've been thinking about this way too ridgidly.

So What would you guys advise for trading with such small amounts

I know bugger all about this stuff but am keen to learn


Thanks

Paper trade & save...I've been paper trading for months trying to develop an intra-day discretionary method. Not only have i yet to realize any measure of success trading live, but you find yourself second guessing everything you do, and the even the small losses hurt psychologically.

Once you master the techniques, you have to master yourself. Its very difficult.

Equities in a bear market, and its doubtful you'll be shorting, so that leaves futures or CFDs. Unless you have experience tradings CFDs you'll lose your money. 10,000 is not enough for futures IMO.

CanOz

 

[tech/a]

10,000 is not enough for futures IMO.

Eminis'

 

[CanOz]

Eminis'

and....?

CanOz

 

[pavilion103]

Mate, I'm no expert but I've been working on a system for about 18 months. Working out specific entry setups, exit strategies, money management etc. On top of that looking at chart after chart to try to gain the best understanding I can.

From the calculations you put up it seems like you have a long long way to go in understanding the mathematical side of things for one. I don't even know what your trading strategy is.

I'd say, don't take your $10,000 and trade it at the moment when you have no idea what is going on. You will lose it. Continue to build it up. Spend hours and hours developing a methodology that works well for you. Learn about risk management and money management. Paper trade an account as you would a real one, using the same capital base and risk per trade, only taking the number of positions that that capital base will allow.
Then see where you are in 12 months and reassess. If you're not confident, keep going with the paper trading.

 

[Spongle]

cheers for the info!

I really know next to nothing regarding this sort of thing so it seems the best POA is to save, create a system over the next couple of years (and beyond) and soak up as much info as possible.

Good info here