Account Size & how to get there?

Dear day traders:

If you can earn a return of 30% a year consistently, my understanding is you have talent in this game. However this also depends on your account size. It is obviously easier to make higher returns on smaller accounts. But even if you have a £100,000 account (which is by no means a small amount of money to get your hands on) and earn a return of 30%, you earn £30k which is not big money. Assuming you can earn a return of 30% a year consistently you would need an account of £300k to make anything close to good money.

Can someone with some experience please put some light on the subject for me. Have they slowly built up their accounts or do they show their positive trading history (with small accounts, i.e £10k) to prop houses/banks who will back them with larger amounts.

It seems you don't need money to make money but need a lot of money to make money.

I am assuming that investors are risking a small proportion per trade, 1-2% max.

Any insight would be greatly appreciated.

Cheers,

Johnny.

Well, I think it depends on what risk you want to take. I see Forex traders make 1000% a month trading in Forex contest.

As a Forex trader, I always remind me that what I need is to produce 5% weekly compound return consistently to earn 1,000% in 1 year with reasonable risk. However, you must understand the followings:

A)to achieve these returns, one must be 100% discipline or he can lose all of his profit in a short period of time;

B)You can only compound your return with limit because you will not be able to trade more than 50 lots in one order from most Forex broker. Once you are trading at the 50 lots range, you can't compound your return any more.

I hope this help.

1only said:

Well, I think it depends on what risk you want to take. I see Forex traders make 1000% a month trading in Forex contest.

As a Forex trader, I always remind me that what I need is to produce 5% weekly compound return consistently to earn 1,000% in 1 year with reasonable risk. However, you must understand the followings:

A)to achieve these returns, one must be 100% discipline or he can lose all of his profit in a short period of time;

B)You can only compound your return with limit because you will not be able to trade more than 50 lots in one order from most Forex broker. Once you are trading at the 50 lots range, you can't compound your return any more.

I hope this help.

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If you can make 30% a year with limited drawdown, you try and get yourself a proprietary job with a bigger balance to trade. Realistically to live off trading you only need to make 30% a year, but I think most are aiming for higher than that. I wouldn't be happy with 30% a year on my balance. You need a lot more than that to push on.

Yes, I can make 5% weekly compound return which can turn a $10K account to $100K in one year while risk only 2% per trade with drawdown less than 20%. However, I can only compound account under $300K or I will have execution issues with most of the Forex broker.

As a self-taugh trader, I will never understand how bank traders to trade very large size and may not be able to get a job.

1only said:

Yes, I can make 5% weekly compound return which can turn a $10K account to $100K in one year while risk only 2% per trade with drawdown less than 20%. However, I can only compound account under $300K or I will have execution issues with most of the Forex broker.

As a self-taugh trader, I will never understand how bank traders to trade very large size and may not be able to get a job.

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They just chase liquidity all day. Most of their business is just client execution.

1only said:

Yes, I can make 5% weekly compound return which can turn a $10K account to $100K in one year while risk only 2% per trade with drawdown less than 20%. However, I can only compound account under $300K or I will have execution issues with most of the Forex broker.

As a self-taugh trader, I will never understand how bank traders to trade very large size and may not be able to get a job.

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What's stopping you dealing through multiple brokers ? You can deal as large as you have the balls for. If that still doesn't do it for you, you can hit all the spread betters whose prices are synthetic and do not depend on liquidity.

BeginnerJoe said:

What's stopping you dealing through multiple brokers ? You can deal as large as you have balls for.

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I think it's a good idea. Good to know that you are a bank trader. Why is your Favorite Trading Tip "Sell Cable on Friday"?

1only said:

I think it's a good idea. Good to know that you are a bank trader. Why is your Favorite Trading Tip "Sell Cable on Friday"?

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You got the wrong guy. My favourite tip is to average down.

BeginnerJoe said:

You got the wrong guy. My favourite tip is to average down.

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Sorry about it

1only said:

Sorry about it

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I seriously don't understand why you have trouble trading the size you want. If you like, I can open accounts in my name and let you trade them if you give me a cut in commissions. 1000% annual capital growths sounds like my kind of thing, and more than plenty to go round.

1only said:

I think it's a good idea. Good to know that you are a bank trader. Why is your Favorite Trading Tip "Sell Cable on Friday"?

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Just a funny quote from someone i know. It's not a bad idea though. What size are you looking to trade with 300k$?
What markets are you trading? What spreads do you have?

BeginnerJoe said:

I seriously don't understand why you have trouble trading the size you want.

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1only highlights a great problem for day traders who average 40-50% a month consistently. Execution and liquidity presents a major limit to the size a trader can take.

Take for instance, stocks. An experienced trader can buy/sell 4000-5000 shares of MSFT/MRVL/DELL/etc and get a good price, but on most other stocks, trading that size would really disproportionate the market and the trader could get a really bad price.

So, with respect to all the stocks in the U.S. (most liquid equity market in the world), a reasonable size would be 1000 shares. As a trader starts small and works his/her way up to 1000 share lots, unfortunately, position size cannot be increased beyond a reasonable amount.

This means that for day traders who manage risk accordingly, there is a limit to how much return you can earn consistently.

Consistently earning 40% a month is a great return, but unfortunately, most people who read about it immediately jump to conclusions such as "If you were earning 40% a month, then you'd be a billionaire in 2 years". It simply doesn't work like that.

Edit: Most full time day traders who are successful enough to make 40% a month usually withdraw all or most of their monthly profits to pay their mortgage bills, etc...so compounding doesn't play a role here anyway.

amit1986 said:

So, with respect to all the stocks in the U.S. (most liquid equity market in the world), a reasonable size would be 1000 shares. As a trader starts small and works his/her way up to 1000 share lots, unfortunately, position size cannot be increased beyond a reasonable amount.

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Isn't the whole point of being a trader is to work your order until you get the position you want ? I would be seriously shocked if an account of a few 100k's represents the impenetrable ceiling for a retail trader.

BeginnerJoe said:

Isn't the whole point of being a trader is to work your order until you get the position you want ? I would be seriously shocked if an account of a few 100k's represents the impenetrable ceiling for a retail trader.

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Not all day traders work their orders. I was once watching a video of a trader who had recorded his screen for the entire days trading. He "worked" his order - often being 8,000 - 12,000 shares in position on any given trade. But it would take him considerable amount of time to build such an position size and he'd be aiming for 20 cents per share per day. He'd often get much more than that every day, but in that case, it's different.

In momentum trading, it's not uncommon to take a large position size immediately. In that case, there's a limit to the position size.

amit1986 said:

Not all day traders work their orders. I was once watching a video of a trader who had recorded his screen for the entire days trading. He "worked" his order - often being 8,000 - 12,000 shares in position on any given trade. But it would take him considerable amount of time to build such an position size and he'd be aiming for 20 cents per share per day. He'd often get much more than that every day, but in that case, it's different.

In momentum trading, it's not uncommon to take a large position size immediately. In that case, there's a limit to the position size.

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If you want something, you work for it, be it a trade order or some other endeavor. This is why I thought it was funny for anyone to believe their pocket change could exhaust the market liquidity. In any case every market has a certain level of expected activity. It would not make sense for people to put things up for sale when they don't expect that many buyers. In this kind of situations, you'll just have to work it or put your order into the order book to let people know you are interested. You'll be surprised how quickly people would come with truck load of the stuff to dump it on you.

brettus said:

Just a funny quote from someone i know. It's not a bad idea though. What size are you looking to trade with 300k$?
What markets are you trading? What spreads do you have?

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I trade EURUSD with 2 pip spread and I risk 2% per trade with 15 pips Stop. For $300K account, I trade 40 lots, which is under the maximum of most Forex brokers and all my entries are market orders. However, my order execution is getting harder and harder starting from about 25 lots with many re-quotes, which affects my emotion.

As I know from your profile, you are a bank trader. If so, can you tell me your experience of trading large order?

1only said:

I trade EURUSD with 2 pip spread and I risk 2% per trade with 15 pips Stop. For $300K account, I trade 40 lots, which is under the maximum of most Forex brokers and all my entries are market orders. However, my order execution is getting harder and harder starting from about 25 lots with many re-quotes, which affects my emotion.

As I know from your profile, you are a bank trader. If so, can you tell me your experience of trading large order?

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You could trade 40 lots in under less than 2 pips in eurusd. You should be able to trade 100 lots in under 2 pips in eurusd. I'm not a bank trader. I was at a brokers. You should trade DMA if you are trading 25 lots. I'm guessing you're not up to 25 lots at the moment yet though. Who do you use for trading? Are you trading the futures? I'm not sure you'll be actually hitting the market.

I trade spot Forex. Yes, I can get filled my market order upto 50 lots per click but I just get requote to slow me down with different prices.

BeginnerJoe said:

I seriously don't understand why you have trouble trading the size you want. If you like, I can open accounts in my name and let you trade them if you give me a cut in commissions. 1000% annual capital growths sounds like my kind of thing, and more than plenty to go round.

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Are you serious? How about 30% commission every time your account is up 150% with $10K minimal and drawdown is up to 30%?

1only said:

I trade spot Forex. Yes, I can get filled my market order upto 50 lots per click but I just get requote to slow me down with different prices.

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Who are you trading with?