Full time trading does it really pay

[HowardCohodas]

You have 58 trades with an average profit of 6.1% and 4 trades with an average loss of 9.3%. So 316%. Whats 6.1%? Of your account? Of the stock value?

I can't really knock that. I still think with the number of trades you are doing, you need at least a year. The market has suited your strategy recently aswell.

6.1% of capital at risk.

During the five months since I started trading credit spreads with money, there has been one down month, one sideways month and three up months. There was no discernible correlation in performance related to this aspect of the market. Low volatility has characterized all five months. The tool I use for choosing the short strike for my spread has a volatility component. It "should" adjust for higher volatility regimes, but that remains untested by trading it with money.

Back-testing and paper trading "suggest" a robust strategy for varied market conditions, but only live action trading over time will be convincing. The only way to get there from here is to continue trading with this strategy. How long is sufficient to convince someone of the validity of the strategy is in the eyes of the beholder, as it should be.

 

[the hare]

6.1% of capital at risk.

With those kinds of paltry rewards based on the risk, you should seriously consider a post office savings account.

first class lulz though.

 

[HowardCohodas]

With those kinds of paltry rewards based on the risk, you should seriously consider a post office savings account.

first class lulz though.

That's 6.1% for the life of the trade which ranges from a couple of days up to 60 days. Otherwise it is not possible to have my account increase from 7% to 15% per month.

You have given me an idea of another statistic to provide in my report. Average lifetime of a spread. Thanks.

 

[new_trader]

You main problem is that you sell when you "think" it will go down, the rigth question must be what makes you think it will go down when it goes up and viceversa, maybe you are not using the rigth indicators or maybe you are not interpretting your indicators information at the rigth way.
By the other hand, these is a market, some will win, some will lose.

I agree. You should be using the 'UP' indicator (green one) when you are thinking of going long and use the 'DOWN' indicator (red one) when you think you should be going short. You can't lose!

kin ell, its not rocket science, bless

 

[Splitlink]

The market has suited your strategy recently aswell.

Your last sentence attracted my attention. Going with the market is the most important part of it. If you can't do that then OP's title question answers itself.

I know that I would not be able to do it. It could be because I am elderly but, nevertheless, a few hours are enough for me. Sometimes, when I have a good morning and I am free all day, I carry on into the afternoon but it ends with, at best, leaving a stop and switching off. I do not do that often.

So, actually, The question is not only if it pays, but if you can do it every day'

 

[Black Swan]

It's decent, but in reality you won't make £100 a day(not you). Some days you will, but not everyday. Just realistically it's not possible for 99% of traders. You can't always be right. Also the psychological pressure, due to the fact that you have to make money. In theory it sounds easy.

Another T2W group think myth rears its head. 100 quid a day trading FX from a 20K account is poor. I stress "on average" yet you home in on the 100 quid everyday each day which is not what I stated..

Still at least it's a departure from; "But that'd be 10%+ per month, if you compounded it you'd be as rich as Soros inside 5 years, even the top hedge funds can't do/don't do 10% returns per month!!..." Another version of Godwin's Law..

I'm beginning to slowly reach the conclusion Dionysus Toast reached some time back, hardly anyone on this thread or this site trades and those that do have such bad circuitry and issues they'll never make it.

You quote 99% of traders could never make a living off 20K, actually 99% of successful traders I know could, however my definition of a successful retail trader is very different from most and I only know a handful personally, none met through T2W btw..

Let's finish this with a question, what kind of capitalisation do you *think* is necessary to trade FX in order to draw down an above average salary each month? How much do you think you need in order to draw down 1K per week? Oh and btw, if you only risk 2% per trade (max) what would you suggest donig with the other 98% whilst it *sits there*?

 

[Black Swan]

Your last sentence attracted my attention. Going with the market is the most important part of it. If you can't do that then OP's title question answers itself.

I know that I would not be able to do it. It could be because I am elderly but, nevertheless, a few hours are enough for me. Sometimes, when I have a good morning and I am free all day, I carry on into the afternoon but it ends with, at best, leaving a stop and switching off. I do not do that often.

So, actually, The question is not only if it pays, but if you can do it every day'

Hi Split good post, two issues your post highlighted for me and these points are not subjective to you, but mainly answer the OP's original question; unless you absolutely have to make trading work for you (as a full time job) you'll never make a success at it, you need the desire/the need for the money to make it work.

The myth, that's been successfully peddled for years, of seamlessly moving from profitable part time trading, to full time, having acquired 50-100K along the way to give you the nec. capital and confidence to then trade is never going to happen. Thats not to say part time (difficult to define) can't make regular money, they can and do, but as I've always maintained if you're making circa 20K part time and keeping down a job then simply carry on carrying on...

Secondly part of making it work and being able to take wages out of the market relies on discipline, being there or finding a mechanism to make yourself available to take the opportunities to trade (as and when they happen) is crucial. Yes we're all going to miss opps. when we're asleep but otherwise you have to either have set hours, in day trading, or adapt your trading to the lifestyle choice you have to make if swinging and or position trading.

 

[HowardCohodas]

That's 6.1% for the life of the trade which ranges from a couple of days up to 60 days. Otherwise it is not possible to have my account increase from 7% to 15% per month.

You have given me an idea of another statistic to provide in my report. Average lifetime of a spread. Thanks.

Average life of a spread: 17 calendar days. However, that mixes weeklies and monthlies. Another time I will separate the two.

 

[Pazienza]

6.1% of capital at risk.

So tell me Howie, if someone were to risk say 2% of their account per trade (2% being the capital at risk), the average winner produces a whopping 0.122%? Is that right?

Somebody who risked 10% of their account would get average wins of 0.61% and so on?

 

[brettus]

Another T2W group think myth rears its head. 100 quid a day trading FX from a 20K account is poor. I stress "on average" yet you home in on the 100 quid everyday each day which is not what I stated..

Still at least it's a departure from; "But that'd be 10%+ per month, if you compounded it you'd be as rich as Soros inside 5 years, even the top hedge funds can't do/don't do 10% returns per month!!..." Another version of Godwin's Law..

I'm beginning to slowly reach the conclusion Dionysus Toast reached some time back, hardly anyone on this thread or this site trades and those that do have such bad circuitry and issues they'll never make it.

You quote 99% of traders could never make a living off 20K, actually 99% of successful traders I know could, however my definition of a successful retail trader is very different from most and I only know a handful personally, none met through T2W btw..

Let's finish this with a question, what kind of capitalisation do you *think* is necessary to trade FX in order to draw down an above average salary each month? How much do you think you need in order to draw down 1K per week? Oh and btw, if you only risk 2% per trade (max) what would you suggest donig with the other 98% whilst it *sits there*?

Point. 10 ticks a trade on average it can be done swing trading. I still think realistically thats pushing it, but it would make you 25k a year off 20k. Trading intraday is the same thing just more trades and lower average tick gain. I think you should be aiming for a drawdown less than 20% and i don't think this is possible off 20k.

Going by own experience, i have reached a leverage i'm comfortable with that will only allow me to make between 50%-75% of my account value a year. I earn a salary from trading also, but not from proprietary trading, more like risk management.

 

[brettus]

6.1% of capital invested in the stock.

 

[Splitlink]

The myth, that's been successfully peddled for years, of seamlessly moving from profitable part time trading, to full time, having acquired 50-100K along the way to give you the nec. capital and confidence to then trade is never going to happen. Thats not to say part time (difficult to define) can't make regular money, they can and do, but as I've always maintained if you're making circa 20K part time and keeping down a job then simply carry on carrying on...

Secondly part of making it work and being able to take wages out of the market relies on discipline, being there or finding a mechanism to make yourself available to take the opportunities to trade (as and when they happen) is crucial. Yes we're all going to miss opps. when we're asleep but otherwise you have to either have set hours, in day trading, or adapt your trading to the lifestyle choice you have to make if swinging and or position trading.

Yes, I don't believe that part time traders realise the hard work involved in trading full time. They may do it one day, the same as I do, when I am free, but I'd go nuts doing it every day. Especially if the latter part of a few days trading does not go well! They should remember that they must feed the wife and kids!

Remember, if you pack in a good job and fail, you'll never hear the end of it!

 

[new_trader]

Yes, I don't believe that part time traders realise the hard work involved in trading full time. They may do it one day, the same as I do, when I am free, but I'd go nuts doing it every day. Especially if the latter part of a few days trading does not go well! They should remember that they must feed the wife and kids!

Remember, if you pack in a good job and fail, you'll never hear the end of it!

That’s ironic Split. Most have aspirations of trading full-time to get away from hard work. I suppose if you’re trading for breadcrumbs it will seem like hard work and that is why most continue with part-time trading until they are certain their living will be much more comfortable making the transition to full time.

It may be just me, but I am always sceptical of the people who call themselves a ‘full time’ trader (as if it confers some extra credibility in what they say about trading) when they are married and use spread betting because of the tax advantages. They are either too embarrassed or too arrogant to admit that they have a very supportive (emotionally and financially) spouse, wife, partner, ‘other’ as well as the tax advantages that you get with the dual income. But when asked about it, those people get so incensed by the question and refuse to answer that it will always be a mystery....a forbidden question...But I just can't imagine anyone coming home from work and saying "Honey, Kids, it's beans on toast for the next few years because I want to be a full time spred betta!"

I say that so called ‘full time’ traders have absolutely no idea how much extra time and effort “part time” traders are putting in to realise their own dreams and aspirations about trading and are therefore completely unqualified to make any comments about it.

To continue with the sceptical theme - A number of other people have also mentioned that they lost their entire trading pot 3, 4, X times before becoming profitable. I always wonder where they got their 2nd, 3rd, X pot to start again.

 

[meanreversion]

To continue with the sceptical theme - A number of other people have also mentioned that they lost their entire trading pot 3, 4, X times before becoming profitable. I always wonder where they got their 2nd, 3rd, X pot to start again.

Ah yes, I always wondered that.

You forget the other alternative with full time traders - they may have made money in a previous job and regular income generation is not a priority.

In the end, if you have traded independently and successfully for a few years, there should be a next step, namely managing OPM, at which point you're no longer a "full time trader".

 

[standleymt]

Umm interesting posts but I can't say I am particularly inspired..! There seems to be a lot of cynical put downs on this site. My experience of life is the more I help people the better my life is and I try to lead by example.

I am sorry for mentioning the company I use for investing it was wrong and done without thought. It has been instructional to me however how paranoia on the internet can be spread so easily, I really have nothing to peddle and truly wish to make an informed decision on whether to invest more time in learning about trading or go with my original assumption. Anyway thanks all.

 

[Splitlink]

That’s ironic Split. Most have aspirations of trading full-time to get away from hard work. I suppose if you’re trading for breadcrumbs it will seem like hard work and that is why most continue with part-time trading until they are certain their living will be much more comfortable making the transition to full time.

It may be just me, but I am always sceptical of the people who call themselves a ‘full time’ trader (as if it confers some extra credibility in what they say about trading) when they are married and use spread betting because of the tax advantages. They are either too embarrassed or too arrogant to admit that they have a very supportive (emotionally and financially) spouse, wife, partner, ‘other’ as well as the tax advantages that you get with the dual income. But when asked about it, those people get so incensed by the question and refuse to answer that it will always be a mystery....a forbidden question...But I just can't imagine anyone coming home from work and saying "Honey, Kids, it's beans on toast for the next few years because I want to be a full time spred betta!"

I say that so called ‘full time’ traders have absolutely no idea how much extra time and effort “part time” traders are putting in to realise their own dreams and aspirations about trading and are therefore completely unqualified to make any comments about it.

To continue with the sceptical theme - A number of other people have also mentioned that they lost their entire trading pot 3, 4, X times before becoming profitable. I always wonder where they got their 2nd, 3rd, X pot to start again.

There you go!

I hope what you say will get inside the heads of the wannabe fulltime traders. It's pie in the sky and you have to be tall and have a long reach to get it!

 

[HowardCohodas]

6.1% of capital invested in the stock.

I trade index options credit spreads. Capital at risk is the difference in strike prices making up the spread less the credit received.

 

[brettus]

I trade index options credit spreads. Capital at risk is the difference in strike prices making up the spread less the credit received.

Excuse me for being dumb, but if you have 100k total capital, you made 6.1k? from that credit spread?

 

[HowardCohodas]

Excuse me for being dumb, but if you have 100k total capital, you made 6.1k? from that credit spread?

Without delving deeply into money management, here are a few points. At the moment I have 13 credit spreads open. Twelve of them are paired up to form Iron Condors. This is important because the second spread added to form the Iron Condor does not place any additional capital at risk. Last, I am never "all in." I was hovering around 10% cash in this account, but am moving it toward 20%. This arrangement permitted me to earn an average of 10.5% month on month return in this account.

 

[meanreversion]

Without delving deeply into money management, here are a few points. At the moment I have 13 credit spreads open. Twelve of them are paired up to form Iron Condors. This is important because the second spread added to form the Iron Condor does not place any additional capital at risk. Last, I am never "all in." I was hovering around 10% cash in this account, but am moving it toward 20%. This arrangement permitted me to earn an average of 10.5% month on month return in this account.

Is it correct to then say you have up to 80% of your entire trading pot quarantined by the broker?