What to do in the situation of undercapitalization?

[raytino]

I am trying to think of ways in which I can meet my personal financial objectives quicker with a consistently profitable trading system that I have developed. I still have to hold down a lowly day job (where I am seriously underpaid) but I have developed this system in my spare time over the last two years. I want to make at least £3,000 per month so I can focus on other ideas I have and start enjoying my life. I have rigorously backtested and forward tested the system, and it remains consistantly profitable over varying sample sizes. However, I am undercapitalized to trade it with the money management rules I have in place AND achieve the returns I am after.

I'D LIKE TO HEAR YOUR OPINIONS ON WHAT YOU THINK I SHOULD DO. PLEASE VOTE IN THE POLL

SYSTEM OVERVIEW
I'm sure that there are more profitable systems out there, but my point here is that it is profitable and consistent at doing so, which I know many people have a problem doing. There is also a lot of opportunity to trade, adding to the overall net profitability and return on investment.

Without giving too much away, here are some of the basic stats on the system:
• Trades only on the FOREX on a specific currency pair
• Decision is made once a day whether to go "long", "short" or "do not trade" based on my signals (part technical indicators and part discretionary. NB: the part that is discretionary is teachable and not some innate gut feeling). On average 85% of the time you will be going "long" or "short" and 15% the time you will do nothing on the day.
• Risk to Reward is 5:3 on any one trade (e.g. in any one trade you are either be risking £500 or gaining £300)
• Profitable on average 70% of the time
• Loss on average 30% of the time
• Assuming a Risk of £500 per trade and a reward of £300 per trade, the expectancy is: (0.7 * £3,000) - (0.3 * £5,000) = £600 per trade
• Backtested over a sample size of 2,000 (but still doing more)
• forward tested for 3 months with same success rate
• Average 1933 net pips per year on backtested data
• 297 net pips with forward tested data

PLEASE VOTE IN THE POLL

 

[0007]

If you acknowledge the system is under capitalised at the planning stage then you should not trade it because it has a major flaw. Why not go back to the drawing board?

 

[grantx]

Raytino,

Don't show anyone. While you're saving for sufficient funds to open an account, develop, refine, and improve your strategy. All things being equal, the extra time will be reflected in the improved performance, greater returns, reduced risk.

Good luck.

Grant.

 

[Windowsill]

I am trying to think of ways in which I can meet my personal financial objectives quicker with a consistently profitable trading system that I have developed. I still have to hold down a lowly day job (where I am seriously underpaid) but I have developed this system in my spare time over the last two years. I want to make at least £3,000 per month so I can focus on other ideas I have and start enjoying my life. I have rigorously backtested and forward tested the system, and it remains consistantly profitable over varying sample sizes. However, I am undercapitalized to trade it with the money management rules I have in place AND achieve the returns I am after.

I'D LIKE TO HEAR YOUR OPINIONS ON WHAT YOU THINK I SHOULD DO. PLEASE VOTE IN THE POLL

SYSTEM OVERVIEW
I'm sure that there are more profitable systems out there, but my point here is that it is profitable and consistent at doing so, which I know many people have a problem doing. There is also a lot of opportunity to trade, adding to the overall net profitability and return on investment.

Without giving too much away, here are some of the basic stats on the system:
• Trades only on the FOREX on a specific currency pair
• Decision is made once a day whether to go "long", "short" or "do not trade" based on my signals (part technical indicators and part discretionary. NB: the part that is discretionary is teachable and not some innate gut feeling). On average 85% of the time you will be going "long" or "short" and 15% the time you will do nothing on the day.
• Risk to Reward is 5:3 on any one trade (e.g. in any one trade you are either be risking £500 or gaining £300)
• Profitable on average 70% of the time
• Loss on average 30% of the time
• Assuming a Risk of £500 per trade and a reward of £300 per trade, the expectancy is: (0.7 * £3,000) - (0.3 * £5,000) = £600 per trade
• Backtested over a sample size of 2,000 (but still doing more)
• forward tested for 3 months with same success rate
• Average 1933 net pips per year on backtested data
• 297 net pips with forward tested data

PLEASE VOTE IN THE POLL

Why not trade with less funds.....at least then you can stop testing and see it live. The other thing you need to look at, in my opinion, is compound interest. A successful system doesn't take long to get there.

 

[DaxDestroyer]

• Risk to Reward is 5:3 on any one trade (e.g. in any one trade you are either be risking £500 or gaining £300)
• Profitable on average 70% of the time
• Loss on average 30% of the time
• Assuming a Risk of £500 per trade and a reward of £300 per trade, the expectancy is: (0.7 * £3,000) - (0.3 * £5,000) = £600 per trade
• Backtested over a sample size of 2,000 (but still doing more)
• forward tested for 3 months with same success rate
• Average 1933 net pips per year on backtested data
• 297 net pips with forward tested data

PLEASE VOTE IN THE POLL

I would walk around and get one or two co/investors on board

B U T

600 per TRADE??? No way you mean 60? Before commissions
I hope the rest of your calculations makes more sense :innocent:

Usually a system gives more diverse results than either 300 gain or 500 pain.
By the way, I hate systems which have higher losses then wins. 100 pips per month does not sound like a good system by the way.

 

[Akuma99]

Other ... as I trade currencies primarily, use a broker such as Oanda who allow trade sizes of any order, trade the same system and adjust the trade size accordingly. Let the "winning system" prove its worth and add to your capital at the same time. (sounds good in theory)