Day Trading

[JR8]

I looked into it more and it looks typical of a kind of fraud that is being perpetuated, one name for it is Trading Arcades.

Mug punters start by 'investing' say US$3k of their own money and spend a few months doing $100 trades (presumably the capital rapidly disappears in fees). The promise is that if you're still afloat after 3 months, then you'll be made a 'proprietary trader' (LOL!) trading the brokers capital. Presumably that's where the 20-1 comes in.

Anyway it seems 98% of people lose their capital, there is no way of canceling and withdrawing from the scheme, it boils down to mug-punters with visions of Wall Street being stripped of their money via offshore entities that you haven't a hope of laying a finger on.

[freeman.vu]

I traded full-time on my own acct for 7 years, in that time I did not meet one person that started up day-trading and survived more than a year. And I was involved in many groups online and via training sessions over that time.

In the long run I made a bit, but was undercapitalised and ended up degrading my trading acct by having to live off it.

If you don't have at least 200k, and that is the absolute minimum in my opinion, you WILL NOT MAKE IT!!!!! Starting with less will mean you'll have to gear up and the afore mentioned swans of all colours will quack your account. Having more than 200k will likely also mean failure but at least it will only be due to lack of discipline and not a lack of funds.

Better to donate your money to charity now and then just get another job, at least that way you'll have a warm and fuzzy feeling about the losses. End result will be the same.

Cheers,

Happy new year!

Would like to renew the conversation. Sorry but where the 200k number come from? to trade forex, you don't even need that much as a start

[JR8]

What's your figures Freeman?

[taxico]

...Would like to renew the conversation. Sorry but where the 200k number come from? to trade forex, you don't even need that much as a start

you sure don't, but how much profit/loss do you actually take with a small amount?

[freeman.vu]

@JR8: I don't have any figures, but I am curious to know where the 200k comes from.
@taxico: let's say a small account with 10K, leveraging 10, a medium (high) freq scalping strategy with profit/loss of 10 - 15 bps (~150$)?
Btw, I am doing some back testing at the moment and got very positive results. Assuming the results hold for forward testing, with 50K is a very good start, but I know I need to test more...

[JR8]

@JR8: I don't have any figures, but I am curious to know where the 200k comes from.
@taxico: let's say a small account with 10K, leveraging 10, a medium (high) freq scalping strategy with profit/loss of 10 - 15 bps (~150$)?
Btw, I am doing some back testing at the moment and got very positive results. Assuming the results hold for forward testing, with 50K is a very good start, but I know I need to test more...

It wasn't me that said that is was Grumpy. However you do need some 'size' to get decent rates quoted.

Trust me on this I used to do the daily P/L on a trading floor for 'my traders', er about 25 of them. So if a retail customer (that's you ) calls up his private client broker with an order, the broker will then call the Retail Desk (i.e. for non-corporate/banks deals). They call the trader on the applicable currency desk. Both will load their price far more heavily than if you were trading 'size'. Anything under US$100k and you were likely to get quoted a hideously wide spread.

Same principle as the money changers in SG offering better rates of US$100 bills.

p.s. 10* margin, that's just nuts. I'd politely suggest anyone offering that is a cowboy operation.

[freeman.vu]

hej JR8, thanks for the sharing. I know the number is not from you.

I don't think I know much about Forex as I am still a student. I see one broker which supposes to provide retail traders interbank quotes - very tight spread (e.g: EUR/USD: 0.4 bps -- one tick spread) so this is the narrowest I ever seen. One thing I know for sure is the quote feed is coalesced at some point so it's not real time 100% but its still more than enough for my strategy
Another thing about leverage is I think with very good risk management, leverage of 10 or 20 in Forex is manageable especially talking about a bit high frequency where in and out lasts only short time. But I agree that if it's 100 up to 1000 (I know some brokers advertising that in my home country) is completely scam.

[JR8]

hej JR8, thanks for the sharing. I know the number is not from you.

I don't think I know much about Forex as I am still a student.

Ah when I wrote ‘They call the trader on the applicable currency desk’, I meant currency of bonds. Apologies, that was confusing.
I.e. most debt (i.e. bond) trading floors are split up into ‘currency desks’, i.e. a desk for Canadians, a desk for US corporates, a desk for French, and so on. So in the pre-euro days each country had it’s own desk. I expect they now have ‘country desks’, as the traders will typically specialise and have a deep knowledge of one country, it’s economy, it’s corporates etc.

I see one broker which supposes to provide retail traders interbank quotes - very tight spread (e.g: EUR/USD: 0.4 bps -- one tick spread) so this is the narrowest I ever seen. One thing I know for sure is the quote feed is coalesced at some point so it's not real time 100% but its still more than enough for my strategy

So what would be in it for them, if they’re simply passing on interbank rates. It doesn’t stack up does it? 'If it smells like a fish...'

Another thing about leverage is I think with very good risk management, leverage of 10 or 20 in Forex is manageable especially talking about a bit high frequency where in and out lasts only short time. But I agree that if it's 100 up to 1000 (I know some brokers advertising that in my home country) is completely scam.

In the place I worked, you could apply to get a loan of up to IIRC c.60% on blue-chip stocks. Even 10-20* is completely insane. You will get burnt by that, trust me I've seen it happen to a day-trader I knew. (and the tragedy was he gave up studying medicine at an US Ivy- league college to become a day trader!)

So what’s the EUR/USD going to be in a week’s time, and why is that your opinion? What side are you buying and how much?

[JR8]

Everyone who joined my final department was given a copy of this book., by our aged and extremely respected boss. I'd highly recommend it to you.
----------------------------------------------------
http://www.amazon.com/Reminiscences-Sto ... k+operator

'Reminiscences of a Stock Operator'
-----------------------------------------------------

[freeman.vu]

So what’s the EUR/USD going to be in a week’s time, and why is that your opinion? What side are you buying and how much? [/color]

Hey, I think we are talking about different things. Stock is different animal. You can see stock go up/down 10% but this never happens in currency. For Forex, you can go in both sides: buy or sell and question of how much to buy/sell depends on your risk appetie.
Anyway, I am curious why such number (200K) come up, does it base on his strategies alone or on some other factors which I don't know. I am at the first step testing my strategy and I find I don't need that much at all so I am really surprise

[freeman.vu]

Everyone who joined my final department was given a copy of this book., by our aged and extremely respected boss. I'd highly recommend it to you.
----------------------------------------------------
http://www.amazon.com/Reminiscences-Sto ... k+operator

'Reminiscences of a Stock Operator'
-----------------------------------------------------

Thanks for this recommendation. Can you give us a brief summary of the book? I don't know how to trade stock to be honest as I see it is too risky!

[taxico]

Everyone who joined my final department was given a copy of this book., by our aged and extremely respected boss. I'd highly recommend it to you.

'Reminiscences of a Stock Operator'
-----------------------------------------------------

Thanks for this recommendation. Can you give us a brief summary of the book? I don't know how to trade stock to be honest as I see it is too risky!

i've not read it...

buy low sell high. ream your clients. brown nose your boss/potential boss. job hop whenever you get a huge joining bonus. pop pills. retire at 39. (59 is the new 39)

[JR8]

Freeman:
Hey, I think we are talking about different things. Stock is different animal. You can see stock go up/down 10% but this never happens in currency.


[My reply in Blue Text]
Never say never. Do you remember what Sterling did the day it got spat out of the ERM?
Besides, volatility is your friend. It is what creates you opportunities.

For Forex, you can go in both sides: buy or sell and question of how much to buy/sell depends on your risk appetite.

Correct, either way you are ‘buying risk’. How much and what should be driven by your financial goals, your age, and your wealth. Identify your goals and plot a route to it. It’s a far better way than rushing in blindly hoping to make ‘loadsa money’, as the large majority of people who take that route fail (IMHO).

Anyway, I am curious why such number (200K) come up, does it base on his strategies alone or on some other factors which I don't know. I am at the first step testing my strategy and I find I don't need that much at all so I am really surprise

No idea. As I said it wasn’t my comment. But you did understand my point about wider spreads on smaller trades right?


Thanks for this recommendation. Can you give us a brief summary of the book? I don't know how to trade stock to be honest as I see it is too risky!


You think stocks are risky but FX isn’t? Lol. I’d politely suggest you have that the wrong way around.

There is a summary of the book on the page I linked. And no I'm not going to phone you up and read it out for you

Taxi:
i've not read it... buy low sell high. ream your clients. brown nose your boss/potential boss. job hop whenever you get a huge joining bonus. pop pills. retire at 39. (59 is the new 39)

Well close. I retired at 40. Please don’t think I’m being at all smug though, I’m not. What I rapidly discovered is that it’s a real double-edged sword, as being employed gives you status (as in a self-worth/ego], a social network/friends on tap, pride in yourself, and a reason to get up each day. You miss it when its gone! Now I have to back-fill all of these facets via other routes, and it is much more of a challenge than simply having it handed to you on a plate via a career-job.

[taxico]

...I retired at 40... What I rapidly discovered is that it’s a real double-edged sword... Now I have to back-fill all of these facets via other routes, and it is much more of a challenge than simply having it handed to you on a plate via a career-job.

i don't actually have to work coz i was a 90s dot com hero and not working is really harder than it seems so i know what you mean.

sometimes it's easier to lie...

we need to start a club. i also recommend L4P if you have plenty to throw around. you'll eventually get banned, like me, but it will be fun.

[JR8]

i don't actually have to work coz i was a 90s dot com hero and not working is really harder than it seems so i know what you mean.

sometimes it's easier to lie...

we need to start a club. i also recommend L4P if you have plenty to throw around. you'll eventually get banned, like me, but it will be fun.

Ah nice, good for you.

Easier to lie, and tell people you have a job? If that's what you mean I get your point. If you meet someone new socially one of the 'ice-breaker' questions often asked is 'So, what do you do?'. This is part seeking things in common (bonding)/measuring you up (divining relative status), that people meeting for the fist time do, and if you're aged 20-60 it is presumed you will have a job. If you don't have, or apparently need one then...
a) You've killed the bonding stone-dead.
b) You, in their mind, have often positioned yourself socially way above them.

What is L4P? I don't throw it around (money), I live a modest lifestyle. I've seen too many traders make millions in their 20s, and blow it on cars, a flash house, trophy-wives with shopping habits, and all the trimmings. Then when they get canned, they lose it all, and are left with nothing.

I think the trick is in knowing when enough is enough and then preserving it via LBYM (Living Below Your Means).