29 replies to this topic

[alexnewbee]

Bull? What bull?
http://stockcharts.c...id=p79533712025

[bln]

Simple explanation.

Central banks keep printing trillions to keep this pile aloft, but they can't print prosperity.

Prices going up doesn't mean real value is rising.

 

Nah, company earnings is what drives the underlying trend. The day blue ship earnings turn down and start to trend to the down side is the day you should start worrying about the market.

 

CB money printing and QE gives boost, but is not the main driver.

Edited by bln, 25 October 2017 - 05:33 AM.

[AChartist]

I guess the gold/dow chart is why people dont feel it,

 

when no amount of INDU can buy slaves a year of obamacare.

[12SPX]

 

Simple explanation.

Central banks keep printing trillions to keep this pile aloft, but they can't print prosperity.

Prices going up doesn't mean real value is rising.

 

Nah, company earnings is what drives the underlying trend. The day blue ship earnings turn down and start to trend to the down side is the day you should start worrying about the market.

 

CB money printing and QE gives boost, but is not the main driver.

 

Curious though, isn't that really a joke to because the only reason they beat is because they continually get lowered and then the stock celebrates because it beats?  Do you know the comparison of current estimates to what they were at the start of the year?

[CLK]

I really don't know what people do with their money, maybe they invest and trade at the same time. But there is no way you can devote 2% of your capital to trading the market and beat all in buy and hold. If someone did happen to have a one million dollar account, 2% of that is only $20,000, the most you can make in a month in SSO is 5% which is only $1,000 and that doesn't figure in stop outs. Maybe on a good month you get all the trades right and make 10%. So you can see why I say there is not much to be made, on a $100,000 account even, the profit is only $200 on a 10% month on a 2% position. So to do this type of trading for a living it either takes a $10,000,000 account or use a 20-50% total capital position of around $200,000, which in theory would net $10,000 profit per month. You can see why most traders resort to options for small accounts.

Edited by CLK, 25 October 2017 - 07:38 AM.

[NAV]

I really don't know what people do with their money, maybe they invest and trade at the same time. But there is no way you can devote 2% of your capital to trading the market and beat all in buy and hold. If someone did happen to have a one million dollar account, 2% of that is only $20,000, the most you can make in a month in SSO is 5% which is only $1,000 and that doesn't figure in stop outs. Maybe on a good month you get all the trades right and make 10%. So you can see why I say there is not much to be made, on a $100,000 account even, the profit is only $200 on a 10% month on a 2% position. So to do this type of trading for a living it either takes a $10,000,000 account or use a 20-50% total capital position of around $200,000, which in theory would net $10,000 profit per month. You can see why most traders resort to options for small accounts.

 

Can you help explain why you would trade only 2% of your account ?

Edited by NAV, 25 October 2017 - 07:57 AM.

[LarryT]

Love the saying, "you can make a small fortune in the stock market if you start out with a large one" 

[CLK]

 

I really don't know what people do with their money, maybe they invest and trade at the same time. But there is no way you can devote 2% of your capital to trading the market and beat all in buy and hold. If someone did happen to have a one million dollar account, 2% of that is only $20,000, the most you can make in a month in SSO is 5% which is only $1,000 and that doesn't figure in stop outs. Maybe on a good month you get all the trades right and make 10%. So you can see why I say there is not much to be made, on a $100,000 account even, the profit is only $200 on a 10% month on a 2% position. So to do this type of trading for a living it either takes a $10,000,000 account or use a 20-50% total capital position of around $200,000, which in theory would net $10,000 profit per month. You can see why most traders resort to options for small accounts.

 

Can you help explain why you would trade only 2% of your account ?

 

 

 

That's what you said you do and it's what I've read, a trader should risk no more than 2% of their account on any one trade.

[CLK]

Love the saying, "you can make a small fortune in the stock market if you start out with a large one" 

 

 

Exactly.

[NAV]

 

 

I really don't know what people do with their money, maybe they invest and trade at the same time. But there is no way you can devote 2% of your capital to trading the market and beat all in buy and hold. If someone did happen to have a one million dollar account, 2% of that is only $20,000, the most you can make in a month in SSO is 5% which is only $1,000 and that doesn't figure in stop outs. Maybe on a good month you get all the trades right and make 10%. So you can see why I say there is not much to be made, on a $100,000 account even, the profit is only $200 on a 10% month on a 2% position. So to do this type of trading for a living it either takes a $10,000,000 account or use a 20-50% total capital position of around $200,000, which in theory would net $10,000 profit per month. You can see why most traders resort to options for small accounts.

 

Can you help explain why you would trade only 2% of your account ?

 

 

 

That's what you said you do and it's what I've read, a trader should risk no more than 2% of their account on any one trade.

 

 

You got it all wrong. Let me clarify.

 

If you have a 100k account, you should not risk more than 2% on each trade. That does not mean you play with 2k capital. That's your STOP size. That means you are willing to lose 2k per trade max .

 

In my case i use a STOP size of SPX 6-8 points on each trade. That's about .2% risk. Since i play the 2x leveraged ETF, my risk per trade is 0.4% (way less than the 2% max). It means you lose max $400 per trade assuming you have a 100k account. But you trade with your entire capital of 100k. In fact given the 2X leverage you would be actually trading with 200k of capital.

 

As for the age old question of how much capital is required to trade for a living, it depends on your lifestyle. If your family expenses are 100k per year and you make 50% returns, you would need north of 200k in capital to account for your expenses plus saving some to compound your capital over time. If you are just trading to make a living and not saving anything, why would you choose such a difficult profession as trading ? You can do that with even with a corporate job, which is way easier.

 

The only reason people trade for a living is:

 

1) They want to make much bigger returns than what the corporate world offers relative to their talent

2) They want to escape the corporate slavery at any cost, even if means to earn less than the corporate compensation.

 

It's a tough question to answer. Depends on the individual objective. If you have a family, it adds more complexity to the equation.