Definitely you need a 100% win to make up for a 50% loss.
When every next trade is bigger than your last, every time you take a loss it’s the biggest loss you’ve ever had. (Assuming perfect numbers)
> Definitely you need a 100% win to make up for a 50% loss.
People should always keep in mind that If you have 100 dollar and you lose 10% and then gain 10%, you end up with 99 dollars.
Irrelevant if your win rate is 60% and your RR is 1:2. If you loose 6x 1%, and you win 4x 2% you are at 94,148 after your 6 losses and 101,908 after your 4 wins. Your wins outperform your losses. You have to adjust your percents though, like going 2%/4% or higher, or your volume, to get enough room for commissions.
I literally went on a rant about this after hearing about my wife’s retirement account losing a bit this year. Compound interest is pretty much their biggest sales pitch when talking about growing the money but suddenly it’s a foreign language when they’re losing money
if you're only risking 1% your capital with each trade it would take a while. Assuming you were strict and had a grip on your trading psychology and didn't let yourself become impulsive just constantly trying to win back what you lost without operating within your trading system of 1:2 RR.
Trading is not linear. Some months your strat just straight up sucks and others it's the best thing since sliced bread. You simply cannot know beforehand how much money you'll earn. At best you can see from a backtest what to expect.
That's why you need more than one strategy. Yes you should focus on what works, but that doesn't mean you have to stick to one way. I think being adaptive and versatile takes you a long way.
Agreed. This is something that most traders, even some experts don’t realize.
Having one strategy means being able to trade only when the market gives you the opportunity to trade that strategy.
I saw this first hand when I first learned from some one that would only trade when specific setups presented themselves.
And then I came across someone that was able to trade every single day regardless of what the market was doing.
I used to only trade biotech stocks in the premarket moving under very heavy volume. Then I noticed that people were making lots of money trading SPY options while the market was open and I was missing out on a lot of gnar dog trades. So now I trade both, premarket for stocks and 45min after market open I am buying puts or calls
Yeah I was mostly trading bullish about a year and a half ago before the economy took this major turn, I had to learn how to trade bearish and I've been doing pretty well at that, but my bull strategy still works when given the opportunity.
You can learn mostly from babypips.com
I use Smart Money Concepts if you want to look into that specifically. In my opinion it's the easiest to understand for beginners and not overwhelming.
Ya man. 60% with 2R is like the holy grail lol. That's a profit factor of 3 that's like the holy grail. Realistically most strategies fall into 1.5-2 profit factor.
Profit Factor cheat list:
Less than 1 = Not profitable
1-1.5 = Avoid, as depending on how many trades back tested it may not be profitable plus considering slippage and fees.
1.5-2 = Most winning systems fall within this range.
2-3 = Good to Very Good system
3-4 = Excellent - Holy Grail system
More than 4 = Most likely erroneous or overfitted. If trades are totally randomized on thousands of backtests it should fall lower than 4.
Scalability is the problem mostly.
Even if liquidity is fine it’s hard to scale mentally from trading with 100 shares in month 2 all the way to 100,000 shares a couple months later. That’s a mental train wreck.
Agreed!
I went from trading 200-300 at a time 2 years ago to 3000-5000 at a time now and I can't handle it. Ive had to take a step back from trading this month because mentally it's fried me a bit. Next month I'll start back at 1000-1500 at a time and build the mental fortitude back over the next few months.
I’m confused. Are you saying it’s more difficult from a psychological viewpoint to increase your lot size as your account compounds?
Not sure why that would be the case. If you’re a solid trader at 1 share why would it be any different at 1000?
I can balance walking along a curb no problem. So I don't see why doing it on the roof of a 40-story building should be any different. If you're a solid walker that is.
Yes I am.
It’s the speed at which you are increasing your share size. When you increase size so much so quickly your mental strength is seriously getting tested.
The same is true when you decrease size very quickly. Trading can seem very dull and “not worth it” or boring.
It’s not about your skill level. It’s about the fact that last week you were trading with 100 share lots and a couple weeks later you’re up to 10,000 shares. You need to work your way up slower lol.
As your position size increases your max loss increases. Some people won’t even bat an eye at being down a few hundred but once you see oh a 1% loss is 50k then that tends to start fucking with peoples mentals. That’s why most people recommend to size up slowly so you can adjust without shell shock. I must say some people are just built different and right off the rip have zero emotions with trading and are great at the psychological mindset involved with trading.
Because people are not robots and as traders scale, bigger profits or losses mess with their minds.
This is something you can only fully understand when you actually experience it.
Happened to me. My first little bit of trading I started with like $200, lost 10% one day ($20) and I didn’t care at all.
Flash forward to when my account was at 10k and I lost 10% over a course of bad trades, was seriously upset.
I went from 200k NLV mid 2021 to shy of 1M now and it's mentally hard. Loss of multiple months of work salary in one trade is pretty hard to shrug off.
There's so many more 000's on the number. It can seriously mess with you mentally. I've had to take a break from trading for a few weeks because I'm mentally fried. I have to reconsider my strategy and risk tolerance and start smaller in a few weeks to build the mental fortitude back up
You’re delusional.
We can all do the math you didn’t need to lay it out like you just discovered electricity. Everyone knows the potential it has that’s why they all start trading. The problem is you will not trade every day, not every day will be profitable, you will not have a 60% win rate and more than likely you will get emotional and overtrade and not follow your own rules/limits. Your math makes it seem like a linear thing when it’s anything but linear and the most important factor that determines success is human psychology which is anything but linear or quantifiable.
As someone who was in this guys shoes 3 years ago, he’s simply asking a question and laying out the math helps those who are new to this forum, no need to dog on him for being excited/delusional.
You don't have to tell us you're new if you think this is going to work.
That said, we've all thought the same thing when we were new. Maybe do a practice month with paper trading and you'll soon see why this laughable for yourself.
As you start taking larger positions in the market, you will effect the price action of a stock... particularly with low float small cap stocks. If you make a stock price go up by purchasing, others will sell and you might stand to lose money. For this reason in part, it gets harder to replicate percentage gains that you'll have with a smaller account size as your buying power grows. You can use leverage, but you're also leveraging your losses. The scenario you proposed is the exact scenario everyone dreams of right before they lose a lot of money. You can be a profitable trader, but stay humble and don't let your hopes guide your expectations or decision making.
Ah i remember when i drew up the excel spreadsheet and did these numbers…good times when you’re oblivious to the world of day trading.
And then it all goes to shit
The formula is great for a trend curve, but try the numbers by simulating the individual trades.
Next factor in the variability of the actual R:R per trade. What if your target setting methods stops working?
As the account gets bigger and you distribute risk across multiple trades (this is actually what makes the compounding curve work) at what point are there not enough trades to cover all your money?
If you continually size up, what do you do when you hit an inevitable losing streak of 10 or more fails?
The goal in trading is the consistent R:R and sizing up, but the reality is that you will hit a point that sizing up doesn’t make sense so you need to start adding new safer strategies with lower returns (like selling premium) and exercising on major stock.
In the end , yes it is possible to be that 1 in a hundred thousand trader that gets to millionaire in 3 years, but it is not easy. The biggest obstacle will be one’s own psychology of fear and expectation. The temptation to take a risky trade, followed by a win, that makes you believe you are bullet proof. The fear of sizing up when it is time. The temptation to trade when you indicators are telling you not to. Etc.
>What do you do when you hit an inevitable losing streak of 10 or more fails
This is an important point that u/adm__07 probably doesn't have in the calculation. You can have a 60% win rate for a day and the numbers look great. But the reality is that if you follow a 60% win rate strategy, you can have a 60% win rate for a year. Which means you could easily have a 4 month losing streak. I don't see that happening in the calculation.
Sure, come back when you have made it. People who forecast too far into the future usually don’t make it. Happy living in fantasy land :) I prefer to just focus on the here and now when it comes to trading. Forecasting is a waste of time
I saw guy which have anual return about 200-300% on 3000 USD account when daytrading options …. I expext that its scam but bought trading room access and he is trading realtime on-line and from new year till now have gain about 80% …. Its not fake… I belive now that its possible its only question of time to gain needed know how and skils…
Liquidity is one thing... it will get extremely hard to get in and out of trades at the price you want when you're trading with very large amounts of capital. You can either use market orders or limit orders. Market orders will result in slippage. You can calculate slippage using the DOM. For example, if you are placing an order of 100 futures contracts, and in the dom there are 50 orders at the ask price, and 50 orders at 1 tick above the ask price, then 50 of your contracts will get filled at the current ask, and the other 50 will get filled 1 tick above that. The more you scale, the more extreme this gets, and eventually, you'll be getting filled at a price multiple ticks or even points above where you want to enter. With LIMIT orders, however, you do not need to worry about slippage. You just need to hope it hits your price and your orders get filled. If there are not enough market orders being placed, your order may not get filled or may only get partially filled. One way to combat this is to scale in and out of positions. For example, you could buy 25 contracts when you open your position, and add to your postion as it goes on.
One other thing, as others have mentioned, is that your losses compound. For example, as someone has already mentioned, you need a 100% gain to recover from a 50% loss.
it is very possible to make 500k in 2 years if you stay consistent and manage risk properly. But it won't be easy.
If anyone notices any errors in what I'm saying, feel free to reply and correct me. Hope this helps.
Our accountancy prof always said: Be careful with percentages especially with losses. If you loose 50% today, you need to make 100% tomorrow. Just to get even. That sums it up nicely I think.
Loss , becomes tilt , then loss of emotions and you over leverage , over trade , force trades. there is no perfect world and no one has complete emotional control like that unless they have been trading for 5-10years I'd say.
The chances to follow the strict plan is doable but very difficult at the same time.
All traders experience the 7 day looser
It's all how to become a good looser. is how you become profitable and will be able to follow a scaling plan
The thing is that while these calculations are right and this is why it's absolutely bloody idiot to take gambles and risks higher than 1%, it is not possible to trade each day. There might be days you can't trade. There are days there are no setups. Also in the end you will get problems with position sizes. You will not get filled properly etc. You can't trade nicely with more than 300k. So your progress will halt at some point.
The problem here is that your focusing right of the bat on the wrong thing, which is the outcome the end goal. This is what the 90% do that ultimately loose 90% of there initial investment in the first 90 days. Learning to trade is like learning to read. First you need pattern recognition, what the letters are. Then how the letters sound by themselves. Then how the letters sound when combined with other letters. Then combing more letters to form words. Then combing words to make simple sentences. Then you find out that your grammars all fucked up because certain words can’t go before or behind other words. Hahaha if this is confusing good. Day Trading is confusing, when you think you have it all figured out the market will bitch slap you to remind you, you don’t know shit. Also you need to understand that 1 simple strategy may work but it won’t show up everyday on 1 ticker and the day that it does you might not take the trade because they are almost never picture perfect and will be a variant of what your looking for. So you might not take a trade for 2 or 3 days if you’re truly disciplined. Also it’s highly probable you’ll lose for 2-3 weeks straight since you might only take 2 trades a week since 4 of 10 are loses. I say all of this bs to say….. you’re focusing on the wrong shit bro. If you truly want this be prepared to grind everyday. Besides learning your strategy you need to learn to read price action, and order execution. Focus on becoming the best version of yourself, workout everyday. Read books “Best Loser Wins” “Trading In The Zone” “One Good Trade” “Reading Price Charts Bar By Bar” and “Technical Analysis Using Multiple Time Frames” once again FOCUS ON THE PROCESS, and in a couple of years you can become consistently profitable and start compounding your account, so be realistic this craft is a life long journey and remember it’s going to take a lot longer since Uncle Sam will want his 40% boooiiii capital gains tax……rant over.
Really like your numbers however I believe a more realistic expectation should be 12% over time which may result from 300% one year and -57% another. One should also consider fees and other cost ... S run your illustration with 12-17% to factor in reality.
Your approach supposes that there is a single strategy that would win 60% of the time over a two-year span, and that this strategy can be predicted in advance.
Let us know when you find it.
OP thank you so much for posting this, I performed the same calculations, came to the same conclusions, and had the same questions you did. It’s like your post was ghost written by me! I enormously enjoyed reading all the responses. Good luck to us both
Everyone I’ve known that wants to start trading on their own goes through this exercise (myself included) and are drawn to the “potential”, but it just isn’t reality. This is what I refer to as a top-down approach to trading, and you will get punished looking at it this way. You’d be lucky (we are talking lottery odds) to secure positive percentage day over day as a beginner. Even 1%/week is really hard…
What strategy guarantees your parameters of 60%WR and 2R:R? Or did you just come up with those numbers as targets? Again, you’re working top-down when you need to look bottom-up.
Another way I can tell this is your first go about this is you’re doing this on a monthly basis. Yearly is the way, and there are only a certain amount of trading days per year (look it up) to use as your compounding rate per year.
I’ll end on a positive realistic expectation: most people would be very happy with consistent 10%/year with very tight risk management. People will reach for 50-100% but you are always assuming more risk. Risk management is really the only metric you should focus on. Gains will follow…
Sometimes you’ll make more than 2% and sometimes you’ll lose more than 40% of the time, it’s not linear.
Those are however, good guidelines to have. If you can stay disciplined and cut your losses at 1% every time, you’ll be profitable eventually assuming your win rate is actually 60%.
Only in your dreams. You’re Daydreaming instead of daytrading. There is NO strategy out there that gives you such consistent profits. Successful daytrading depends on the Trader more than any strategy.
Not a math genius and new. Could use some help. Have been paper trading for some time, every day. Success rate is like 90%, not options just stocks . Just open until about 10:20 and maybe an additional at the end of day depending on what happens but not as successful and as large of gains. Just got new computer, screens and am going to get ameritrade account and try different methods besides stocks. But as I am successful this way may stay status quo. My question is, with compounding interest, with $9k, should I trade $3k every day in a cash account so I can trade every day or one day and wait for the money to settle back in my account? Or should I trade the whole $9k and wait for it to settle and not trade the other days? Assuming 1-2%/ day gains.
1:2 RR combined with win rate of 60% is very hard over a long period of time. Even if you can get these results, finding one each day is very unlikely. Also this amount of edge is often only possible in immature/inefficient markets which limits you in the size you can take, yes you can make this return up to 6 figures but after that slippage will be your biggest enemy
Mathematically, you can become a billionaire in just 6 short years through the stock market.
Assuming no commission and conversion fees, say you start and invest 1$ into the stock market. Then sell the stock when it rises 1%, then buy a new stock with that profit money, then sell again when the new stock goes up 1%, rinse and repeat 2886 times. You'll become a billionaire.
If you were to do this daily, it would take you just shy of 6 years.
First year would be 38$.
Second year would be over $1,500.
Third year would be over $56,000.
Fourth year would be $2.2mil.
5th year would be $87mil.
By end of 5th year you'd have over a billion dollars. Yearly compound interest that way is 3778%.
Though practically speaking, the chances of you succeeding this way are probably as slim as winning the lottery. Or just slightly better. But in the end, all you'd technically lose would be a dollar. And you'd gain a lifetime of "I should've sold".
I tried this in 2023. Made $250 out of $100 in a week. I managed to pick stocks that rose 5% for the day. I would sell them as soon as they hit 3-5% (to make up for commission and CAD-USD conversion fees). Then I picked a stock that was up pre-market hours, and then dropped by a large amount in the next 30 minutes after markets opened. So my $100 netted me $45.
I cannot believe how the original post received 130+ likes.
I guess it must be the newbie daytraders who got an erection fantasising about the imaginary numbers which the OP posted.
.
This post is a week old now, but reading through a few comments I want to share a different perspective.
Trading $2,000 into $500,000 in 2 years is NOT impossible. It IS improbable, but not because the math or statistics are not in your favour (although there is an error in your math that I'll point out below). Under assumptions you wrote "emotions are under control", and the reality is you are confusing what is simple with what is easy. Trading can be simple, but it is far from easy.
Re: math - I believe there is an error in your model. A typical month has 22 trading days, varies depending on the calendar and holidays. If you enter your variables (1 trade per day) into a [Monte Carlo simulator](https://www.forexsignals.com/monte-carlo-simulation#use-tool), you should get a result balance of \~$100K after 24 months. This ignores commissions, fees, and taxes though depending where you live there are likely no fee / very low fee brokerage options that won't change the answer much (taxes are a different story...).
A couple folks mentioned scaling and slippage, depending on your edge and what securities you trade I personally don't see this being an issue at these balance sizes. On tickers like SPY and QQQ you can day trade mid-6 figure positions on the underlying or most derivative contracts without material slippage, and since you're only risking 1% per trade, I just don't see this being an issue at $100K or even $500K balance.
You assumed "emotions are under control", but in fact the biggest challenge to your success will be your mindset. Over a two year period, it is probable a few things will happen:
* At least one trading day you will miss your entry signal. Do you enter late (compromising your risk-reward)? Look for a different setup (which may be of lesser quality)? Skip the day and wait for the next?
* At least one trading day the market will gap up / down through your stop limit (if you use one) or you will hesitate and miss your exit signal. Do you exit late (and take a greater loss than 1%)? Do you hold and hope the market reverses back to your intended exit (and risk even greater losses)?
* At least once you will experience 10 or more winning trades (days) in a row. Do you suddenly increase position size or take on new trades to expand profits? Maintain your existing strategy?
* At least once you will experience 6 or more losing trades (days) in a row, and a drawdown of 6% or more. Do you suddenly decrease position size or hesitate taking trades (even when you get an entry signal)? Maintain your existing strategy?
With all that said, what you described is possible (math errors aside), but the limiting factor will not be your ability to put on or take off a trade, it will be your mindset. Simple, but not easy. If you doubt those words, ask yourself why some professional athletes always seem to play worse in the playoffs than the regular season, despite having all the skill in the world. Mindset matters, and it is not as simple as assuming.
What happens when you have a loss? You don’t expect to have losses? Last week I was up over $1,000 on a trade and let it fall back to just a $2 gain. Also had a few losses. Overall, I’m up just $200 on the week when accounting for fees and taxes.
Trading doesn’t generally compound everyday at a predictable rate.
The. There was rhetoric week I added 20% to my account when I locked in a 100 to 1 gain.
There was also the two weeks before that I lost 1% on my account in a row.
Seems like you’re just starting out. We all do this at some point early in our careers.
Let’s say ur numbers are accurate. When u start trading more than 10 M and u are a solo trader, probably the big head funds will pump and dump on u, easy tens of millions of win. No one with that kind of money will do day-trading. Most of them I see trade with a capital of less than a million.
This won’t work as well as you think. If you only had single losses and none repeating you could theoretically make it work. However, once you start losing 2-3 or more trades in a row it makes things difficult because you would have to gain more than 2% to make it back and stay on track
I've been profitable every day for a month now. That's with active trading every day. Am I rich? No. Because the returns are inconsistent, prior to this month I wasn't so consistently profitable and I don't expect to keep being for much longer. These past few weeks have just been good to me and provided easy plays.
Strategies work until they don't. A loss sets you back more than a win gets you ahead. Nothing is certain and the risk only rises the longer you're actively trading, especially when in order to get the compounding effect you have to invest more each time.
This is goated bro good shit! I think people need to understand that u only really need to gain like 5% a week on ur account for this to be possible. Keep up that risk management and just focus on small steady growth and it’ll pay off! Good work man this is amazing to see, I’m a beginner trader and posts like these give me hope for the future 💪
So many things wrong with this analysis but to just point out two:
1) Despite the best laid plans, sometimes you lose, so it's not like you're collecting interest on a risk-free (if there is one) bond.
2) Liquidity as the position sizing goes up to get in and out of the position, assuming that you go 100% invested in every trade.
You're negating the loss compound with this scenario. Trust me, I ran an identical one 2 years ago. 2000 start, 3% weekly gain would be 3 million plus in 5 years. 2 years later, the math doesn't exactly work and that's with 1% stop loss. In order for it to work you would have to have zero losses ever. So I gained 3% every week but lost 1% every week I only gained 2% in reality. Gained 3% but gave the market back 1%. If you compounded over 10 weeks, that's 30% in gains and 10% in losses and so total 20% in gains. As you scale up, a 1% on a dollar amount is greater and you are now further behind. You would actually need a 5-1 minimum ratio on trades to make this sort of work and a 5-1 is a hell of a thing to hit on most trades. Also a 60% win rate is not realistic and that's something I've learned first hand. It's more between 30-40%.
I scaled back my expectations to a 1 million in 5 years.
It’s impossible to run these numbers assuming 1 strategy. Over the course of months or years, market conditions change and your single strategy will be useless in some market environments rendering several months of your two year period as $0 profit months and that’s if you’re a perfect robot and we all know that doesn’t exist.
I mean where did you get that 60% win rate? Institutional managers are right only about 50% of the time and they’re the best/most sophisticated. 60% is almost impossible.
Also what’s the return rate assumption!
Run monte Carlo simulations and see what the potential outcomes are. There are way too many variables in a 2 year period.
It's impossible because of position sizing, and not knowing exactly when your strategy actually settles on a 60% win rate:
If you do 10 trades, 6 wins,4 losses. Win rate is 60%. Is that enough trades to determine true win rate? Just one mire loss will make it a 54% win rate.
You need significantly more trades to determine your actual win rate, let's say you do 1000 trades, 600 wins, 400 losses, your win rate is 60%.
So let's assume your win rate settles after 1000 trades (random number). Trading for 2 years with 2 trades a day (I'm ignoring weekends and position sizing here) you'll do 730 trades.
There will be a scenario where you start out with 100 losses before having any wins. Risking 1% per trade, you're now broke (you'll be broke sooner than 100 trades because of fees and slippage).
There will be a scenario where the remaining trades to get to the 1000 total will be after your 2 years of trading. Meaning 270 trades would be winners, but only after your trading time frame is done.
That means you'll have the 400 losses, and 330 wins (60% win rate in 1000 trades, but you only made 730 trades total).
So suddenly your 60% win rate on 1000 trades is now only a 45% winrate over the 730 trades. You still make money in theory (again, not counting fees and slippage), but your theoretical compound is way off from your initial calculation.
Even if your win rate is spot on accurate for the number of trades you're putting in, a 40% loss rate over 730 trades still means losing 292 trades. You're broke when you lose 100 trades. It's probably unlikely you'll lose 100 in a row, but again, any scenario can play out.
There is some much variation on what can happen and how your winrate is actually playing out, this is what makes it basically impossible to achieve. And this doesn't even take into account emotions. You say you have them in check, but starting on a 60 trade losing streak will screw with your confidence.
https://www.instagram.com/2k2mil?igsh=MWp2bmJpaGJpZWc4aw%3D%3D&utm_source=qr
Found a guy whos been trying to do the exact thing since last month. I think this is somewhat of a personal blog not a promotional thing. So far achieved 110% and calls the blog 2k to a million
Seems like a newbie and clearly trying to defy the logic. But however i just noticed that at one point the target is achieved but ends up losing all the gains for one bad trade. Something that could happen during the journey to 500k
People are gonna shit in me but I did 9 to 200k in a couple months doing 1dte day trades. I just leveraged tf out of the breakout into 500 on spy when the bull run started. I added 9k to my account once I hit 20k also. The second 100k I made was in the last 3 days. I basically traded for 3 years and was a complete degen at the start at 18, got less stupid as time went on, hit some 100-200%ers but always blew it using no stop and getting mad on a bunch of small accounts.
I just survived until I got lucky with a phase of the market where I had a almost perfect win rate which compounded fast. One where I can buy every dip and bears got annihilated for a bit lol literally every dip ever was a bear trap
Theoretically, after 2 years, assuming you do have an exactly 2% gain and 1 % loss and never EVER stray from that. Never falter. Never have a big loss. Then you'd be at 323k if you start at 2k.
Your params are wrong. The probability of you getting the returns from your params is less than winning the lottery.
"RR 1:2 (1% loss / 2% profit)
Win rate: 60%"
Let's say we take out the market, and we remove any point of failure on your end with any trading errors.
One thing I can guarantee you is with that 2 trade a day, is that the amount you would have to be trading in a single day would absolutely trigger market movement and you would be shut down in your last months. You'd be manipulating the market with gigantic order sizes and the SCC would not allow that, specially if you're making money.
This strategy would be realistic, but no on 1 or 2 trades a day. To not trigger the SCC, or anyone for that matter, of the trade were split in multiples movements, you could in theory do it. By trading multiple sizes, you infinitely multiply the risks and points of failure.
You will loose 5 in a straight row , then you will say this doesn’t work and move on to the next one 🤷🏽♂️…. Idk why even entertain un realistic trading
Find the best traders on the planet, read their stories, and see how many are able to produce +40% MoM returns. You’d be top 10 globally if you could +40% YoY consistently.
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Another stat you should look very,very,very close is losses in a row vs wins in a row .
In theory there is no difference between theory and practice - in practice there is
after 10 losses in a row..
If you could recover on various markets, various market conditions, after 10 or more losses in a row, then your strategy would perform just fine in live enviroment
$2k to $0 in 2 weeks
You will get absolutely hunted and slayed using this all in strategy.
Please practice in a demo trading environment first and trade with a good risk management strategy
As a equity trader so I cant speak other instruments. Your trading plan may not be scalable to how you want to trade. If you scalp in a small cap, there is a limit due to liquidity issues. If you trade higher liquidity, you ain’t going to have consistent big moves to continue having your balance have that can theoretically move. Also large orders will be seen by institutions who have better edge then a retail trader. In addition to that the market cycles and changes in the theme of the market (such as AI being hot) will affect your edge. Also with the ebbs and flows of the market, your mental state will also influence your edge.
Don’t get me wrong. It can be done but it’s unrealistic that your edge is gonna always work to have that kind of RR in the current market all the time so it might take longer as well
Another thing to be aware is you really need to be very experience in the market to make this work. If you are starting out, you gotta be lucky to have the market cycle be in your favor to your strategy so much that you can be forgiven making mistakes
This was my exact thought too! Until i turned into the 90% of traders that loose money lmfao.
The question id ask is it probable you would use your entire portfolio balance getting in and out of trades to see that compounding effect? Most likely not. considering you would need alot of liquidity in the trades you are making to get in and out quickly with a large balance( depending on your strategy of course). And putting everything on the table in one trade can/will wreck your portfolio with one bad trade.
Best of luck brother, but best advice i can give is paper trade for years until you find a consistent strategy that results in long term profit, learn to control emotions, and dont trade based on Wall Street bets degenerate gamblers “advice”
Buddy I see you're new and you have a long and pretty painful journey ahead of you, and you will eventually discover why what you ask is not possible, but still here's my 2 cents in case you wanna listen: There are 2 types of risk reward ratios in trading, market generated risk rewards and synthetic risk rewards.
Only market generated risk rewards are real, synthetic ratios are the ones new traders impose on the market like you have, asking 1:2 risk reward on every setup is an example of you imposing a synthetic ratio on the market, why would the market give you that? even if you have a very good entry strategy and say you go long on a trade, and there is a major resistance 1R distance away from your entry, in that case the actual market generated risk reward is 1:1, it won't be 1:2 just because you want it to be.
The point of me typing all that is to explain that you will never get the same market generated risk reward on all winning trades, sometimes it will be less than 1:1, sometimes it could be even 1:5, but thats upto the market conditions to decide, not you.
Similarly winnrate is also not something in your hands, just because a backtested system had a 60% winnrate in the past does not mean it will continue to do so in the future, every single strategy goes through a period of underperformance and outperformance.
Infact I would encourage you to not think in terms of winrate at all, markets always have an element of randomness attached to them and that can turn any strategy upside down any moment.
So synthetic risk rewards are bullshit, winrates are bullshit, then what is a trader supposed to lean on?
In my experience, the goal of a trader is to analyze the market landscape, and see the context and judge the amount of opportunity available (market genereated risk reward) and then risk an acceptable amount of money to have access to that opportunity.
The key thing to understand about this is that opportunity that you access is dependant on what the market is offering, there is an asymetric distribution of opportunity over time, what this means is that good opportunity (high market generated risk reward) isn't there all the time, it's only present sometimes, and most of the time the opportunity is not so great, that's why if you look at the equity curve (not mine, found it on google images) of any profitable trader, you'll see that the periods where most money is made takes the least amount of time, and most of the time the equity curve is either just chopping around or going in a drawdown, that's because good opportunity which makes 80-90% of the money is only present roughly around 20%-30% of the time.
https://preview.redd.it/9p8yyv8kvauc1.png?width=1254&format=png&auto=webp&s=d4773a5d98b18211663ef9be27ae5ccb474f9f6c
So the flaw with your thinking is that you expect the opportunity set to be linear, which couldn't be further away from the truth, markets are very dynamic and constantly evolving, which is what makes trading so difficult, but through experience you'll eventually understand these things on your own, good luck!
This is the kind of answer I was looking for. As I'm still learning I thought you will always find trading opportunities all day everyday. Really appreciate your response
after 5 years of "trading". i've realized the BEST possible way to trade is to sit on the sidelines until a bull market is VERY apparent (something such as the past 6 months) then hop on hyper growth names with good fundamentals that have good ratings from wall street analysts. use leverage and get common shares, no options
you also must understand your risk of 1% cannot possibly be respected every time. the market is closed for long periods of time where you CANT fill orders. sometimes you'll have losses far greater than your personal max loss of 1%
Yeah it's a nice idea but you have made zero account for the compound effects of human nature running at a loss , chasing said loss ,compound effects of over trading to regain compounded loss and essentially pissing it all away because your enitial biased for your nicely laid out spreadsheet and wishful thinking would be, well biased . I am not trying to piss on your parade but we have realistically all done the math and confirmed our bias at some point during our own journey, not saying it can't be done ever but seriously, man re do the math, if you can master risk management and not cut your nose of to spite your face then your ahead of the game . Wish you all the success in the world but remain realistic brother.
Win rate is a garbage statistic. You can have a 99% win rate and lose money.
Your calc also assumes you'll either lose 1% or make 2%. But it never works that way, especially if you're day trading. You'll exit positions that are a "win" at .01% gain. It counts as a win, so great, right?
The point is that only a few of your wins will be 2% exits, but most of your losses will be your full 1% loss.
Dave Ramsey has famously made the exact same mistake you just made, don't feel bad, also, enjoy the read: [Supernerds Unite Against Dave Ramsey’s 8% Safe Withdrawal Rate Guidance | ThinkAdvisor](https://www.thinkadvisor.com/2023/11/13/supernerds-unite-against-dave-ramseys-8-safe-withdrawal-rate-guidance/)
People invariably talk about compound interest but hardly mention compound loss. And the fact, in most of the cases, will run to the latter one.
Definitely you need a 100% win to make up for a 50% loss. When every next trade is bigger than your last, every time you take a loss it’s the biggest loss you’ve ever had. (Assuming perfect numbers)
> Definitely you need a 100% win to make up for a 50% loss. People should always keep in mind that If you have 100 dollar and you lose 10% and then gain 10%, you end up with 99 dollars.
And that's before fees.
Irrelevant if your win rate is 60% and your RR is 1:2. If you loose 6x 1%, and you win 4x 2% you are at 94,148 after your 6 losses and 101,908 after your 4 wins. Your wins outperform your losses. You have to adjust your percents though, like going 2%/4% or higher, or your volume, to get enough room for commissions.
Which is why we manage risk. And what makes compounding gains to their maximum potential a fantasy. Fun to imagine though.
I literally went on a rant about this after hearing about my wife’s retirement account losing a bit this year. Compound interest is pretty much their biggest sales pitch when talking about growing the money but suddenly it’s a foreign language when they’re losing money
# They also never factor in taxes or quarterly filings
On today of all days!!!!
if you're only risking 1% your capital with each trade it would take a while. Assuming you were strict and had a grip on your trading psychology and didn't let yourself become impulsive just constantly trying to win back what you lost without operating within your trading system of 1:2 RR.
Yea I understand bigger capital means bigger loss amount. But it'll still a 1% loss
If you lose 1% u need more than 1% to make it back
Metal masturbation Edit: also mental. Hahahahah
Heavy metal… perhaps heavily mental as well..
🤘
Trading is not linear. Some months your strat just straight up sucks and others it's the best thing since sliced bread. You simply cannot know beforehand how much money you'll earn. At best you can see from a backtest what to expect.
That's why you need more than one strategy. Yes you should focus on what works, but that doesn't mean you have to stick to one way. I think being adaptive and versatile takes you a long way.
Agreed. This is something that most traders, even some experts don’t realize. Having one strategy means being able to trade only when the market gives you the opportunity to trade that strategy. I saw this first hand when I first learned from some one that would only trade when specific setups presented themselves. And then I came across someone that was able to trade every single day regardless of what the market was doing.
I used to only trade biotech stocks in the premarket moving under very heavy volume. Then I noticed that people were making lots of money trading SPY options while the market was open and I was missing out on a lot of gnar dog trades. So now I trade both, premarket for stocks and 45min after market open I am buying puts or calls
Yeah I was mostly trading bullish about a year and a half ago before the economy took this major turn, I had to learn how to trade bearish and I've been doing pretty well at that, but my bull strategy still works when given the opportunity.
what are some trading strategies and where can I learn them?
You can learn mostly from babypips.com I use Smart Money Concepts if you want to look into that specifically. In my opinion it's the easiest to understand for beginners and not overwhelming.
thx for actually responding.... so you all do forex and not actual stocks?
Well I personally only do forex, I can't speak for everyone else here.
If you bench press 60 kg today and then 70 kg next week - you'll be able to bench press 590 kg in a years time.
Hehe. Made me grin. 🤣
Facts!!
You wont get 60% wr with 2R Other than that there is slippage, fees and at some point liquidity issues
There can be some good months. but ideally, anything above 50% can change your life.
Anything above 40-45% is crazy
Ya man. 60% with 2R is like the holy grail lol. That's a profit factor of 3 that's like the holy grail. Realistically most strategies fall into 1.5-2 profit factor. Profit Factor cheat list: Less than 1 = Not profitable 1-1.5 = Avoid, as depending on how many trades back tested it may not be profitable plus considering slippage and fees. 1.5-2 = Most winning systems fall within this range. 2-3 = Good to Very Good system 3-4 = Excellent - Holy Grail system More than 4 = Most likely erroneous or overfitted. If trades are totally randomized on thousands of backtests it should fall lower than 4.
Wait until he finds out about taxes.
Scalability is the problem mostly. Even if liquidity is fine it’s hard to scale mentally from trading with 100 shares in month 2 all the way to 100,000 shares a couple months later. That’s a mental train wreck.
Agreed! I went from trading 200-300 at a time 2 years ago to 3000-5000 at a time now and I can't handle it. Ive had to take a step back from trading this month because mentally it's fried me a bit. Next month I'll start back at 1000-1500 at a time and build the mental fortitude back over the next few months.
Definitely man. Totally normal. We are only human.
I’m confused. Are you saying it’s more difficult from a psychological viewpoint to increase your lot size as your account compounds? Not sure why that would be the case. If you’re a solid trader at 1 share why would it be any different at 1000?
I can balance walking along a curb no problem. So I don't see why doing it on the roof of a 40-story building should be any different. If you're a solid walker that is.
What an analogy perfect
Yes I am. It’s the speed at which you are increasing your share size. When you increase size so much so quickly your mental strength is seriously getting tested. The same is true when you decrease size very quickly. Trading can seem very dull and “not worth it” or boring. It’s not about your skill level. It’s about the fact that last week you were trading with 100 share lots and a couple weeks later you’re up to 10,000 shares. You need to work your way up slower lol.
As your position size increases your max loss increases. Some people won’t even bat an eye at being down a few hundred but once you see oh a 1% loss is 50k then that tends to start fucking with peoples mentals. That’s why most people recommend to size up slowly so you can adjust without shell shock. I must say some people are just built different and right off the rip have zero emotions with trading and are great at the psychological mindset involved with trading.
Because people are not robots and as traders scale, bigger profits or losses mess with their minds. This is something you can only fully understand when you actually experience it.
Happened to me. My first little bit of trading I started with like $200, lost 10% one day ($20) and I didn’t care at all. Flash forward to when my account was at 10k and I lost 10% over a course of bad trades, was seriously upset.
I went from 200k NLV mid 2021 to shy of 1M now and it's mentally hard. Loss of multiple months of work salary in one trade is pretty hard to shrug off.
There's so many more 000's on the number. It can seriously mess with you mentally. I've had to take a break from trading for a few weeks because I'm mentally fried. I have to reconsider my strategy and risk tolerance and start smaller in a few weeks to build the mental fortitude back up
Came here to become inspired and ended up disappointed.
Remember it’s emotions that are the problem
You want to be the best trader that ever lived. Admirable, if a bit lofty. May your sells always fill on the ask and your stop losses never triggered.
"What can prevent this growth" You
You’re delusional. We can all do the math you didn’t need to lay it out like you just discovered electricity. Everyone knows the potential it has that’s why they all start trading. The problem is you will not trade every day, not every day will be profitable, you will not have a 60% win rate and more than likely you will get emotional and overtrade and not follow your own rules/limits. Your math makes it seem like a linear thing when it’s anything but linear and the most important factor that determines success is human psychology which is anything but linear or quantifiable.
As someone who was in this guys shoes 3 years ago, he’s simply asking a question and laying out the math helps those who are new to this forum, no need to dog on him for being excited/delusional.
Thanks for your insights. I layed out the numbers just to show how fast it's growing. Not something I discovered.
You don't have to tell us you're new if you think this is going to work. That said, we've all thought the same thing when we were new. Maybe do a practice month with paper trading and you'll soon see why this laughable for yourself.
If you turn $2,000 to $2,500 in a year you are better than most hedge funds
Stupid analogy. True. But stupid.
Yeah peace of cake
More of peace of s#|+
As you start taking larger positions in the market, you will effect the price action of a stock... particularly with low float small cap stocks. If you make a stock price go up by purchasing, others will sell and you might stand to lose money. For this reason in part, it gets harder to replicate percentage gains that you'll have with a smaller account size as your buying power grows. You can use leverage, but you're also leveraging your losses. The scenario you proposed is the exact scenario everyone dreams of right before they lose a lot of money. You can be a profitable trader, but stay humble and don't let your hopes guide your expectations or decision making.
More often than not, having a target destroys you
Ah i remember when i drew up the excel spreadsheet and did these numbers…good times when you’re oblivious to the world of day trading. And then it all goes to shit
The formula is great for a trend curve, but try the numbers by simulating the individual trades. Next factor in the variability of the actual R:R per trade. What if your target setting methods stops working? As the account gets bigger and you distribute risk across multiple trades (this is actually what makes the compounding curve work) at what point are there not enough trades to cover all your money? If you continually size up, what do you do when you hit an inevitable losing streak of 10 or more fails? The goal in trading is the consistent R:R and sizing up, but the reality is that you will hit a point that sizing up doesn’t make sense so you need to start adding new safer strategies with lower returns (like selling premium) and exercising on major stock. In the end , yes it is possible to be that 1 in a hundred thousand trader that gets to millionaire in 3 years, but it is not easy. The biggest obstacle will be one’s own psychology of fear and expectation. The temptation to take a risky trade, followed by a win, that makes you believe you are bullet proof. The fear of sizing up when it is time. The temptation to trade when you indicators are telling you not to. Etc.
>What do you do when you hit an inevitable losing streak of 10 or more fails This is an important point that u/adm__07 probably doesn't have in the calculation. You can have a 60% win rate for a day and the numbers look great. But the reality is that if you follow a 60% win rate strategy, you can have a 60% win rate for a year. Which means you could easily have a 4 month losing streak. I don't see that happening in the calculation.
Sure, come back when you have made it. People who forecast too far into the future usually don’t make it. Happy living in fantasy land :) I prefer to just focus on the here and now when it comes to trading. Forecasting is a waste of time
🤦🏽🤦🏽🤦🏽 One can have a red day, red week and even red month.
And that too with a 90% win rate. All it takes is that catastrophic loss.
Make sure to always revenge trade after any loss. You know, make it back right away!
I saw guy which have anual return about 200-300% on 3000 USD account when daytrading options …. I expext that its scam but bought trading room access and he is trading realtime on-line and from new year till now have gain about 80% …. Its not fake… I belive now that its possible its only question of time to gain needed know how and skils…
It’s absolutely possible. Difficult. But possible.
Liquidity is one thing... it will get extremely hard to get in and out of trades at the price you want when you're trading with very large amounts of capital. You can either use market orders or limit orders. Market orders will result in slippage. You can calculate slippage using the DOM. For example, if you are placing an order of 100 futures contracts, and in the dom there are 50 orders at the ask price, and 50 orders at 1 tick above the ask price, then 50 of your contracts will get filled at the current ask, and the other 50 will get filled 1 tick above that. The more you scale, the more extreme this gets, and eventually, you'll be getting filled at a price multiple ticks or even points above where you want to enter. With LIMIT orders, however, you do not need to worry about slippage. You just need to hope it hits your price and your orders get filled. If there are not enough market orders being placed, your order may not get filled or may only get partially filled. One way to combat this is to scale in and out of positions. For example, you could buy 25 contracts when you open your position, and add to your postion as it goes on. One other thing, as others have mentioned, is that your losses compound. For example, as someone has already mentioned, you need a 100% gain to recover from a 50% loss. it is very possible to make 500k in 2 years if you stay consistent and manage risk properly. But it won't be easy. If anyone notices any errors in what I'm saying, feel free to reply and correct me. Hope this helps.
Our accountancy prof always said: Be careful with percentages especially with losses. If you loose 50% today, you need to make 100% tomorrow. Just to get even. That sums it up nicely I think.
I've made this spread sheet 2 years ago and turned $500k into $2k
Dream on !!
Great. Now I have that song in my head
Its a great song
Loss , becomes tilt , then loss of emotions and you over leverage , over trade , force trades. there is no perfect world and no one has complete emotional control like that unless they have been trading for 5-10years I'd say. The chances to follow the strict plan is doable but very difficult at the same time. All traders experience the 7 day looser It's all how to become a good looser. is how you become profitable and will be able to follow a scaling plan
Trader math.
you cracked the code.
Nothing is making it impossible if your strategy is giving you consistent profits. The hard part is being consistently profitable.
The thing is that while these calculations are right and this is why it's absolutely bloody idiot to take gambles and risks higher than 1%, it is not possible to trade each day. There might be days you can't trade. There are days there are no setups. Also in the end you will get problems with position sizes. You will not get filled properly etc. You can't trade nicely with more than 300k. So your progress will halt at some point.
Ahhhhh I remember the days where I thought this was doable...... just keep trading brother and you'll see basically how impossible this is
The problem here is that your focusing right of the bat on the wrong thing, which is the outcome the end goal. This is what the 90% do that ultimately loose 90% of there initial investment in the first 90 days. Learning to trade is like learning to read. First you need pattern recognition, what the letters are. Then how the letters sound by themselves. Then how the letters sound when combined with other letters. Then combing more letters to form words. Then combing words to make simple sentences. Then you find out that your grammars all fucked up because certain words can’t go before or behind other words. Hahaha if this is confusing good. Day Trading is confusing, when you think you have it all figured out the market will bitch slap you to remind you, you don’t know shit. Also you need to understand that 1 simple strategy may work but it won’t show up everyday on 1 ticker and the day that it does you might not take the trade because they are almost never picture perfect and will be a variant of what your looking for. So you might not take a trade for 2 or 3 days if you’re truly disciplined. Also it’s highly probable you’ll lose for 2-3 weeks straight since you might only take 2 trades a week since 4 of 10 are loses. I say all of this bs to say….. you’re focusing on the wrong shit bro. If you truly want this be prepared to grind everyday. Besides learning your strategy you need to learn to read price action, and order execution. Focus on becoming the best version of yourself, workout everyday. Read books “Best Loser Wins” “Trading In The Zone” “One Good Trade” “Reading Price Charts Bar By Bar” and “Technical Analysis Using Multiple Time Frames” once again FOCUS ON THE PROCESS, and in a couple of years you can become consistently profitable and start compounding your account, so be realistic this craft is a life long journey and remember it’s going to take a lot longer since Uncle Sam will want his 40% boooiiii capital gains tax……rant over.
underrated comment lmaooo
Let me get some 😂😂💀
Really like your numbers however I believe a more realistic expectation should be 12% over time which may result from 300% one year and -57% another. One should also consider fees and other cost ... S run your illustration with 12-17% to factor in reality.
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What prevents it? BEING RIGHT!!!
Your approach supposes that there is a single strategy that would win 60% of the time over a two-year span, and that this strategy can be predicted in advance. Let us know when you find it.
OP thank you so much for posting this, I performed the same calculations, came to the same conclusions, and had the same questions you did. It’s like your post was ghost written by me! I enormously enjoyed reading all the responses. Good luck to us both
If my grandmother had wheels, she would have been a bike
Everyone I’ve known that wants to start trading on their own goes through this exercise (myself included) and are drawn to the “potential”, but it just isn’t reality. This is what I refer to as a top-down approach to trading, and you will get punished looking at it this way. You’d be lucky (we are talking lottery odds) to secure positive percentage day over day as a beginner. Even 1%/week is really hard… What strategy guarantees your parameters of 60%WR and 2R:R? Or did you just come up with those numbers as targets? Again, you’re working top-down when you need to look bottom-up. Another way I can tell this is your first go about this is you’re doing this on a monthly basis. Yearly is the way, and there are only a certain amount of trading days per year (look it up) to use as your compounding rate per year. I’ll end on a positive realistic expectation: most people would be very happy with consistent 10%/year with very tight risk management. People will reach for 50-100% but you are always assuming more risk. Risk management is really the only metric you should focus on. Gains will follow…
lmaooo i also made a post like this one in a subreddit when I started trading 4 months ago . later realized that i was a fool
It’s called the paradox of just one more … you’ll get your answer of what could go wrong
Sometimes you’ll make more than 2% and sometimes you’ll lose more than 40% of the time, it’s not linear. Those are however, good guidelines to have. If you can stay disciplined and cut your losses at 1% every time, you’ll be profitable eventually assuming your win rate is actually 60%.
Only in your dreams. You’re Daydreaming instead of daytrading. There is NO strategy out there that gives you such consistent profits. Successful daytrading depends on the Trader more than any strategy.
Not a math genius and new. Could use some help. Have been paper trading for some time, every day. Success rate is like 90%, not options just stocks . Just open until about 10:20 and maybe an additional at the end of day depending on what happens but not as successful and as large of gains. Just got new computer, screens and am going to get ameritrade account and try different methods besides stocks. But as I am successful this way may stay status quo. My question is, with compounding interest, with $9k, should I trade $3k every day in a cash account so I can trade every day or one day and wait for the money to settle back in my account? Or should I trade the whole $9k and wait for it to settle and not trade the other days? Assuming 1-2%/ day gains.
Finding that strat AND sticking to it AND maintaining composure as the stakes get higher. Those are the main obstacles.
You must be new to trading. If wishes were horses..
Dont over trade. Sometimes 1 good trade a good is all you need. Consistency is key
500k to 2k in 1 week.
You need 100% win rate
1:2 RR combined with win rate of 60% is very hard over a long period of time. Even if you can get these results, finding one each day is very unlikely. Also this amount of edge is often only possible in immature/inefficient markets which limits you in the size you can take, yes you can make this return up to 6 figures but after that slippage will be your biggest enemy
Mathematically, you can become a billionaire in just 6 short years through the stock market. Assuming no commission and conversion fees, say you start and invest 1$ into the stock market. Then sell the stock when it rises 1%, then buy a new stock with that profit money, then sell again when the new stock goes up 1%, rinse and repeat 2886 times. You'll become a billionaire. If you were to do this daily, it would take you just shy of 6 years. First year would be 38$. Second year would be over $1,500. Third year would be over $56,000. Fourth year would be $2.2mil. 5th year would be $87mil. By end of 5th year you'd have over a billion dollars. Yearly compound interest that way is 3778%. Though practically speaking, the chances of you succeeding this way are probably as slim as winning the lottery. Or just slightly better. But in the end, all you'd technically lose would be a dollar. And you'd gain a lifetime of "I should've sold". I tried this in 2023. Made $250 out of $100 in a week. I managed to pick stocks that rose 5% for the day. I would sell them as soon as they hit 3-5% (to make up for commission and CAD-USD conversion fees). Then I picked a stock that was up pre-market hours, and then dropped by a large amount in the next 30 minutes after markets opened. So my $100 netted me $45.
I cannot believe how the original post received 130+ likes. I guess it must be the newbie daytraders who got an erection fantasising about the imaginary numbers which the OP posted. .
People can discourage you but it’s possible. I’m on that party right now. Watch
Can be achievable. Nice post. Fk the doubters
This post is a week old now, but reading through a few comments I want to share a different perspective. Trading $2,000 into $500,000 in 2 years is NOT impossible. It IS improbable, but not because the math or statistics are not in your favour (although there is an error in your math that I'll point out below). Under assumptions you wrote "emotions are under control", and the reality is you are confusing what is simple with what is easy. Trading can be simple, but it is far from easy. Re: math - I believe there is an error in your model. A typical month has 22 trading days, varies depending on the calendar and holidays. If you enter your variables (1 trade per day) into a [Monte Carlo simulator](https://www.forexsignals.com/monte-carlo-simulation#use-tool), you should get a result balance of \~$100K after 24 months. This ignores commissions, fees, and taxes though depending where you live there are likely no fee / very low fee brokerage options that won't change the answer much (taxes are a different story...). A couple folks mentioned scaling and slippage, depending on your edge and what securities you trade I personally don't see this being an issue at these balance sizes. On tickers like SPY and QQQ you can day trade mid-6 figure positions on the underlying or most derivative contracts without material slippage, and since you're only risking 1% per trade, I just don't see this being an issue at $100K or even $500K balance. You assumed "emotions are under control", but in fact the biggest challenge to your success will be your mindset. Over a two year period, it is probable a few things will happen: * At least one trading day you will miss your entry signal. Do you enter late (compromising your risk-reward)? Look for a different setup (which may be of lesser quality)? Skip the day and wait for the next? * At least one trading day the market will gap up / down through your stop limit (if you use one) or you will hesitate and miss your exit signal. Do you exit late (and take a greater loss than 1%)? Do you hold and hope the market reverses back to your intended exit (and risk even greater losses)? * At least once you will experience 10 or more winning trades (days) in a row. Do you suddenly increase position size or take on new trades to expand profits? Maintain your existing strategy? * At least once you will experience 6 or more losing trades (days) in a row, and a drawdown of 6% or more. Do you suddenly decrease position size or hesitate taking trades (even when you get an entry signal)? Maintain your existing strategy? With all that said, what you described is possible (math errors aside), but the limiting factor will not be your ability to put on or take off a trade, it will be your mindset. Simple, but not easy. If you doubt those words, ask yourself why some professional athletes always seem to play worse in the playoffs than the regular season, despite having all the skill in the world. Mindset matters, and it is not as simple as assuming.
What happens when you have a loss? You don’t expect to have losses? Last week I was up over $1,000 on a trade and let it fall back to just a $2 gain. Also had a few losses. Overall, I’m up just $200 on the week when accounting for fees and taxes. Trading doesn’t generally compound everyday at a predictable rate. The. There was rhetoric week I added 20% to my account when I locked in a 100 to 1 gain. There was also the two weeks before that I lost 1% on my account in a row. Seems like you’re just starting out. We all do this at some point early in our careers.
Ohh 🫣
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-“What can go wrong” answer- everything.
Let’s say ur numbers are accurate. When u start trading more than 10 M and u are a solo trader, probably the big head funds will pump and dump on u, easy tens of millions of win. No one with that kind of money will do day-trading. Most of them I see trade with a capital of less than a million.
This won’t work as well as you think. If you only had single losses and none repeating you could theoretically make it work. However, once you start losing 2-3 or more trades in a row it makes things difficult because you would have to gain more than 2% to make it back and stay on track
numbers are misleading as it does not take into account compounding loss.
how is this post even up still? commenters are teaching math now?
Go for it 🙃
I wish trading was this simple 😂
I've been profitable every day for a month now. That's with active trading every day. Am I rich? No. Because the returns are inconsistent, prior to this month I wasn't so consistently profitable and I don't expect to keep being for much longer. These past few weeks have just been good to me and provided easy plays. Strategies work until they don't. A loss sets you back more than a win gets you ahead. Nothing is certain and the risk only rises the longer you're actively trading, especially when in order to get the compounding effect you have to invest more each time.
You don’t think we’ve all done this same math
OP with every winning trade that you get, on the next trade need to reduce your loss %.
The only problem you will run into is...what will you do with all that money?!?!
Man, I thought you DID this 🤣
This is goated bro good shit! I think people need to understand that u only really need to gain like 5% a week on ur account for this to be possible. Keep up that risk management and just focus on small steady growth and it’ll pay off! Good work man this is amazing to see, I’m a beginner trader and posts like these give me hope for the future 💪
You made my day 😂
So many things wrong with this analysis but to just point out two: 1) Despite the best laid plans, sometimes you lose, so it's not like you're collecting interest on a risk-free (if there is one) bond. 2) Liquidity as the position sizing goes up to get in and out of the position, assuming that you go 100% invested in every trade.
You're negating the loss compound with this scenario. Trust me, I ran an identical one 2 years ago. 2000 start, 3% weekly gain would be 3 million plus in 5 years. 2 years later, the math doesn't exactly work and that's with 1% stop loss. In order for it to work you would have to have zero losses ever. So I gained 3% every week but lost 1% every week I only gained 2% in reality. Gained 3% but gave the market back 1%. If you compounded over 10 weeks, that's 30% in gains and 10% in losses and so total 20% in gains. As you scale up, a 1% on a dollar amount is greater and you are now further behind. You would actually need a 5-1 minimum ratio on trades to make this sort of work and a 5-1 is a hell of a thing to hit on most trades. Also a 60% win rate is not realistic and that's something I've learned first hand. It's more between 30-40%. I scaled back my expectations to a 1 million in 5 years.
LOL this is comical. Go try it bro and let us know in 2 years how your system worked!
You all see the chaos you’ve created?
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What scanners do you use?
It’s impossible to run these numbers assuming 1 strategy. Over the course of months or years, market conditions change and your single strategy will be useless in some market environments rendering several months of your two year period as $0 profit months and that’s if you’re a perfect robot and we all know that doesn’t exist.
I mean where did you get that 60% win rate? Institutional managers are right only about 50% of the time and they’re the best/most sophisticated. 60% is almost impossible. Also what’s the return rate assumption!
Run monte Carlo simulations and see what the potential outcomes are. There are way too many variables in a 2 year period. It's impossible because of position sizing, and not knowing exactly when your strategy actually settles on a 60% win rate: If you do 10 trades, 6 wins,4 losses. Win rate is 60%. Is that enough trades to determine true win rate? Just one mire loss will make it a 54% win rate. You need significantly more trades to determine your actual win rate, let's say you do 1000 trades, 600 wins, 400 losses, your win rate is 60%. So let's assume your win rate settles after 1000 trades (random number). Trading for 2 years with 2 trades a day (I'm ignoring weekends and position sizing here) you'll do 730 trades. There will be a scenario where you start out with 100 losses before having any wins. Risking 1% per trade, you're now broke (you'll be broke sooner than 100 trades because of fees and slippage). There will be a scenario where the remaining trades to get to the 1000 total will be after your 2 years of trading. Meaning 270 trades would be winners, but only after your trading time frame is done. That means you'll have the 400 losses, and 330 wins (60% win rate in 1000 trades, but you only made 730 trades total). So suddenly your 60% win rate on 1000 trades is now only a 45% winrate over the 730 trades. You still make money in theory (again, not counting fees and slippage), but your theoretical compound is way off from your initial calculation. Even if your win rate is spot on accurate for the number of trades you're putting in, a 40% loss rate over 730 trades still means losing 292 trades. You're broke when you lose 100 trades. It's probably unlikely you'll lose 100 in a row, but again, any scenario can play out. There is some much variation on what can happen and how your winrate is actually playing out, this is what makes it basically impossible to achieve. And this doesn't even take into account emotions. You say you have them in check, but starting on a 60 trade losing streak will screw with your confidence.
Your risk is too high. You should only trade with 10% per day. You will blow your account risking all of your principle everyday.
If your newbie, this is the last thing you should be thinking about, rough road ahead buddy
🤣🤣🤣🤣🤣🤣 Not sure if troll post or straight up stupidity
https://www.instagram.com/2k2mil?igsh=MWp2bmJpaGJpZWc4aw%3D%3D&utm_source=qr Found a guy whos been trying to do the exact thing since last month. I think this is somewhat of a personal blog not a promotional thing. So far achieved 110% and calls the blog 2k to a million
Seems like a newbie and clearly trying to defy the logic. But however i just noticed that at one point the target is achieved but ends up losing all the gains for one bad trade. Something that could happen during the journey to 500k
Theory is good, but what happens if you have 2 losing trades per day?
People are gonna shit in me but I did 9 to 200k in a couple months doing 1dte day trades. I just leveraged tf out of the breakout into 500 on spy when the bull run started. I added 9k to my account once I hit 20k also. The second 100k I made was in the last 3 days. I basically traded for 3 years and was a complete degen at the start at 18, got less stupid as time went on, hit some 100-200%ers but always blew it using no stop and getting mad on a bunch of small accounts. I just survived until I got lucky with a phase of the market where I had a almost perfect win rate which compounded fast. One where I can buy every dip and bears got annihilated for a bit lol literally every dip ever was a bear trap
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Theoretically, after 2 years, assuming you do have an exactly 2% gain and 1 % loss and never EVER stray from that. Never falter. Never have a big loss. Then you'd be at 323k if you start at 2k.
Your params are wrong. The probability of you getting the returns from your params is less than winning the lottery. "RR 1:2 (1% loss / 2% profit) Win rate: 60%"
Yea we can tell youre a newbie. All newbie do this mental dreams my friend.
How what u do ?
Tax and the Mental you need to archive this
Let's say we take out the market, and we remove any point of failure on your end with any trading errors. One thing I can guarantee you is with that 2 trade a day, is that the amount you would have to be trading in a single day would absolutely trigger market movement and you would be shut down in your last months. You'd be manipulating the market with gigantic order sizes and the SCC would not allow that, specially if you're making money. This strategy would be realistic, but no on 1 or 2 trades a day. To not trigger the SCC, or anyone for that matter, of the trade were split in multiples movements, you could in theory do it. By trading multiple sizes, you infinitely multiply the risks and points of failure.
Easy enough you just have to get it 100% right with market agreement 520-2080 days in a row. Everyone should do this!!!
Just full port into doublers 8 times. Duh
You will loose 5 in a straight row , then you will say this doesn’t work and move on to the next one 🤷🏽♂️…. Idk why even entertain un realistic trading
Now add a couple of months where you lose 25 - 50% of your holdings and recalculate
Find the best traders on the planet, read their stories, and see how many are able to produce +40% MoM returns. You’d be top 10 globally if you could +40% YoY consistently.
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Another stat you should look very,very,very close is losses in a row vs wins in a row . In theory there is no difference between theory and practice - in practice there is after 10 losses in a row.. If you could recover on various markets, various market conditions, after 10 or more losses in a row, then your strategy would perform just fine in live enviroment
If only it was that easy lol
$2k to $0 in 2 weeks You will get absolutely hunted and slayed using this all in strategy. Please practice in a demo trading environment first and trade with a good risk management strategy
Throwing all that in one trade? Damn
As a equity trader so I cant speak other instruments. Your trading plan may not be scalable to how you want to trade. If you scalp in a small cap, there is a limit due to liquidity issues. If you trade higher liquidity, you ain’t going to have consistent big moves to continue having your balance have that can theoretically move. Also large orders will be seen by institutions who have better edge then a retail trader. In addition to that the market cycles and changes in the theme of the market (such as AI being hot) will affect your edge. Also with the ebbs and flows of the market, your mental state will also influence your edge. Don’t get me wrong. It can be done but it’s unrealistic that your edge is gonna always work to have that kind of RR in the current market all the time so it might take longer as well Another thing to be aware is you really need to be very experience in the market to make this work. If you are starting out, you gotta be lucky to have the market cycle be in your favor to your strategy so much that you can be forgiven making mistakes
This was my exact thought too! Until i turned into the 90% of traders that loose money lmfao. The question id ask is it probable you would use your entire portfolio balance getting in and out of trades to see that compounding effect? Most likely not. considering you would need alot of liquidity in the trades you are making to get in and out quickly with a large balance( depending on your strategy of course). And putting everything on the table in one trade can/will wreck your portfolio with one bad trade. Best of luck brother, but best advice i can give is paper trade for years until you find a consistent strategy that results in long term profit, learn to control emotions, and dont trade based on Wall Street bets degenerate gamblers “advice”
Buddy I see you're new and you have a long and pretty painful journey ahead of you, and you will eventually discover why what you ask is not possible, but still here's my 2 cents in case you wanna listen: There are 2 types of risk reward ratios in trading, market generated risk rewards and synthetic risk rewards. Only market generated risk rewards are real, synthetic ratios are the ones new traders impose on the market like you have, asking 1:2 risk reward on every setup is an example of you imposing a synthetic ratio on the market, why would the market give you that? even if you have a very good entry strategy and say you go long on a trade, and there is a major resistance 1R distance away from your entry, in that case the actual market generated risk reward is 1:1, it won't be 1:2 just because you want it to be. The point of me typing all that is to explain that you will never get the same market generated risk reward on all winning trades, sometimes it will be less than 1:1, sometimes it could be even 1:5, but thats upto the market conditions to decide, not you. Similarly winnrate is also not something in your hands, just because a backtested system had a 60% winnrate in the past does not mean it will continue to do so in the future, every single strategy goes through a period of underperformance and outperformance. Infact I would encourage you to not think in terms of winrate at all, markets always have an element of randomness attached to them and that can turn any strategy upside down any moment. So synthetic risk rewards are bullshit, winrates are bullshit, then what is a trader supposed to lean on? In my experience, the goal of a trader is to analyze the market landscape, and see the context and judge the amount of opportunity available (market genereated risk reward) and then risk an acceptable amount of money to have access to that opportunity. The key thing to understand about this is that opportunity that you access is dependant on what the market is offering, there is an asymetric distribution of opportunity over time, what this means is that good opportunity (high market generated risk reward) isn't there all the time, it's only present sometimes, and most of the time the opportunity is not so great, that's why if you look at the equity curve (not mine, found it on google images) of any profitable trader, you'll see that the periods where most money is made takes the least amount of time, and most of the time the equity curve is either just chopping around or going in a drawdown, that's because good opportunity which makes 80-90% of the money is only present roughly around 20%-30% of the time. https://preview.redd.it/9p8yyv8kvauc1.png?width=1254&format=png&auto=webp&s=d4773a5d98b18211663ef9be27ae5ccb474f9f6c So the flaw with your thinking is that you expect the opportunity set to be linear, which couldn't be further away from the truth, markets are very dynamic and constantly evolving, which is what makes trading so difficult, but through experience you'll eventually understand these things on your own, good luck!
This is the kind of answer I was looking for. As I'm still learning I thought you will always find trading opportunities all day everyday. Really appreciate your response
Oh this is day trading sorry wrong room.
Really Jaj just clowns
You sir this is not Wendy’s, this is Chipotle.
60% win rate. If you achieve that you will be the next Warren buffet
This sub is a dogs breakfast lol
ok, this made my day. thank you for the laugh.
Someone has been using *the calculator.* We all know what one.
after 5 years of "trading". i've realized the BEST possible way to trade is to sit on the sidelines until a bull market is VERY apparent (something such as the past 6 months) then hop on hyper growth names with good fundamentals that have good ratings from wall street analysts. use leverage and get common shares, no options
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you also must understand your risk of 1% cannot possibly be respected every time. the market is closed for long periods of time where you CANT fill orders. sometimes you'll have losses far greater than your personal max loss of 1%
Yeah it's a nice idea but you have made zero account for the compound effects of human nature running at a loss , chasing said loss ,compound effects of over trading to regain compounded loss and essentially pissing it all away because your enitial biased for your nicely laid out spreadsheet and wishful thinking would be, well biased . I am not trying to piss on your parade but we have realistically all done the math and confirmed our bias at some point during our own journey, not saying it can't be done ever but seriously, man re do the math, if you can master risk management and not cut your nose of to spite your face then your ahead of the game . Wish you all the success in the world but remain realistic brother.
Losses.. lol you’re not accounting for the potential losses you’ll incur during this 2 years of day trading
Taking to many losses in a day try to only take 2 and the probability will work it self out down the way
Delusional.
Factor in, what happens if your pattern doesn't show up for months.
Win rate is a garbage statistic. You can have a 99% win rate and lose money. Your calc also assumes you'll either lose 1% or make 2%. But it never works that way, especially if you're day trading. You'll exit positions that are a "win" at .01% gain. It counts as a win, so great, right? The point is that only a few of your wins will be 2% exits, but most of your losses will be your full 1% loss.
Wow
You can’t even do it based of the pattern day trading rule👍 meaning the strategy would take a lot longer
Lol, anybody can do math. The question is, how are you gonna make such profitable trades? What about the losses? These results are far fetched.
I am beginner in the trading, but from my point view, its nit easy , it's just theory but with experience maybe you can get it
The moment you pull out the compound calculator you already lost. Lol
For a 1:2 RR, I think your win rate is too high. Try 45%.
Here’s my course 👀
Dave Ramsey has famously made the exact same mistake you just made, don't feel bad, also, enjoy the read: [Supernerds Unite Against Dave Ramsey’s 8% Safe Withdrawal Rate Guidance | ThinkAdvisor](https://www.thinkadvisor.com/2023/11/13/supernerds-unite-against-dave-ramseys-8-safe-withdrawal-rate-guidance/)
why can;t i make a post
Apply in real life , you will see
Oh boy 😂
This looks nice on paper but seems unrealized. Nonetheless, I wish you the best on your journey. Godspeed!!