Experimenting with small trading account

[goldenedge]

I want to try something new this year and want to take a break from my original account. I'm sick of hearing beginners and experts alike say that it's impossible to grow a small account into a very large one. :annoyed: So I want to show them that it's possible as long as you know what you're doing in the market.

So, this is my goal for 2017. I will turn a small account into a very large one (atleast 1000% growth) using some experimental techniques that are sustainable for the short term. I have some theories that will help.

I will start pretty soon in one or two weeks. I will eventually update this thread with my strategy, system and the markets I chose to trade. Don't worry, I will explain every question you have in your mind. :thumb: This is not a journal. I don't explain each and every one of my trade but I will provide a daily summary of my trades and explain what happened during the day as a whole.

This is not a joke. I'm pretty serious about this. Even if I blow up my account, I'm sure that I can learn a lot by experimenting. So it's a win-win situation for me.

You can always check out my blog that I linked below.

 

[goldenedge]

Okay, here it is guys. I'm all in. I want to achieve this goal and prove it that it's possible.

During the last 15 days I have been testing different strategies for small accounts and come up with something that actually works. I will explain my complete strategy.

Here is the math:

Avg risk - 20-25% of the portfolio
avg loss- 20-80% of the total risk (I have a dynamic system that will cut losses quicker)
Avg profit- 60-100% of the total risk
Profit % - 70% (high because I focus on picking scraps)

Average trades per day - 2.5 (4 or 5 trades is generally maximum for me. If I make more than this then I'm making a mistake because my strategy shouldn't generate these many signals in a day under any circumstances.)

Chance of hitting home run (100%-200% of total risk) - 17%
Chance of hitting max loss (100% of total risk) - 12%

Worst possible scenario
=> 2 consecutive max losses (50-75% portfolio loss).
=> not a big deal. We gain almost the whole loss in 1-2 weeks.
=> It's pretty frequent too (like 5% or something) so I'm always prepared mentally.
=> will not trade for a few days after the worst possible scenario happens.

 

[goldenedge]

MARKETS, INITIAL CAPITAL and ORDER


Initial money -> 2300
Target(1000%)->23,000(as soon as possible. 1 year is the worst possible case) EDIT: 1000% might be easily achievable. Let's aim for 10,000% ie., 2,30,000.

Orders used-> Only cover order from zerodha at max leverage.

Markets trading -> Crude oil mini for now, will eventually trade natural gas once my account grows.

Both of these markets are ideal because of a lot of reasons that I am not going to discuss here.

 

[pannet1]

hi goldenedge,

sounds very interesting. good luck.

 

[goldenedge]

Now the fun part. These rules are part of my normal trading strategy so I'm just writing it down as I go along. Everything I've written below is something I 100% follow without fail.

TRADING RULES:

1) No impulse trading under any circumstances. To avoid it, I go for a 5 min meditation before and after a trade.

2)Only strong proven setups(mostly some type of engulfing price patterns). Nothing else. If I don't find one then I wait for a day or two. The reason is because I want to keep my profitability as high as possible. If you look closely at my system you can figure out that my 'edge' lies in profitability.

3) Will not generally trade until evening. Afternoons rarely trend in the markets I mentioned. All I need is 20-30 pips per day so what's the point? The only exception is when I find a really strong setup that I don't want to miss(this happens very RARELY)

4) Will not hold a trade for more than 2 hours(my ideal trade is 40 min to 1 hr). Again, this is something I've observed in my journals. My strategy and time frame are very short term so holding trades for a longer term implies that I'm putting emotions into trade. If no/negative movement then I get out.

5) Will not trade after the data is released on wednesdays or thursdays. It's pure gambling. 20-30 pip moves happen very frequently at that time so I have the chance to blow 50% of my account in the blink of an eye. Only exceptions is when I find a really strong setup on wednesday.

6) Will not chase setups. Either they come to me or I wait for another one. There's no point in skewing your risk/reward by trading setups that has already moved .(made a post about missed opportunities in my blog.)

7)Will not look at absolute profits and losses because of two reasons i) trading with 2.3k is way too low and might demotivate me ii) once my account grows 5k/10k fluctuations are pretty common. The only solution is to look at % and pips.

These are the general seven rules that I instinctively follow. I've just written them down for the reader to understand my system.

GREED CIRCUIT:

If I have a complete profitable week in a row then sometimes greed gets into my head(I'm human). I generally never follow rules at this time. If this happens, I just close all my trades NO MATTER WHAT and only trade single contract for a few days. I can generally notice the 'signs of greed' in my journal so I always get out without much damage.

Trust me, taking a break doesn't help in solving greed. I've tried this again and again. Only way to fix it is to trade 1 contract forever.

FEAR/DESPERATION/ANXIETY CIRCUIT:

If I loose my cool or put a lot of emotions in a trade then I just close my pc and take a break for a few days. I will go back and read the books I mentioned in my blog. It helps me in a therapeutic way and I generally trade better after taking a break.


These are my rules. My strategy is pretty simple so I'm not talking about it. It's just a combination of bollinger bands (2.75 SD) and price action patterns. My strategy gives me enough signals so I'm happy with this simple one.

I will start pretty soon in a few days (or next monday). Get ready folks. :clap: Please don't comment on this thread. If you have anything to add then message me. I will include your message in my next post.The reason is that I don't want newbies to invade this thread and thereby scattering important update posts. Remember that the only reason I am writing this thread is to help you guys. So please don't scatter my threads by replying.

 

[goldenedge]

Regarding posting frequency:

No I don't post my daily trades(there are a lot of good journals out there. This is just a really serious experiment to prove a point). I will update this thread generally during weekends. I will post my net capital change on a week-to-week basis. I will talk about percentages and profitability of the last week in that thread.

Once in a while I will post a thread during weekdays...generally I will post whenever I hit a home run or huge losses.

Another reason why I don't want to post everyday is because most days are pretty average to be honest. You make a few pips here and there. BORING!!!

 

[goldenedge]

Weekly report:

It's going fine as of now. I'm up 30% and now my account sits at 3100(approx). Crude oil gave some nice moves.


One thing I have overlooked is the brokerage costs because of cover order. It's too much!! This week my total profits are 1070 but my net profit was around 820. I only make 2-3 trades on average per day so I am assuming it won't be a big problem in the long run.

My current goal is to get to around 6000 mark and then start trading natgas (it's my best market). I should hit it by the end of this month(if everything goes fine). The problem with crude is that we need 20 pips after brokerage atleast per day to get a decent profit whereas we need only 10 in natgas! And also the brokerages are low in NG compared to crude!

To be honest, I'm starting to get the 'feel' of growing a small account. It's really challenging and stressful. A small tiny mistake has a lot of consequences . At the same time, it's really interesting.

I'm yet to experience a 30% portfolio loss in one day. Everyday before starting the session, I prepare myself mentally. Hope I will be able to deal with it if it happens.
[it will happen eventually because probability will kick in]

 

[aja]

goldenedge,I thought you are going to discuss here with some method/charts on how to make money from a small amount.

Atleast I was eagerly expecting your SHOW after your long reply to me here-

http://www.traderji.com/general-trading-investing-chat/103869-only-45k-left-3.html#post1198819

Just 7 posts and you are gone

 

[Subhadip]

You can always check out my blog that I linked below.

This forum is NOT for advertisement of your BLOG.

So stop showing up.......

 

[kimanjo]

It looks like he is taking a break since he stopped posting his updates of trading experience with a small account. Has he hit home run or did he get huge losses? I wonder what happened to him.