Spread betting as a full time occupation...
Discussion
ATM said:
We are not friends I might add. I found it hard to believe he had ended up in that situation. But from what he was telling me he had NO strategy. He just went long or short and probably 'all in' based on his mood / gut / err the moon! He was looking for 40 or 50 points in say an hour or less.
Day trading is IMO lethal. My strategy was lots of small P&Ls. I used to work on a bond option desk where we lost £15m over about 6 months ( nice work if you can get it ) on large directional trades, I remember being very impressed though with a guy on another desk who traded FX, he spent all year taking lots of little bites out of the market rather than making big 'macro' bets. Ironically he was made redundant. The loss making senior traders.....they went off to start a hedge fund. walm said:
ATM said:
I read something in a Paper / Magazine [cant remember where] just this weekend about some well known London based commodities trader. He has just bought millions of tonnes of cocoa beans for many $100m. He apparently started out his career as a cycle courier. Now he lives in an 11m gaff in Mayfair or something like that - you get the jist.
Anthony WardStarted out managing other people's money.
Still does (although probably a lot of his $1.5bn AUM is his).
http://dealbook.blogs.nytimes.com/2010/07/26/trade...
I just read the link I posted. It does say:
Public school educated Mr Ward began life as a motorcycle dispatch rider before making his fortune as a commodity trader.
Timmy35 said:
ATM said:
We are not friends I might add. I found it hard to believe he had ended up in that situation. But from what he was telling me he had NO strategy. He just went long or short and probably 'all in' based on his mood / gut / err the moon! He was looking for 40 or 50 points in say an hour or less.
Day trading is IMO lethal. My strategy was lots of small P&Ls. I used to work on a bond option desk where we lost £15m over about 6 months ( nice work if you can get it ) on large directional trades, I remember being very impressed though with a guy on another desk who traded FX, he spent all year taking lots of little bites out of the market rather than making big 'macro' bets. Ironically he was made redundant. The loss making senior traders.....they went off to start a hedge fund. ATM said:
Timmy35 said:
ATM said:
We are not friends I might add. I found it hard to believe he had ended up in that situation. But from what he was telling me he had NO strategy. He just went long or short and probably 'all in' based on his mood / gut / err the moon! He was looking for 40 or 50 points in say an hour or less.
Day trading is IMO lethal. My strategy was lots of small P&Ls. I used to work on a bond option desk where we lost £15m over about 6 months ( nice work if you can get it ) on large directional trades, I remember being very impressed though with a guy on another desk who traded FX, he spent all year taking lots of little bites out of the market rather than making big 'macro' bets. Ironically he was made redundant. The loss making senior traders.....they went off to start a hedge fund. That's not what I was doing I would often take a profit over several days or even weeks having held a loss in the interim. I'd almost expect the market to move against me as soon as I'd opended a position. I can see how quickly you'd rack up losses chasing the market all over the place.
Timmy35 said:
ATM said:
Timmy35 said:
ATM said:
We are not friends I might add. I found it hard to believe he had ended up in that situation. But from what he was telling me he had NO strategy. He just went long or short and probably 'all in' based on his mood / gut / err the moon! He was looking for 40 or 50 points in say an hour or less.
Day trading is IMO lethal. My strategy was lots of small P&Ls. I used to work on a bond option desk where we lost £15m over about 6 months ( nice work if you can get it ) on large directional trades, I remember being very impressed though with a guy on another desk who traded FX, he spent all year taking lots of little bites out of the market rather than making big 'macro' bets. Ironically he was made redundant. The loss making senior traders.....they went off to start a hedge fund. That's not what I was doing I would often take a profit over several days or even weeks having held a loss in the interim. I'd almost expect the market to move against me as soon as I'd opended a position. I can see how quickly you'd rack up losses chasing the market all over the place.
g4ry13 said:
That's based on the assumption that withdrawals are made at the end of each month. If they are then it's a difficult task, but if there is some consistency and compounding effect then it's possible at end of a 12 month period to have averaged £1.5k/month.
Anything is possible in theory, though it pays to sit down and think it through calmly and logically.Can it be done? yes. If person x was to try doing it tomorrow would he do it? The 70% month in and out? Based on probabilities you would have to bet against him.
Do not get me wrong - it is the industry I work in and as a way of short to medium term trading a whole range of markets it is a great mechanism for doing it. I just think it is important to not get too carried away with the potential rewards because chasing potentially silly returns can lead to really unfunny losses.
Just my 2p's.
Edited by limpsfield on Tuesday 27th July 17:31
limpsfield said:
Can it be done? yes. If person x was to try doing it tomorrow would he do it? The 70% month in and out? Based on probabilities you would have to bet against him.
Do not get me wrong - it is the industry I work in and as a way of short to medium term trading a whole range of markets it is a great mechanism for doing it. I just think it is important to not get too carried away with the potential rewards because chasing potentially silly returns can lead to really unfunny losses.
Just my 2p's.
Sure, it's very difficult. But the crux of my point was you don't have to achieve 70%/month to average 1.5k/month over the year. If the account is compounded and the person has consistency with a 20%/month ROI over a 12 month period they will get very close to the target. Now 20%/month is still going to be difficult for the average but it's more a more achievable task than 70%.Do not get me wrong - it is the industry I work in and as a way of short to medium term trading a whole range of markets it is a great mechanism for doing it. I just think it is important to not get too carried away with the potential rewards because chasing potentially silly returns can lead to really unfunny losses.
Just my 2p's.
Ok, I failed to resist. How lucky are you feeling? £2000 in the pot. Divide by 50. £40 risk per trade. £1/pip. Scalp GBP/USD. Say you do an average 5 trades a day, Make average £40 per trade (taking into account the occasional loss). £4000 per month. In fact, you just need to start with £30 and be lucky. 
In fact, month 2, £120/trade. £12000 profit.
Month 3, £360/trade. £36000 profit.
Month 4, £108000 profit.
Month 5, £324000 profit.
Month 6, £972000 profit.
Month 7, £2916000 profit.
This time next year, Rodders...
Seriously, though, there's a lot of sensible advice, although it may take longer than 6 months to get to a consistent level of profitability.
In fact, month 2, £120/trade. £12000 profit.
Month 3, £360/trade. £36000 profit.
Month 4, £108000 profit.
Month 5, £324000 profit.
Month 6, £972000 profit.
Month 7, £2916000 profit.
This time next year, Rodders...Seriously, though, there's a lot of sensible advice, although it may take longer than 6 months to get to a consistent level of profitability.
Edited by ShadownINja on Tuesday 27th July 20:37
f13ldy said:
Excellent input.
As far as £1500 goes that looks like a very optimistic figure indeed. Now I can see although possible in a ideal situation with larger capital, with my scenario it's not really do-able.
Again, if it was that easy, everyone would do it.
Have a go anyway. BUT. Initially forget taking any money at all as an income. Your two aims are preserving and if possible increasing your precious margin capital. Treat your margin as precious, don't give it away easily. As far as £1500 goes that looks like a very optimistic figure indeed. Now I can see although possible in a ideal situation with larger capital, with my scenario it's not really do-able.
Again, if it was that easy, everyone would do it.
Look for things that genuinely look far too cheap or far too expensive, and research properly, not just the headline news but what is the market doing? Is the move you are seeing confirmed by volumes? A large upwards price move with low volumes is unlikely to be sustained, a move upwards with increasing volumes probably will be for example.
Don't just randomly punt, think carefully, and never trade in 'anger' after a small loss, chances are you'll just end up making a bigger loss.
Accept that often you will 'miss' opportunities and kick yourself, don't just move on to the next trade. Oh and beware the 'big' trade. If you think it could double your capital in one trade then chances are it could just as likely totally wipe you out. Think about the loss you could make, not just the profit.
Do it for the next month and come back and tell us how you got on. If you still have £2k in your account you have IMO done well.
walm said:
Sure anyone with £2k just needs his wits about him and can earn over £20k gross a year day trading, it's really easy... not.
Link says minimum $100k, but has no sources.
http://www.edubook.com/day-trading-for-a-living/25...
Apparently wikipedia says 90% of day traders fail but I couldn't find that reference either.
So let's do the math, working backwards from £1,500 per month.
Total per year is £18k.
Since the markets return on average 7% a year and assuming you can match the market (remember most full time investment management professionals with years of experience fail to meet even the market) then you would need just over £250k to generate that kind of return.
That of course forgets to include trading costs. Since you are talking about 6-7 hours a day then presumably you would be doing a fair few trades.
Say £10 each? What minimum of 5 trades a day? So £50 x 250 trading days a year means you need another £12.5k just to make your trades.
So you need to earn c.£30k per year in total. Again assuming 7% returns that implies £430k or so.
£2k? Not so much...
Just think for a minute what you are suggesting.
You are suggesting that you can almost double your money EVERY MONTH.
You are suggesting that with less than a year's training someone with £20k could earn £15k per month (just multiplying your numbers by 10).
That is a gross income of c.£300k.
Why on earth wouldn't the whole world be doing this wonderful work?
Sure with spread betting you can lever up. Minimum deposits are typically 10% so your £2k could allow you to make an investment the same size as a £20k unlevered position.
You are still orders of magnitude away from the capital required.
Just my 2p.
If you really think you can earn return of 7.5% per month (£1,500 over your £2k levered 10x), then I strongly suggest you send your trading history and CV to Man Group, GLG Partners, Gartmore or Marshall Wace.
They will pay you a lot more than £1,500 a month.
This is complete toss. Why are you possibly comparing scalping intra-day with cash holding of positions? You have not taken into account any form of leverage. Comparing the market return of 7% to TRADING is ridiculous, they are non-comparable and as such your figures are totally spurious.Link says minimum $100k, but has no sources.
http://www.edubook.com/day-trading-for-a-living/25...
Apparently wikipedia says 90% of day traders fail but I couldn't find that reference either.
So let's do the math, working backwards from £1,500 per month.
Total per year is £18k.
Since the markets return on average 7% a year and assuming you can match the market (remember most full time investment management professionals with years of experience fail to meet even the market) then you would need just over £250k to generate that kind of return.
That of course forgets to include trading costs. Since you are talking about 6-7 hours a day then presumably you would be doing a fair few trades.
Say £10 each? What minimum of 5 trades a day? So £50 x 250 trading days a year means you need another £12.5k just to make your trades.
So you need to earn c.£30k per year in total. Again assuming 7% returns that implies £430k or so.
£2k? Not so much...
Just think for a minute what you are suggesting.
You are suggesting that you can almost double your money EVERY MONTH.
You are suggesting that with less than a year's training someone with £20k could earn £15k per month (just multiplying your numbers by 10).
That is a gross income of c.£300k.
Why on earth wouldn't the whole world be doing this wonderful work?
Sure with spread betting you can lever up. Minimum deposits are typically 10% so your £2k could allow you to make an investment the same size as a £20k unlevered position.
You are still orders of magnitude away from the capital required.
Just my 2p.
If you really think you can earn return of 7.5% per month (£1,500 over your £2k levered 10x), then I strongly suggest you send your trading history and CV to Man Group, GLG Partners, Gartmore or Marshall Wace.
They will pay you a lot more than £1,500 a month.
walm said:
ATM said:
Is anyone on here admitting to doing this for a living?
I pick stocks for a living.Not with just my money, I hasten to add.
Perhaps that means I know nothing about FX trading and commodities.
What I do know is risk-reward.
Generating annual returns of >15% consistently would make you one of the world's greatest traders ever.
Buffett has done 20.3% from 1965-2009 and is regarded as a legend. He is the 3rd richest man in the world.
Generating 900% annual returns (£1.5k x 12 / £2k) is a ridiculous target.
Again, my 2p.
ETA - consistent 15% a year would not make you one of the world's best traders. It would make you a very good fund manager. Anyone who trades futures will return 100's of % per year on capital used. Prop trading and fund managing are totally different worlds and a lot of people fail to grasp this.
Timmy35 said:
f13ldy said:
Excellent input.
As far as £1500 goes that looks like a very optimistic figure indeed. Now I can see although possible in a ideal situation with larger capital, with my scenario it's not really do-able.
Again, if it was that easy, everyone would do it.
Have a go anyway. BUT. Initially forget taking any money at all as an income. Your two aims are preserving and if possible increasing your precious margin capital. Treat your margin as precious, don't give it away easily. As far as £1500 goes that looks like a very optimistic figure indeed. Now I can see although possible in a ideal situation with larger capital, with my scenario it's not really do-able.
Again, if it was that easy, everyone would do it.
Look for things that genuinely look far too cheap or far too expensive, and research properly, not just the headline news but what is the market doing? Is the move you are seeing confirmed by volumes? A large upwards price move with low volumes is unlikely to be sustained, a move upwards with increasing volumes probably will be for example.
Don't just randomly punt, think carefully, and never trade in 'anger' after a small loss, chances are you'll just end up making a bigger loss.
Accept that often you will 'miss' opportunities and kick yourself, don't just move on to the next trade. Oh and beware the 'big' trade. If you think it could double your capital in one trade then chances are it could just as likely totally wipe you out. Think about the loss you could make, not just the profit.
Do it for the next month and come back and tell us how you got on. If you still have £2k in your account you have IMO done well.
Scalping is mostly about feel. Some people stick rigidly to technical indicators and others trade purely on flow, but a lot of it comes down to feel. What I tell people is that as with anything in life you get better by practice. The problem is most people who try it on their own run out of money before they learn anything. To start off you want to trade as much as possible but REALLY small. Trade small size and often and get a 'feel' for the market and how it moves. Hopefully the more you trade the more you will learn and will get better, this may then enable you to make a living from it but it will take time - a lot of it. Watch the screens for 8 hours every day and after 6 months you might have a clue what is going on.
Having said that, £2k is a little too small to start as a full time career/job and don't expect to make money from the start or put any pressure on yourself toearn at the beginning. Ideally have another income stream. There is a saying you pay to learn and it is never so true as in trading. You will have big up days, down days and everything inbetween, but it is the big losers that teach you the most and if they don't teach you anything then you will be poor very quickly.
Edited by R11ysf on Wednesday 28th July 15:18
R11ysf said:
This is sensible advice. If you want to scalp from home (or scalp in any form for that matter) what your have to realise is that most traders lose money. That is because scalping/trading is best compared to a professional sportsman, a lot of it comes down to natural talent and a lot can be taught or coached there are some people who will always make a fortune and others can't figure out why, but there will be others who always manage to make the worst of every situation.
Scalping is mostly about feel. Some people stick rigidly to technical indicators and others trade purely on flow, but a lot of it comes down to feel. What I tell people is that as with anything in life you get better by practice. The problem is most people who try it on their own run out of money before they learn anything. To start off you want to trade as much as possible but REALLY small. Trade small size and often and get a 'feel' for the market and how it moves. Hopefully the more you trade the more you will learn and will get better, this may then enable you to make a living from it but it will take time - a lot of it. Watch the screens for 8 hours every day and after 6 months you might have a clue what is going on.
Having said that, £2k is a little too small to start as a full time career/job and don't expect to make money from the start or put any pressure on yourself toearn at the beginning. Ideally have another income stream. There is a saying you pay to learn and it is never so true as in trading. You will have big up days, down days and everything inbetween, but it is the big losers that teach you the most and if they don't teach you anything then you will be poor very quickly.
Good post. I can tell you've been playing a while.Scalping is mostly about feel. Some people stick rigidly to technical indicators and others trade purely on flow, but a lot of it comes down to feel. What I tell people is that as with anything in life you get better by practice. The problem is most people who try it on their own run out of money before they learn anything. To start off you want to trade as much as possible but REALLY small. Trade small size and often and get a 'feel' for the market and how it moves. Hopefully the more you trade the more you will learn and will get better, this may then enable you to make a living from it but it will take time - a lot of it. Watch the screens for 8 hours every day and after 6 months you might have a clue what is going on.
Having said that, £2k is a little too small to start as a full time career/job and don't expect to make money from the start or put any pressure on yourself toearn at the beginning. Ideally have another income stream. There is a saying you pay to learn and it is never so true as in trading. You will have big up days, down days and everything inbetween, but it is the big losers that teach you the most and if they don't teach you anything then you will be poor very quickly.
I am not picking a fight, but these two comments are entirely inconsistent...
The VAST majority will lose money. Hence your professional sportsman analogy, which is entirely apt.
Again I come back to risk-reward. If you are prepared to lose everything i.e. 100% of capital (or more), then the rewards can of course be in the 100's of per cent.
The question was what is a reasonable amount of capital to start with.
Clearly 7% is too low if you are prepared to take on significantly more than market risk (and lever up), but I think 900% is preposterously high.
How much would you start with?
R11ysf said:
Anyone who trades futures will return 100's of % per year on capital used.
R11ysf said:
What your have to realise is that most traders lose money.
What you mean is that SOME traders will return 100's of % on capital. The extremely successful ones.The VAST majority will lose money. Hence your professional sportsman analogy, which is entirely apt.
Again I come back to risk-reward. If you are prepared to lose everything i.e. 100% of capital (or more), then the rewards can of course be in the 100's of per cent.
The question was what is a reasonable amount of capital to start with.
Clearly 7% is too low if you are prepared to take on significantly more than market risk (and lever up), but I think 900% is preposterously high.
How much would you start with?
Edited by walm on Wednesday 28th July 16:37
walm said:
Prop trading and fund managing are totally different worlds and a lot of people fail to grasp this.
This is true. To make more of a distinction most traders deal with flow, they are executing orders for clients or executing orders that are part of a larger structure. Prop traders are relatively few in number. Although lots of desks that aren't supposed to prop trade do to an extent.
Fund managers sit around all day having ultra long lunches in expensive restaurents talking about football with pension fund managers and insurance company treasurers.;)
Full-time spraed betting with your own money will ALWAYS end in ruin.
I am a new issue / credit trader working in partnership with 1 guy. I shared an office with a guy who invented Itrax. He was a day trader setting up a hedge fund using spread betting. He employed a LOT of capital and was one of the sharpest brains you will ever meet. He made about 200k in the first 6 months. Subsequently the amount of money he lost was eye watering. He now runs a yoga retreat....
3 quick observations. 1 - What makes plumbers / taxi-drivers / retired soldiers think they can trade FX or cocoa on a leveraged basis? 2 - 85% of day traders lose money. why do you think spread betting is tax free ? Perhaps it has something to do with the HMR&C not wishing to have all spread betters reclaiming their losses...and, finally, 3 - have you ever met any real traders ? the kind of guys who make money are not the sort of guys who make a quick buck and sit back happy....the level of commitment, greed and energy required is very unusual....fortunately...
I am a new issue / credit trader working in partnership with 1 guy. I shared an office with a guy who invented Itrax. He was a day trader setting up a hedge fund using spread betting. He employed a LOT of capital and was one of the sharpest brains you will ever meet. He made about 200k in the first 6 months. Subsequently the amount of money he lost was eye watering. He now runs a yoga retreat....
3 quick observations. 1 - What makes plumbers / taxi-drivers / retired soldiers think they can trade FX or cocoa on a leveraged basis? 2 - 85% of day traders lose money. why do you think spread betting is tax free ? Perhaps it has something to do with the HMR&C not wishing to have all spread betters reclaiming their losses...and, finally, 3 - have you ever met any real traders ? the kind of guys who make money are not the sort of guys who make a quick buck and sit back happy....the level of commitment, greed and energy required is very unusual....fortunately...
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