$1,000 to $1,000,000 in a year theory crafting

Trading Discussion
1

I’m sure most of us have seen someone post about bringing up a small trading account that anyone could fund to a million dollar account in a year or 36 months or what have you, and looking on paper we can see how it is possible, so i was thinking i might ask you guys for what you see as the potential problems in that kind of goal

This would be the theory: I open a $1,000 account, I risk 5% per trade (determining what 5% is at the start of every month), and have my RR as 2:1, and have a W/L of 75%, then i would only need to make 16 trades in a month to double my account, and if i did this for a year:

Starting balance $1,000

Month 1:$2,000
Month 2:$4,000
Month 3: $8,000
Month 4: $16,000
Month 5: $32,000
Month 6: $64,000
Month 7: $128,000
Month 8: $256,000
Month 9: $512,000
Month 10: $1,024,000
Month 11: $2,048,000
Month 12: $4,096,000

now obviously if you look at those numbers it seems way too good to be true but at the same time you can see how it is within reason that it is possible and i’m sure there have been many traders who have done this before successfully (although i have yet to see one with proof), here are the potential problems i see:

  1. Spreads and Swaps
  2. Drawdowns

Spreads and Swaps are obviously fluctuating prices that can’t be exactly predicted, but through my experience i’d say about 6% of all my potential trade income is taken by spreads and swaps (meaning for every trade 6% of the pips are taken for broker charges on average)

The drawdown is the biggest potential roadblock i think, obviously if i lose 10 trades in a row i will have to reduce the amount of money i trade with setting me back days or even weeks, but this may have an easy solution… If i start off with a 20% buffer (a $1,200 account), and trade risking only 5% of the $1,000 (pretend that the buffer isnt there), then i can afford to lose a reasonable amount of trades in a row with no adverse affects to my money management, i myself have never had a losing streak of more than 4 trades in a row

One thing in my favor for these calculations is the fact that i can calculate RR at the start of every week rather than every month, meaning i’ll increase my lot sizes weekly rather than monthly, this will make the exponential growth kick into gear much faster, now combining the paper trading calculations with the spread and swap costs as well as the buffer it would seem very reasonable to assume that someone could make $1,000,000 in a year out of $1,000

What are other potential problems you guys see? Have you seen anyone do this succesfully? Have you seen anyone fail miserably?

2

I no longer believe you to be a full time trader.

Correction… I didn’t ever believe it to begin with, but now this post just validates that.

3

@mastergunner99: ok.

4

I’m serious. That type of post is detrimental to the success of traders. Everything looks good on paper. But if it’s so good, why not just put your head down and do it, then come back with the results. No one ever does that. Luck is the only way you can get rich quick in Forex. For anyone that has obtained any fast wealth, has not been able to duplicate what they did. Not Darvas, not Soros, not anyone.

The goal should be simple. Make pips. Period. Obtain an edge in the market and exploit it.

The market does not care about your spreadsheets, or your indicators, or your 5% goals. It gives a rat’s butt about your margin, your broker, your trading method. It is a complex 4 trillion dollar a day beast that dwarfs anything that anyone can truly fathom. People have collectively lost millions upon millions upon millions.

And you think you can turn $1000 into 4 million in a year simply because it looks good on paper? In a few short years you would be the richest person in the entire world.

So how about we drop the My Little Pony/Star Wars act on Forex, and really take a serious look at what this market is, how you can develop an edge, and how you can exploit that edge for profitable gain.

I have a half of a mind to reopen my Price Action Hero thread to just show you how that’s done.

5

welp there we have it, you’ve caught me, your impeccable arguments have truly shown that i am in fact a complete fraud who has no idea what he is doing… I don’t think I have ever been this sarcastic I don’t want to be mean and I don’t want to argue with you as that is entirely against the purpose of this thread and the spirit of this forum, but feel free to open up a thread about all the reasons you think i am not actually a trader and i would love to debate with you on your concrete reasoning supported by reason and logic :slight_smile:

As For the rest of your comment that could possibly pertain to what this thread is about: I disagree with you, “For anyone that has obtained any fast wealth, has not been able to duplicate what they did. Not Darvas, not Soros, not anyone.” You are missing the point in a huge way, they DID repeat their success, over and over and over again, saying they didn’t is like saying that they were lucky which is definitely not the case, Soros for instance, he was a hardcore fundamental trader, that was his game, and because of that his system of trading could not be quantified by indicators or hard numbers, the system he used was the way he analyzed data and interpreted it, he was his own indicator for the market, so when he made that billion dollars it was because of the way he operated as a trader, he duplicated successful trades using the same system of trading both before and after that trade…

Again, you are missing the point entirely… the market moves because of human psychology both by the individual and the masses, candlesticks, indicators, price action etc. are all quantifiable interpretation of that psychology, they aren’t infallible tools but in a way technical trading IS fundamental trading, but on a shorter term scale

In your own (slightly modified words), So how about we drop the PERSONAL ATTACKS ON OTHER TRADERS, and really take a serious look at what this market is, how you can develop an edge, and how you can exploit that edge for profitable gain.

please, this thread is asking for other traders to brainstorm about WHY this doesn’t ever seem to work, what keeps it from working when there is a measurable level of assurance that it would, could it be that their is a higher level of outer market psychology that we have yet to quantify or could never hope too? What is it that makes an already proven profitable system lose out in the long run without modification etc. etc. etc.

p.s. PLEASE open up your Price Action Hero thread, i would honestly (not sarcasm) love to learn anything you have to offer and i’m sure many other traders would too :3

6

It won’t work for the very reasons you stated. Human psychology. You are attempting to control a system that does not play by those rules. For all of those traders that attempt to place a daily goal on percentage or pips, they are only fooling themselves. The goal should be to be profitable period. How are you possibly going to dictate what type of profitable trades you will pull out of the market in the time frame you want to control with with the win rate you state? That reasoning alone would give any sensible person an understanding that they would question your claim that you trade Forex for a living. This thread is something that is started by newbies who have big dreams of the market and think that they can somehow control it. It simple does not work like that.

There has been no attack on you. I stated my opinion of what I thought of your claim as a full time trader. I stated my reasons for believing that. If you were somehow hurt by that, I can’t apologize for feelings that I do not control. I would suggest obtaining thicker skin if that’s the case as the market can hurt you far more than my opinion of your full time status.

If you trade profitability, the percentages will take care of themselves. You do not, or will not ever have the luxury of controlling that.

7

They’re also putting unnecessary pressure on themselves, which will hurt their trading.

The goal should be to be profitable period.
and
If you trade profitability, the percentages will take care of themselves.

That’s all you need to worry about. When I started out, I used to do little exercises like this. How long will it take to double my account?, how soon can I retire? etc. It’s an interesting little exercise, but it takes the focus away from trading and can give you unrealistic expectations.

8

Because the market is unpredictable, because our meager minds cannot fathom the complexity of mass psychology to make precise predictions, we shouldn’t base our goals on a fixed %. Rather, we should based our goals on what the market has to provide us with, with our rather pitiful skills, to reap what we can using those minuscule skills. Thus, the logical goals that we should have is, to always take the best opportunities that come, with relevance to our measly skills only, and the next is to reflect on how to improve. It’s more about self improvement, it is about beating yourself, and taking yourself to the next level. You might find yourself being able to achieve that kind of high returns, but it always start from steps. If you try jumping too far ahead at once, you might find the floor below you unstable, and that will be your demise, try building the steps more solidly and you will naturally attain your maximum potential. I am not saying such high returns is impossible, because I always believe nothing is, even if it weren’t “realistic” at this point in time. If you keep beating yourself, and achieve your maximum potential every time, you might just hit those returns eventually. Even if you didn’t you have no regrets.

Warren buffet became billionaire at 60 years of age, and on average gets 20% returns annually, according to my puny knowledge. If I am wrong, correct me lol. Furthermore, he is an investor not a trader. But screw that, he doesn’t set a limit to what anyone else can do, we might just be able to do better, but we need to take the baby steps to achieve that and more, because we don’t really know what our maximum potential is, do we? Or is there even a maximum? lol happy trading!

9

sorry, i don’t think i clarified what i was saying well enough, there is no % goal, whether it is per week or per month, my goal as a trader is not to bend the rules of a system to try to get to these hard number goals or find any way i can to get to them since obviously we are at the mercy of the market, my goal is to find or formulate a system that has the average output required to meet these minimum percentage requirements, to find a method or strategy of trading that on average through all market conditions over a period of time will consistently produce a W/L of 75% and 16 trades a month, and there are COUNTLESS systems that produce those results or better including the one i trade, my role as a trader is to basically to find a good system, to do what my system tells me to do, whether it is fundamental or technical through the combination of indicators and price the system analyzes the data for me and tells me the highest probability entry points according to its specifications, how it does that is irrelevant because it leaves my only job to be the one filling orders according to my methods trading specifications, obviously i have to know how and why the system works as i will be the one initially writing the system because i can see the overall profitability right at the start but as far as the individual trades the accurate interpretation of the data into a format i can recognize as entry and exit points is what i need, this eliminates me from the equation entirely (or it should), i think the problem most people have with this kind of thread is preconception, that either it is easily attainable or it absolutely isnt, but we all know it IS possible, so then why cant most people do it??

the fact is there are hundreds if not thousands of people who have turned tiny accounts into millions in a matter of months or years, what sets them apart from us? i myself know a Russian business man who made over 2 million dollars in 2 years starting from a 20K account, and look at this thread, 301 Moved Permanently there are many people who have done this before, therefore i think its illogical to assume its an impossible goal, i think something extremely shocking for me was reading the book “millionaire traders” (i highly recommend it), to find that EVERY SINGLE millionaire trader does nothing different then we do or are supposed to do, the rules they trade by are elementary school of pipsology lessons, so then why is this such an immeasurable goal for people?

This is what we know:
There are people who made millions trading the same systems or types of systems most other traders do

and yet

most traders dont do that well

therefore we can assume that it isnt the system that is the problem it is the trader

and it makes sense, the markets move by psychology, we are the movers of the market, as mass of traders, banks, and governments made up of people we are a part of it all, therefore it is reasonable to assume that to be succesful at trading you really have to be successful at reading psychology, and that managing your own psychology is key, you want to understand why others fail while keeping yourself from making the same mistakes, to say that there are people who cannot fathom or predict mass market psychology makes no sense because MANY people do that every day, that is what fundamental trading is, that’s what Elliot wave theory is, that’s what indicators are, interpreters of the after effects of psychology (that is market movement)

I really have yet to see any reason other than personal ones as to why this is an un-achievable goal, the problems lie with the trader and nothing else in my opinion, i realized just now how ranty and jerkish this post sounds but i just dont understand :expressionless: I started this thread to try to gain concrete reasoning and logic behind why this goal doesnt work for people, why most traders fail, and it would seem so far that all we can come up with is you become rich if you are able to control your own psychology while being able to predict others, and i know that in itself is a difficult goal to achieve but once it is achieved, any number goal is possible, the timeframe for achieving it being irrelivant

I myself have doubled my account in a single day multiple times, but ive also blown half of my account in a day multiple times, that was when i was learning how to trade, i had the technical aspects down and i had formulated a profitable system, yet i would never trade it to its potential, and that was entirely my fault, not the markets, not the systems, my own…

Im not trying to seem argumentative i just want good discussion about this because this is the entire point of trading forex, to be profitable, we need more ideas as to why people fail if we want to avoid it ourselves

10

SithJawa, just be consistant, with your routine (daily ), and your system, the rest will fall into place for ya…

Best of Luck,

11

Please do it, would love to learn from an institutional guy. :slight_smile:

12

Personally, i dont see anything wrong with your figures or your plan - except your timeframe…

I think people start to set themselves up for failure when they give themselves these hypothetical targets which they set for themselves… I think turning $1,000 into $4mil is definately doable, but in a year?!.. If i turned $1,000 into $4mil after 25 years - i’d be happy!

When i first started out (which bare in mind wasn’t too long ago), i had the mindset of wanting to make x% of my account each month. Now i am more at the point where i’m not really fussed or set on a certain % number - i would just like to be consistently profitable and be able to sustain that in the long term… I am currently still in my demo stages, i like to follow the do not risk more than 2% each trade rule, but on one trade i opened 3 seperate positions giving me a trade risking 6% - which granted, it did work out like i planned, that month i made over 25% on my account. Was i happy? of course… The next month however, was a lot tougher, my first two weeks i experienced a lot more losses. All in all, i managed to end the month 2% profit. Was i just as happy? Yes!

I think overall it comes down to risk management and psychology… Could you stomach losing 5% on a trade in month 2 - 5% of $2000 - $100. Sure, no big deal…
But then fastforward to say [I][B]if[/B][/I] you made it to month 10 - losing 5% of $512,000 - $25,600?

I think we are all capable of making a lot of money from the market, but the only thing that holds us back, is us…

I think the moral is, don’t try and shoot for the stars overnight, too often it seems to lead to a crash and burn. If making thousdands and millions was that easy, why aren’t there more millionaires in the world? This is something which will pay off with time - slow and steady wins the race, everytime…

Best of luck :57:

13

I actually agree with what people are saying on here about putting targets on your trading.

The problem with targets is that they are rules and unlike the market it doesn’t have rules. The market is non-linear by nature and is made up by people who are non-linear when you put rules around the market to say I will make 50 pips a day or something similar you are putting linear rules around something that is non-linear. It is like your trying to tame the dragon that can’t be tamed.

If you have a trading method you should only take trades based on your method and only when your method appears. And i mean really appear. Not just um that looks like it. It needs to be like "holy **** that is my method without a doubt. I need to trade this and i will feel like a dummy if i don’t since it is a seemingly comprehensible easy to understand trade based on my method.

The bottom line is - don’t trade to make money or to hit your targets. Only trade when your method appears.

If you have targets the problem is you will start forcing trades that aren’t based on your method to reach your target. Which means you will be taking trades that aren’t that high quality to make up for your pip or money target.

Let me tell you the secret to trading and I have mentioned it before: [I]If your intentions are wrong don’t even bother. The only intention you should have is that a seemingly, comprehensible, easy to understand, and obvious trade has presented itself. There is no other reason to trade!
[/I]
Which means never trade just because you want to make money, or just because you have a target to hit. The money will come when your method, and trading psychology is ready.

Good luck!

— I updated this post since there was a tonne of spelling mistakes…

14

Like a Sniper, plain and simple…

Sometimes I wonder How many traders are hunters… They can sit here for hours and hours, sometimes see a kill, sometimes they dont, and just pack it up, and call it day, not really bothered, because there is always tomorrow…

15

Again, I completely agree with people placing goals for themselves are pointless, all that makes them do is be more prone to bend the rules of whatever system they trade to meet the goals, its unrealistic because you are entirely at the mercy of the market, HOWEVER that is not what i am saying, the market moves by psychology yes, but that isnt quantifiable, thats why we have indicators and systems, because we see recurring themes in psychology and price movement and we create tools to make it easier to understand without having too do hundreds of calculations or speculate, i think the fact that this is a business alone means at some point we need to use cold hard numbers for our gains, I’m not saying to have goals but know what the way you are trading can do, what is its average monthly pip gain? max drawdown? etc etc. The system I trade is very consistently profitable, it worked last week, it worked two months ago, and it worked two years ago, and i know what its gains were at it’s very worst week throughout the past 6 months, what i’m saying is that this system has worked with a consistent level of return even though it is based off of random factors (the market), so i can say with a high level of certainty that it will make a certain amount of money for me every week because it always has, if that makes sense…

http://forums.babypips.com/free-forex-trading-systems/44602-j-w-s-experimental-price-indecision-system.html

16

@DanielFxTradingCircle: This may be weird and i had no idea who it was that posted that somewhere in this forum but that “secret” to trading was one of the things that actually made my trading succeed in the first place :smiley: I never trade now unless my method is 100% with it, no fudging on numbers, and now if I have a reasonable doubt to not make a trade i just stay out, my goal isn’t making money it is being an intelligent trader, so thanks :slight_smile:

17

Thats good to know.

I just post things sometimes that is related to the thread. It wasn’t directed towards you. It was just a general good philosophy.