Thursday, July 9, 2009

Realistic goals

I believe that almost all of inexperienced traders came to trading field with very nice and defined goal: TO MAKE MONEY.  

Is goal of making money in markets realistic or not?

If one just has started with trading, then this is not even remotely realistic goal. Same would be to ask first year medicine student to perform open heart surgery or to ask somebody who just started going for music lessons to play some complex piece by Mozart or Beethoven. 

What would be realistic goal for beginners?

Short answer: Their goal should be to survive for as long as possible.

Long answer: To be around in 10 years time.

Above is table that shows how one could progress as trader. Assumption is made with ALSI trading example in mind and in this scenario there is enough start-capital to trade one contract. (Just a reminder: That start-capital should be, at least, equal to two times margin requirement.) Let’s assume that during first year of trading one makes no profit or loss. After 12 months one improves and learns something about trading, so for the following 6 months he/she makes on average 100 points per month. Time is passing and our novice trader manages to survive for 30 months since first trade was placed and he/she now knows how to trade and he/she is making 1000 points per month on average. This is what the table below is showing us - how the money, despite we are looking into very conservative scenario, is growing exponentially and why is important to consider this as marathon run, as trading is definitely not a sprint. 

Numerous novice traders come to trading and dream about millions they are going to make after first few trades. Sometimes, one could be lucky and make it in a very short period of time and with little effort, but same goes for lotto. 

This is not game of luck - it is game of probabilities. 

* Required capital – As of July 9th, 2009 margin amount equals to R 15,500.00.

If you need an Excel file that you can play with, please contact me by mail or post a comment here on blog.


Anonymous said...

Hi Igor, must say you have a great blog. I'm a futures broker in South Africa and was wondering if we can set up a meeting to see if I can help you with better fees then you are currently paying. Is there an email address that I can contact you?

Hope the market is treating you well!

Alsi Trader said...

Hi Anonymous

Thanks for comment

You can e-mail me at:

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