The truth about trading and money managers
Membre depuis Apr 20, 2014
posts 1
May 04, 2014 at 06:33
I think it all depends on what one is trying to achieve. Obviously if your managing a sizable fund your primary concern will be capital preservation and secondly modest controlled growth. I would agree, 10-40% a year would be considered good (the upper end VERY good). As a Retail trader you might also be looking for capital preservation and controlled growth in terms of percentage gains to your account balance on a weekly/ monthly basis. However, you might also look to compounding of the account balance to make the big increases. One could simply keep ones trade exposure below 1-2% of account balance at all times but as the account compounds, increase the dollar take.
Membre depuis Feb 22, 2011
posts 4862
May 05, 2014 at 12:21
smartguy posted:
Guys,
I've been on MFB for a while and I've read so many dumb stuff that I though I'd write down some basic facts about real life trading.
We're a swiss fund, we've done between 5% and 15% per month for the past 2.5 years and we have 50M in AUM. I decided to stay anonymous and just give this back to the community; we've been using MFB internally a lot and we recruited a few talented guys through MFB.
Market is going to open in 20 minutes, I have some time to kill, believe this topic or not, I won't care.
=================
-> Money Managers : First off, I'd like to talk about money managers... guys... forget about money managers who accept clients with small accounts. If a trader/money manager was good, he wouldn't take any client below 100k - and that's what we're doing. We have nobody below 300k and clients can't test us with less than 100k... not a single $1 below; we don't have time to waste with small investors, we're good traders with good performance.
-> Social Trading : Forget about sites like ZuluTrade or eToro, forget about social trading, we've had some fun with 25k and it doesn't work, even the best traders suck on these platforms. Think about it... eToro gives you about 30$ for each 50 followers you have... so if you have 10 000 followers, you get 6k$ per month; and even the 'best' traders on eToro only have 2k-something followers.
6k per months...... Some of my friends make 2k a day..... they don't even accept clients, they're independent why the heck would they share their trading skills with random people to get an extra 300$ per day ?
-> Leverage : How many time have I heard that using 1:100 or 1:50 leverage is safe.... that you're supposed to make 30% per month on the FX market because of leverage.... and that people 'don't understand how FX works' because they're looking to get 2% per month. The only reason why you have leverage on FX is because it moves less than other financial products (oil, stocks, bonds ...) and that you'd like to make as much money on FX as on the stock market. The reality is that professional people never use these leverages. 80% of the time, we use 1:5 leverage.... 1 to fucking 5.... we never go above 1:20.
Think about losing 5% on a 50M account... that's a 2.5M loss, it doesn't even represent lots of pips if you're on 1:100 or 1:200 leverage.
-> Get rich quickly : that one is the best. People who think they can turn 10k in 25k in x months.... guys wake the fuck up, if you do 20% a year, that's already very good. A wise investor is going to look for a fund that makes between 10 and 40% per year... not per day. And getting good at trading is not a matter of days or week, it takes year, stop thinking you're the smartest guy on the market just because you read babypips and you hang out on the forums once in a while.
-> Brokers : ECN... STP... Trading Desk.... bro they're all the same. When you're a professional trader or fund manager, you actually go to your broker's office to open new accounts, you negotiate the price with them and you have a lunch with their CEO every month.
I can tell you how they work... if you have an online account, if you've never seen them and if you put less than 50k$ on your trading account, your broker is not even going to process your trades. They will 'trade against you', whether you think they are ECN, STP or whatever marketing name you can find online.
Someone who has only 50k to trade is a beginner, 95% of beginners wipe out their account. So instead of making 2000$ in commission, they just don't process your trade and wait until you blow up your account, and then they make 50k.... It has nothing to do with regulators... regulators allow them to do that, they have specific ratios to know how exposed they can be.
-> Back-test, useful or useless? : that is the big question. Most dumb guys who don't know what they're talking about think that back-tests are useless, that they do not represent the reality. Fuck off. Back-tests are very important. An EA for intra-day signals, that process 1 to 10 trades per day, can be backtested easily and will reflect the reality.
You want to avoid believing in back-tests when they show scalping or high-frequency scalping (between 50 and 1000 trades per day). Simply because the data is already on the hard drive, so there is no network latency, thus there is no slippage and when you scalp on 3 - 5 pips, the slippage + commission can quickly cost you the earnings.
-> Bonus : no VPS, we have servers in our broker's datacenter, we have a full rack with our own security and a secondary office in their building. if you need good quality stuff, never use a VPS or some sh*t like that, get investors and buy actual servers.
-> conclusion <-
Traders = it's gonna take a while before you become profitable, between 6 months and 3 years, and you should never target more than 5-10% a month. Anything above it is just too risky - you don't even have to explain me your strategy, I can tell you there's something wrong if you do more than 10% a month. Either your leverage is way too high or you're taking too much risks.
Investors = if you have less than 300k to invest, forget about it, work at mc donald for a while and then invest 300k. Don't put it online, find real life guys who have different strategies, a 6 month+ track-record, overall doing between 10 and 15% per year.
=================
cheers
You are talking bullshit
especially about leverage and brokers
so I doubt you are any swiss fund manager
But I understand you are desperate to get some client so even the bad advertisement is good for you:)
Membre depuis Feb 22, 2011
posts 4862
May 06, 2014 at 07:34
minyu2 posted:
@togr can you elaborate or put some reasons why its bullshit?
The whole paragraph about leverage is BS. You do not need to use low leverage to control the risk. There are much sophisticated tools/money management approaches allowing you to benefit from high leverage.
The whole paragraph about brokers is bullshit. You do not need to go for lunch with broker CEO. You need stable broker with good reputation, high leverage, low spreads and fast execution.
The guy is just trying to impress the audience but has no proper knowledge.
May 06, 2014 at 17:16
@togr as I understand it, we can always benefit from higher leverage if we always win. But like @smartguy said, imagine losing 5% on 50M account. So can I ask, how much leverage would you recommend for let say above 50k account and what sophisticated tools that allow us to benefit from the high leverage?
Wait for it
Membre depuis Feb 22, 2011
posts 4862
May 06, 2014 at 21:32
minyu2 posted:
@togr as I understand it, we can always benefit from higher leverage if we always win. But like @smartguy said, imagine losing 5% on 50M account. So can I ask, how much leverage would you recommend for let say above 50k account and what sophisticated tools that allow us to benefit from the high leverage?
@minyu2
We can always benefit from trading only if we wins more than loose.
But you can of course benefit from higher leverage also when you win more often than loose, not always.
High leverage allows you to make higher profit with the same capital than with low leverage.
Equity protection is something completely different. You do NOT NEED LOW LEVERAGE to protect your account.
You need high leverage to have high gains with low capital.
May 07, 2014 at 13:28
@togr Why equity protection is something different? yes, using higher leverage allow me to make higher profit. But only when I win. In case I lose, I will lose more also right?
For example, trader A use no leverage and trader B use 1:5 leverge. Both have the same capital of $10,000. Pip Value equals $100.
Scenario 1: trade hit TP 10 pips. Trader A gain $1,000 and Trader B gain $5,000. Balance trader A $11,000 and B $15,000.
Scenario 2: Hit SL -10 pips. Trader A lose $1,000 and trader B lose $5,000. Balance trader A $9,000 and B $5,000.
Using the above example, trader B would crashed the account after 2 consecutive losses. Therefore exercising lower leverage would help us to survive during losing period. Please correct me if i'm wrong with this example.
I think I need high leverage to be able to trade at all. It give retail traders with low capital the opportunity to trade.
For example, trader A use no leverage and trader B use 1:5 leverge. Both have the same capital of $10,000. Pip Value equals $100.
Scenario 1: trade hit TP 10 pips. Trader A gain $1,000 and Trader B gain $5,000. Balance trader A $11,000 and B $15,000.
Scenario 2: Hit SL -10 pips. Trader A lose $1,000 and trader B lose $5,000. Balance trader A $9,000 and B $5,000.
Using the above example, trader B would crashed the account after 2 consecutive losses. Therefore exercising lower leverage would help us to survive during losing period. Please correct me if i'm wrong with this example.
I think I need high leverage to be able to trade at all. It give retail traders with low capital the opportunity to trade.
Wait for it
Membre depuis Feb 22, 2011
posts 4862
May 07, 2014 at 14:58
@minyu2
Equity protection is something different.
You can monitor equity and close all trades when e.g. there is 15% drop.
You can use SL/TP per position as well.
Low leverage does mean you need more money to trade the same amount.
Equity protection is something different.
You can monitor equity and close all trades when e.g. there is 15% drop.
You can use SL/TP per position as well.
Low leverage does mean you need more money to trade the same amount.
May 07, 2014 at 19:28
@togr Yes, I'm sure we all know about using SL/TP. Nothing sophisticated about that.
Okay, so margin requirement is higher using low leverage compared to high leverage when trading the same amount.
But I'm confuse. I thought your point with high leverage is to trade with higher amount also.
Otherwise the only difference is margin requirement, while P/L stays the same.
Which if this is the case then it doesn't explain how high leverage allow me to have higher gains.
Would you agree?
Okay, so margin requirement is higher using low leverage compared to high leverage when trading the same amount.
But I'm confuse. I thought your point with high leverage is to trade with higher amount also.
Otherwise the only difference is margin requirement, while P/L stays the same.
Which if this is the case then it doesn't explain how high leverage allow me to have higher gains.
Would you agree?
Wait for it
Membre depuis Feb 22, 2011
posts 4862
May 07, 2014 at 21:42
(édité May 07, 2014 at 21:42)
minyu2 posted:
@togr Yes, I'm sure we all know about using SL/TP. Nothing sophisticated about that.
Okay, so margin requirement is higher using low leverage compared to high leverage when trading the same amount.
But I'm confuse. I thought your point with high leverage is to trade with higher amount also.
Otherwise the only difference is margin requirement, while P/L stays the same.
Which if this is the case then it doesn't explain how high leverage allow me to have higher gains.
Would you agree?
You still do not understand it.
Let's say you have SL and TP 10 pips.
You margin requirement with leverage 1:1 for 1 lot EURUSD would be 138000
with lvrg 1:10 13800
1:100 1380
1:1000 138.
So with leverage 1:1000 you can trade 1 lot of EURUSD with margin just $138 so you need account balance let's say 10,000
to trade 1 lot without lvrg you need $138000 so you need 1000,000 balance.
While in both cases your profit would be $100.
With leverage it is 1% profit
Without it is 0.001% profit.
I am done explaining these very basics:)
May 07, 2014 at 22:26
smartguy posted:like the sistematic point of view
Guys,
I've been on MFB for a while and I've read so many dumb stuff that I though I'd write down some basic facts about real life trading.
We're a swiss fund, we've done between 5% and 15% per month for the past 2.5 years and we have 50M in AUM. I decided to stay anonymous and just give this back to the community; we've been using MFB internally a lot and we recruited a few talented guys through MFB.
Market is going to open in 20 minutes, I have some time to kill, believe this topic or not, I won't care.
=================
-> Money Managers : First off, I'd like to talk about money managers... guys... forget about money managers who accept clients with small accounts. If a trader/money manager was good, he wouldn't take any client below 100k - and that's what we're doing. We have nobody below 300k and clients can't test us with less than 100k... not a single $1 below; we don't have time to waste with small investors, we're good traders with good performance.
-> Social Trading : Forget about sites like ZuluTrade or eToro, forget about social trading, we've had some fun with 25k and it doesn't work, even the best traders suck on these platforms. Think about it... eToro gives you about 30$ for each 50 followers you have... so if you have 10 000 followers, you get 6k$ per month; and even the 'best' traders on eToro only have 2k-something followers.
6k per months...... Some of my friends make 2k a day..... they don't even accept clients, they're independent why the heck would they share their trading skills with random people to get an extra 300$ per day ?
-> Leverage : How many time have I heard that using 1:100 or 1:50 leverage is safe.... that you're supposed to make 30% per month on the FX market because of leverage.... and that people 'don't understand how FX works' because they're looking to get 2% per month. The only reason why you have leverage on FX is because it moves less than other financial products (oil, stocks, bonds ...) and that you'd like to make as much money on FX as on the stock market. The reality is that professional people never use these leverages. 80% of the time, we use 1:5 leverage.... 1 to fucking 5.... we never go above 1:20.
Think about losing 5% on a 50M account... that's a 2.5M loss, it doesn't even represent lots of pips if you're on 1:100 or 1:200 leverage.
-> Get rich quickly : that one is the best. People who think they can turn 10k in 25k in x months.... guys wake the fuck up, if you do 20% a year, that's already very good. A wise investor is going to look for a fund that makes between 10 and 40% per year... not per day. And getting good at trading is not a matter of days or week, it takes year, stop thinking you're the smartest guy on the market just because you read babypips and you hang out on the forums once in a while.
-> Brokers : ECN... STP... Trading Desk.... bro they're all the same. When you're a professional trader or fund manager, you actually go to your broker's office to open new accounts, you negotiate the price with them and you have a lunch with their CEO every month.
I can tell you how they work... if you have an online account, if you've never seen them and if you put less than 50k$ on your trading account, your broker is not even going to process your trades. They will 'trade against you', whether you think they are ECN, STP or whatever marketing name you can find online.
Someone who has only 50k to trade is a beginner, 95% of beginners wipe out their account. So instead of making 2000$ in commission, they just don't process your trade and wait until you blow up your account, and then they make 50k.... It has nothing to do with regulators... regulators allow them to do that, they have specific ratios to know how exposed they can be.
-> Back-test, useful or useless? : that is the big question. Most dumb guys who don't know what they're talking about think that back-tests are useless, that they do not represent the reality. Fuck off. Back-tests are very important. An EA for intra-day signals, that process 1 to 10 trades per day, can be backtested easily and will reflect the reality.
You want to avoid believing in back-tests when they show scalping or high-frequency scalping (between 50 and 1000 trades per day). Simply because the data is already on the hard drive, so there is no network latency, thus there is no slippage and when you scalp on 3 - 5 pips, the slippage + commission can quickly cost you the earnings.
-> Bonus : no VPS, we have servers in our broker's datacenter, we have a full rack with our own security and a secondary office in their building. if you need good quality stuff, never use a VPS or some sh*t like that, get investors and buy actual servers.
-> conclusion <-
Traders = it's gonna take a while before you become profitable, between 6 months and 3 years, and you should never target more than 5-10% a month. Anything above it is just too risky - you don't even have to explain me your strategy, I can tell you there's something wrong if you do more than 10% a month. Either your leverage is way too high or you're taking too much risks.
Investors = if you have less than 300k to invest, forget about it, work at mc donald for a while and then invest 300k. Don't put it online, find real life guys who have different strategies, a 6 month+ track-record, overall doing between 10 and 15% per year.
=================
cheers
Membre depuis Feb 22, 2011
posts 4862
May 08, 2014 at 19:07
minyu2 posted:
@togr i thought we're having a good discussion. Too bad you still haven't share your sophisticated tools you mentioned. Thanks anyway. Appreciate you spent time on this topic.
What tool do you mean?
May 08, 2014 at 22:40
smartguy posted:
Guys,
I've been on MFB for a while and I've read so many dumb stuff that I though I'd write down some basic facts about real life trading.
We're a swiss fund, we've done between 5% and 15% per month for the past 2.5 years and we have 50M in AUM. I decided to stay anonymous and just give this back to the community; we've been using MFB internally a lot and we recruited a few talented guys through MFB.
Market is going to open in 20 minutes, I have some time to kill, believe this topic or not, I won't care.
=================
-> Money Managers : First off, I'd like to talk about money managers... guys... forget about money managers who accept clients with small accounts. If a trader/money manager was good, he wouldn't take any client below 100k - and that's what we're doing. We have nobody below 300k and clients can't test us with less than 100k... not a single $1 below; we don't have time to waste with small investors, we're good traders with good performance.
-> Social Trading : Forget about sites like ZuluTrade or eToro, forget about social trading, we've had some fun with 25k and it doesn't work, even the best traders suck on these platforms. Think about it... eToro gives you about 30$ for each 50 followers you have... so if you have 10 000 followers, you get 6k$ per month; and even the 'best' traders on eToro only have 2k-something followers.
6k per months...... Some of my friends make 2k a day..... they don't even accept clients, they're independent why the heck would they share their trading skills with random people to get an extra 300$ per day ?
-> Leverage : How many time have I heard that using 1:100 or 1:50 leverage is safe.... that you're supposed to make 30% per month on the FX market because of leverage.... and that people 'don't understand how FX works' because they're looking to get 2% per month. The only reason why you have leverage on FX is because it moves less than other financial products (oil, stocks, bonds ...) and that you'd like to make as much money on FX as on the stock market. The reality is that professional people never use these leverages. 80% of the time, we use 1:5 leverage.... 1 to fucking 5.... we never go above 1:20.
Think about losing 5% on a 50M account... that's a 2.5M loss, it doesn't even represent lots of pips if you're on 1:100 or 1:200 leverage.
-> Get rich quickly : that one is the best. People who think they can turn 10k in 25k in x months.... guys wake the fuck up, if you do 20% a year, that's already very good. A wise investor is going to look for a fund that makes between 10 and 40% per year... not per day. And getting good at trading is not a matter of days or week, it takes year, stop thinking you're the smartest guy on the market just because you read babypips and you hang out on the forums once in a while.
-> Brokers : ECN... STP... Trading Desk.... bro they're all the same. When you're a professional trader or fund manager, you actually go to your broker's office to open new accounts, you negotiate the price with them and you have a lunch with their CEO every month.
I can tell you how they work... if you have an online account, if you've never seen them and if you put less than 50k$ on your trading account, your broker is not even going to process your trades. They will 'trade against you', whether you think they are ECN, STP or whatever marketing name you can find online.
Someone who has only 50k to trade is a beginner, 95% of beginners wipe out their account. So instead of making 2000$ in commission, they just don't process your trade and wait until you blow up your account, and then they make 50k.... It has nothing to do with regulators... regulators allow them to do that, they have specific ratios to know how exposed they can be.
-> Back-test, useful or useless? : that is the big question. Most dumb guys who don't know what they're talking about think that back-tests are useless, that they do not represent the reality. Fuck off. Back-tests are very important. An EA for intra-day signals, that process 1 to 10 trades per day, can be backtested easily and will reflect the reality.
You want to avoid believing in back-tests when they show scalping or high-frequency scalping (between 50 and 1000 trades per day). Simply because the data is already on the hard drive, so there is no network latency, thus there is no slippage and when you scalp on 3 - 5 pips, the slippage + commission can quickly cost you the earnings.
-> Bonus : no VPS, we have servers in our broker's datacenter, we have a full rack with our own security and a secondary office in their building. if you need good quality stuff, never use a VPS or some sh*t like that, get investors and buy actual servers.
-> conclusion <-
Traders = it's gonna take a while before you become profitable, between 6 months and 3 years, and you should never target more than 5-10% a month. Anything above it is just too risky - you don't even have to explain me your strategy, I can tell you there's something wrong if you do more than 10% a month. Either your leverage is way too high or you're taking too much risks.
Investors = if you have less than 300k to invest, forget about it, work at mc donald for a while and then invest 300k. Don't put it online, find real life guys who have different strategies, a 6 month+ track-record, overall doing between 10 and 15% per year.
=================
Very interesting article
cheers
May 10, 2014 at 07:30
The whole paragraph about leverage is BS. You do not need to use low leverage to control the risk. There are much sophisticated tools/money management approaches allowing you to benefit from high leverage.
The whole paragraph about brokers is bullshit. You do not need to go for lunch with broker CEO. You need stable broker with good reputation, high leverage, low spreads and fast execution.
The guy is just trying to impress the audience but has no proper knowledge.
@togr tools to allow me to benefit from high leverage i mean.
Wait for it
Membre depuis Feb 22, 2011
posts 4862
May 10, 2014 at 12:27
For high leverage you need good broker
To make profit you need good system like mine :)
https://www.myfxbook.com/members/togr/caesar-400-eurusd/662462
To protect equity there are many tools like this https://www.ea-coder.com/forex-software/equity-sentry-free-mt4-ea/
To make profit you need good system like mine :)
https://www.myfxbook.com/members/togr/caesar-400-eurusd/662462
To protect equity there are many tools like this https://www.ea-coder.com/forex-software/equity-sentry-free-mt4-ea/
May 11, 2014 at 12:26
togr posted:
For high leverage you need good broker
To make profit you need good system like mine :)
https://www.myfxbook.com/members/togr/caesar-400-eurusd/662462
To protect equity there are many tools like this https://www.ea-coder.com/forex-software/equity-sentry-free-mt4-ea/
@togr great performance. added to watchlist.
Wait for it
Membre depuis Feb 22, 2011
posts 4862
May 12, 2014 at 08:19
@minyu2
thanks
thanks
Jul 20, 2014 at 11:55
The best long term FX trader I have seen so far uses maximum leverage of 1:2 to 1:3 . It occasionally happens that he uses 1:5 and that is not for making profit !! It is only the last shot for recovering losses on that single trade . using this low leverage, still he is making 5-10% per month .
