I was asked a couple of questions by Pete in a comment on one of my Daily Trade Plans.
I like so much your blog, but just wonder how did you got there, did you blew your account several times? what was your path?
My path so far has been nothing special or different to many I suspect.
I have not blown my account during my journey, I am a financially risk adverse person, so I have always kept my risk to around 1% of my account.
This can be a double edged sword, whilst learning and developing an edge, it is a good protection from blowing accounts, but once one develops an edge, it can make it hard to start compounding a smaller sized account.
Personally, I prefer this method, as I had a limited size pot to start with, and blowing it would be a possible game ending situation.
The biggest draw down from start to date was around 33%, when I was developing my edge.
How much do you think one needs to making a living out of it even if i know there is an edge to get first; i mean how much you think ones need to get in there without getting too much risk with what you said before ( 6000e per lot )
This is a question I myself looked for an answer to in the first year of learning to trade, and could never find a satisfactory answer to. I am afraid I will disappoint you as well. The answer is depending, as there a few factors that one has to consider.
1. What is the expectancy. How much return we expect from the trading system.
2. What is the frequency of system. This has a massive effect on the returns. An edge that gives 5 opportunities a day will give a massive different return to an edge with the same expectancy that only gives a 5 opportunities a week.
3. How much we risk per trade. One system will give a very different return profile, when risk 1% and when risking 5%. When I say risk profile I mean return, likely draw downs and risk of ruin.
All these can have a massive difference to the amount of money returned, therefore will in turn effect the starting amount needed to make a living. And all this ignores what amount of money constitutes a decent or okay living standard.
Example of how frequency effects returns.
This is a Monte Carlo simulation of 500 trades, based on a 57% win rate and a 1.3 RR and an average frequency of 2.82 trades per day and starting balance of 10000, and 1% risk.
Starting from Monday 30th May, and finishing at 3rd April 2017 (roughly 10 months), based off 5 runs of the simulation, the return is between 14181 and 19797 not including the 10,000 we started with. With a draw down of between 6 to 8%.
Therefore, over that period an average of 1418 to 1979 per month. Of course this does not take account that the first months are going to be smaller and the later months larger due to the compounding effect. This is just an average.
Now this is the same simulation with the same figures expect that the frequency is now an average of 5 trades per week.
Starting from Monday 30th May, and finishing at 18th October 2018 (roughly 29 months), based off 5 runs of the simulation, the return is between 15460 and 22944 not including the 10,000 we started with. With a draw down of between 5 to 7%. So a very similar returns profile as the first simulation, which is to be expected.
But the average monthly (using the same caveats as before) return is 533-791.
And neither of these simulations is taking in account any withdraws, just the return if we compound the funds.
All of the above examples are not even looking at possible differences in expectancy or risk amounts.
This is why it so hard to answer your question and why I never got an answer myself when I looked. As it is a chicken and egg situation. You need to know your edge, frequency and risk and what you want to withdraw at a minimum then we can work out how much we need to start with.
I know this is unsatisfactory, but I would rather be straight than give you some bullshit answer.
Good luck with your trading.