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10k is plenty, you're forgetting leverage; equities I think is generally around 3x, futures usually offer around 10x leverage, forex in U.S. 50x, forex outside

10k is plenty, you're forgetting leverage; equities I think is generally around 3x, futures usually offer around 10x leverage, forex in U.S. 50x, forex outside of the US, 200x plus.

sokoloff 11y ago
Calculate out what the projected hourly rate might be, after discounting the gains on a broad-based index fund. If you can get 30% annually instead of 10%, that extra 20% on $10K would be $2000. If you worked just 200 hours in a year (seems a low estimate), that's a $10/hr "job" and you have a non-trivial risk of a substantial drawdown during the year that could put you near out of "business" (as happened in the article). Borrowing on margin, you're going to pay at least 7.5%, so if you're borrowing to 3x, you're paying 15% on your account balance. (Small margin loans are higher rate.) - [1] Forex doesn't have the margin loan problem, but you can't generate much income on a $10K yen/USD carry trade. Round trip commissions will be a much higher drag on a $10K portfolio than a $500K portfolio. If you have the talent to develop an algorithmic trading system that can 3x the market, you can make more than $10/hr in any number of easier and riskless manners. 1 - https://us.etrade.com/investing-trading/pricing-rates#margin https://us.etrade.com/investing-trading/pricing-rates#margin
- gnaritas 11y ago
  What it calculates per hour as a job has nothing to do with anything; you said 10k wasn't enough to overcome fees, that's absurd, 10k is plenty to invested and get a healthy return from and far better than 30% annually, hell I made 35% last month and I didn't work an hour for it. Beat the market is a meaningless scare tactic used by those that don't understand being small has enormous advantages over being large and "the market" returns are what large institutions struggle to beat, small traders destroy the market constantly because being small is easier. Returns decrease as capital increases so it doesn't scale up.
  - sokoloff 11y ago
    > What it calculates per hour as a job has nothing to do with anything; you said 10k wasn't enough to overcome fees, that's absurd I agree that is absurd, but I said no such thing. I don't think it's a sensible use of time, but of course you can beat just the fees.
    - gnaritas 11y ago
      You said > You'd need to have a huge edge (extremely unlikely) to make money after fees with only $10k. No you don't. 10k is plenty to make money, equities aren't the only market and paying the spread is trivial. Beyond that you're overestimating the time it takes; what do I care how many CPU cycles my computer spends watching the market? For a programmer, algo trading is trivially easy and a fun hobby so that time isn't work anyway and it's only a few hundred lines of code to work up a strategy, it's not exactly a big investment of time.
      - sokoloff 11y ago
        No, I didn't say that. jeffreyrogers said that. I said you were better off taking a side job and I still believe that to be true from an economic point of view.
        gnaritas 11y ago
        My bad on the mistaken identity. Side jobs require my time, robots don't, they aren't comparable. I'm better off working no side job and letting a robot earn money on the side because that's simply better even if the bot earns less than I would on a side job. Selling labor is not economically preferable to free money.

10k is plenty, you're forgetting leverage; equities I think is generally around 3x, futures usually offer around 10x leverage, forex in U.S. 50x, forex outside of the US, 200x plus.

sokoloff 11y ago

Calculate out what the projected hourly rate might be, after discounting the gains on a broad-based index fund. If you can get 30% annually instead of 10%, that extra 20% on $10K would be $2000. If you worked just 200 hours in a year (seems a low estimate), that's a $10/hr "job" and you have a non-trivial risk of a substantial drawdown during the year that could put you near out of "business" (as happened in the article). Borrowing on margin, you're going to pay at least 7.5%, so if you're borrowing to 3x, you're paying 15% on your account balance. (Small margin loans are higher rate.) - [1] Forex doesn't have the margin loan problem, but you can't generate much income on a $10K yen/USD carry trade. Round trip commissions will be a much higher drag on a $10K portfolio than a $500K portfolio. If you have the talent to develop an algorithmic trading system that can 3x the market, you can make more than $10/hr in any number of easier and riskless manners. 1 - https://us.etrade.com/investing-trading/pricing-rates#margin https://us.etrade.com/investing-trading/pricing-rates#margin

gnaritas 11y ago
What it calculates per hour as a job has nothing to do with anything; you said 10k wasn't enough to overcome fees, that's absurd, 10k is plenty to invested and get a healthy return from and far better than 30% annually, hell I made 35% last month and I didn't work an hour for it. Beat the market is a meaningless scare tactic used by those that don't understand being small has enormous advantages over being large and "the market" returns are what large institutions struggle to beat, small traders destroy the market constantly because being small is easier. Returns decrease as capital increases so it doesn't scale up.
- sokoloff 11y ago
  > What it calculates per hour as a job has nothing to do with anything; you said 10k wasn't enough to overcome fees, that's absurd I agree that is absurd, but I said no such thing. I don't think it's a sensible use of time, but of course you can beat just the fees.
  - gnaritas 11y ago
    You said > You'd need to have a huge edge (extremely unlikely) to make money after fees with only $10k. No you don't. 10k is plenty to make money, equities aren't the only market and paying the spread is trivial. Beyond that you're overestimating the time it takes; what do I care how many CPU cycles my computer spends watching the market? For a programmer, algo trading is trivially easy and a fun hobby so that time isn't work anyway and it's only a few hundred lines of code to work up a strategy, it's not exactly a big investment of time.
    - sokoloff 11y ago
      No, I didn't say that. jeffreyrogers said that. I said you were better off taking a side job and I still believe that to be true from an economic point of view.
      - gnaritas 11y ago
        My bad on the mistaken identity. Side jobs require my time, robots don't, they aren't comparable. I'm better off working no side job and letting a robot earn money on the side because that's simply better even if the bot earns less than I would on a side job. Selling labor is not economically preferable to free money.