proprietary trading Archives - Algorithmic and Mechanical Forex Strategies

How to make a 140% return when you only earn 20% annually

November 1, 2016 by Shaun Overton 9 Comments

Trading at home, being your own boss, having real financial freedom. That’s why most people get involved with forex.

The average trader has less than $5,000 in his account. You’re thinking that you need to make well above 100% annual returns for YEARS before trading could possibly provide an income to live off of.

How are you going to make it big?

You are setting the bar WAY too high. You don’t need to shoot for returns of a million bajillion percent per year to make a lot of money. Most institutional investors would kill for 20% a year.

How can I amplify my 20% annual returns?

Let’s do some simple math. You make 20% per year on your $5,000 trading account. That’s a profit of $1,000.

But, I said you could make a 140% return on your trading account. If you have an account with $5,000 in it, that’s a total profit of $7,000. You start the year with $5,000. You finish the year with $12,000.

So far, I’ve only calculated the first $1,000 of profit. Where’s the remaining $6,000? Where is that coming from?

You trade other people’s money to increase your own profit.

Say that you’re like Amir Samih from Egypt and that you received an allocation of $120,000. You earn 20% annually on the allocation, of which you get to keep 25%.

$120,000 * 20% annual return = $24,000 annually
You get to keep 25% of $24,000, which is $6,000.

You make $1,000 trading your own money. You make $6,000 trading the allocation.

Voila – you make $7,000 a year in profit with only $5,000 in your account. $5,000 becomes $12,000 in only one year. A 20% annual return magnifies 7x by having investors.

How am I going to get an investor?

Not the way you’re thinking. Trading money for other people is a highly regulated industry. In the United States, for example, you have to register with the NFA. In Europe, you have to follow MiFID II regulations. All of this requres a serious time commitment to find people willing to invest in your trading skills.

Even worse, you would have to raise at least $10 million dollars to offset your regulatory costs. That’s totally out of reach for most people.

You don’t need to shoot for returns of a million bajillion percent per year to make a lot of money.

The best way for you, the stay at home trader, to raise money is by signing up for free with TopTradr. TopTradr is a specialized proprietary trading firm that discovers hidden talent and backs that talent with its own money.

It’s a pure meritocracy. You don’t need to do any sales or marketing. You don’t need to meet any education or experience requirements. You’ll never be asked for a CV.

Trade well, make a profit and you’ll earn points on Top Tradr. The more points you earn and the longer your track record, the more money you’ll be able to receive and apply towards trading.

How are points awarded?

The exact formula is not publicly shared to avoid traders trying to game the system. That said, the allocation rules are very straight forward. You need to be profitable. You need to be consistent.

Here are some specifics on how to maximize your chances of winning an allocation.

You need to be positive on the period to have a score above 100.
For each trade you get points based on the % returns of the trade and the risk / reward of that trade. If the drawdown is 10pts and you get 100pts out of the trade, you get a lot of points. If you get 100pts but have 500pts of drawdown, the trade will score much lower.
The sum of your points is then factored by the consistency of your daily equity growth. If you are up one day 10% then down 20% then up 30% and are not consistent, this factor will be low. If you do 2% every month, then this factor will be sky high.

Does this cost money?

No. The program is 100% free to participate. In order for TopTradr to find talented traders, the service must always remain open to the general public free of charge.

How do I participate?

Sign up using the form below. You will create a TopTradr profile and receive instructions for how to hook your live forex trading account up to TopTradr. Everything after that is completely automatic. TopTradr watches your live trading and assigns you points. When you earn enough points, you receive automatic allocations every 2 weeks. When you earn a profit, you receive 25% of the total profit once per quarter.

Are you ready to magnify your returns by trading TopTradr’s money? Click here to get started.

How Amir Samih Got a $120,000 Trading Allocation

October 21, 2016 by Shaun Overton 2 Comments

What is the basic distinction between a professional trader and an amateur? Money!

It’s tempting to make the professional-amateur distinction more complicated than it needs to be. Professional brings to mind ideas like sophisticated strategies, hedge funds and private jets. When you boil the essence of a pro to its core, it’s really about the amount of money that you have available to trade.

The average retail forex trader has $5,000 in his account. But even that is misleading. The median account size is only $2,000. For every 15 traders with $1,000 in their accounts, there’s maybe 1 guy with more than $25,000 in his account. Barring miraculous returns, there’s almost no chance of the typical retail forex trader to get to a professional level only through profits in the market.

The fastest way to trade at a professional level is to trade for other people. Even that can be very complicated. There’s licensing. There’s regulation. There’s the hassle of dealing with customers.

Unless…. You trade with TopTradr. Here’s the deal:

Trade your live forex account with at least $1,000
Earn a smooth, steady return
Get funded by TopTradr

It costs nothing to sign up. Just do your thing. When you’re successful, you’re eligible to receive an allocation from TopTradr.

How much money can I manage?

Egypt
Everything at Top Tradr is a meritocracy. Do a great job trading and you’ll get an allocation in line with your talent.

Amir Samih lives in Egypt where the average annual income is less than $6,000. Unemployment among men is a major social problem and runs at 8.5%. But it’s even worse when you consider the types of jobs available. Many work in limited opportunity sectors like agriculture or tourism. There aren’t many jobs. The jobs that are available generally suck.

Amir overcame these challenges to earn himself an allocation of $120,000 from TopTradr.

As a trader with a 25% profit share, how far do you think that goes to giving him a great quality of life?

How TopTradr Can Make You A Professional Trader

Your one and only job is to make a profit in the forex market. Your trading style isn’t important to TopTradr.

Manual traders are welcome. EA traders are welcome. Scalpers are welcome. Style isn’t what gets you points.

Profits gets you points at TopTradr. And, more to the point, how you profit gets you points.

TopTradr is looking for traders who are consistently profitable and utilize a low amount of leverage. Use stop losses on every trade. Avoid high-risk strategies like Martingale (i.e., you need to have an opinion on the market). It’s all common sense to anyone that’s traded for a few months.

After you earn a profit, you get paid 25% of the profits on a quarterly basis. There are no fees to sign up and no hidden charges.

Amir overcame these challenges to earn himself an allocation of $120,000 from TopTradr.

Interested? Follow these three easy steps:

Click HERE now and create a TopTradr profile.
Then click HERE and create a STO broker account. Take advantage of their 30% deposit welcome bonus today.
Then return to your TopTradr profile and link your account.

Once your profits start accruing in your STO account, you’ll automatically earn points with TopTradr. Points and consistent profits will lead to an automatic allocation from TopTradr of at least $10,000.

How often will TopTradr pay out a profit share?

A 25% performance fee will be paid to you quarterly when you receive an allocation

What’s the minimum allocation that you will assign me?

$10,000 is the minimum allocation that you will receive.

Am I guaranteed to receive an allocation?

TopTradr is a meritocracy. Only the best, profitable traders receive allocations.

What do I have to do to receive an allocation?

You need to have a TopTradr account and live trading account at STO. After that, all you need to do is trade the forex market profitably. Trading allocations at STO occur automatically and are paid out automatically.

How are TopTradr points awarded?

The exact formula is not publicly shared to avoid traders trying to game the system. That said, the allocation rules are very straight forward. You need to be profitable. You need to be consistent. Would you want to invest in you? If the answer is yes, then there’s a good chance the TopTradr ranking system will award you points in proportion to your talent.

Here are some specifics on how to maximize your chances of winning an allocation.

You need to be positive on the period to have a score above 100.
For each trade you get points based on the % returns of the trade and the risk / reward of that trade. If the drawdown is 10pts and you get 100pts out of the trade, you get a lot of points. If you get 100pts but have 500pts of drawdown, the trade will score much lower.
The sum of your points is then factored by the consistency of your daily equity growth. If you are up one day 10% then down 20% then up 30% and are not consistent, this factor will be low. If you do 2% everyday, then this factor will be high

Click here to register for a TopTradr account right now. It’s completely free to enter and you’ll automatically be graded for a possible allocation.

The Big Switch

February 1, 2016 by Shaun Overton 60 Comments

I moved all of my trading funds into Dominari this month.

I’ve been talking about this system ever since I start live demo testing back in November. Needless to say, I’ve been extremely satisfied with the live results.

My initial live account started trading on January 4 with a starting balance of €1,000 at Pepperstone. Once I saw that the live trades matched my expectations, I quickly kicked that account balance up to a total of €10,000.

And because I want to test the effect of broker selection, I threw another $5,000 in an FXCM account. The Pepperstone account contains the bulk of the money and runs the MT4 version of the strategy. The FXCM version uses Seer, which has been more of a pain to get running smoothly, though I can say that it’s still my favorite platform for testing ideas.

The cost non-problem

The equity curve of the Dominari without trading costs from 2013-2015.

My biggest concern about launching the strategy live was trading costs. Some back of the envelope math suggested that everything would be ok. Live demo testing indicated that it would be ok. But you never really know until you start trading live.

Through the month of January, I’ve consistently monitored the commissions relative to the profit. I fluctuates up and down with the trading account, but I estimate that the spread commission costs are approximately 20-25% of the profit. That’s a relatively high percentage, although it’s nowhere near as bad as it could be given the extreme trading frequency.

Dominari is a high-frequency strategy that averages about 49 trades per day on 28 currency pairs. Everything happens so fast in the account that I’m hard pressed to remember any individual trades. Dominari executed more than 900 trades in the month of January alone. It’s dizzying watching the equity fluctuate up and down. The important thing is that the trend moves from the lower left to the upper right.

QB Pro?

It’s not dead. I still believe it’s a great strategy and totally worthy of your trading. In fact, both Dominari and QB Pro depend critically on one of my favorite indicators, the SB Score.

The reason I got into algorithmic trading is that it emotionally separates me from the responsibility for the outcome. If I have a losing month, it’s just the strategy. There’s not much to do about that.

When there’s an element of discretion, it’s difficult to separate the random component. Sometimes you win, sometimes you lose, but you generally expect to make money. When there’s discretion in an algorithmic strategy, it’s very difficult to know whether losses are my fault or simple bad luck.

QB Pro depends on the manual portfolio selection. Not surprisingly, I heavily favor Dominari because the portfolio selection is static. I can say with my hand over my heart that Dominari is a black box, fully algorithmic strategy.

I’m still updating the portfolio over at Seer Hub and will continue making the selections for clients. For clients that are in the managed account at Pepperstone, I switched the strategy in the middle of the month. I feel responsible as the manager to give clients the best possible performance. And since that’s where I’m placing ~$16,000 of my own money, I feel a fiduciary duty to do the same for my customers. Dominari is where I believe the best opportunity lies.

How you can get Dominari

I plan to offer Dominari as trading signals to anyone with a MetaTrader account within the next month or so. A lot of hard work has gone into developing the strategy. And while I’m confident to the tune of $16,000 of my own money, I want to be even more certain before I release Dominari to a wider audience.

What do you think of the results so far? Leave your thoughts in the comments area below.

How To Pull Profits Like A Pro

December 16, 2014 by Eddie Flower 4 Comments

As mentioned in a previous article about managing your forex venture like a “prop trading” business, using maximum leverage can truly minimize your at-risk capital. Successful prop traders leverage their accounts and risk every dime of allocated capital each month.

The idea is that a winning trading system will accrue profits quite rapidly, but if the position sizes are increased along with the expanding account size, eventually a “blow up” will intervene to cause a steep drawdown.

The key is to mechanically limit the amount of capital allowed to accumulate in the trading account during winning periods. Prop traders set a par account size, and at the end of each month they “sweep” the overflow from gains into a separate, non-trading account. The account opens each new trading month at the same par size.

By doing so, gains are preserved intact while serious drawdowns are limited to the account’s monthly highwater mark. Profits from winning months are retained, and are protected from risk.

Setting a limit on capital at risk reduces the risk of a trading system “blow up”

By sweeping excess cash from the account, a prop trader reduces the risk from a catastrophic drawdown. The traditional practice of small, independent traders is to treat the entire account as a single unit which they attempt to grow as large as possible. Yet, this can be dangerous.

At some point, every system suffers a “blow up.” When this happens, everything may be lost if the trader hasn’t stashed away some of the previous profits. Prop traders avoid this catastrophic scenario by limiting the trading account size.

As a trading account grows, the savvy prop trader pulls profits out in order to keep them safe. For example, at the end of a given month, assume that a trading account whose par value has been set at $5,000 may now total $6,00. So, the overflow $2,500 is swept into a separate account not accessible for trading or margin.

The trader then begins the new month with the par $5,000 and once again the account should begin to accrue gains at the same consistent rate, by using the same trading system.

Crazy margin for outsize gains

By trading a winning system while using maximum leverage and limiting the amount of capital at risk, an entrepreneurial prop trader can harvest profits from a wide range of forex markets. And, traders who are supported by prop shops have access to highly sophisticated risk-management tools to help them grow even faster.

The Basics Of Prop Trading

November 24, 2014 by Eddie Flower 4 Comments

Shaun’s been attracting plenty of attention based on the recent performance in his high risk account, which parallels a proprietary trading scenario. Sometimes also called “prop trading,” the term generally refers to a range of opportunities offered by an investment fund or speculative firm to individuals who trade for the firm’s account.

For traders who have a real talent for forex, yet very little capital of their own, prop trading may be the pathway to a good career or supplemental income.

What is proprietary trading?

To avoid confusion, it’s important to understand that the same term is also used in a different context to refer to the basic concept of any brokerage firm or financial institution that trades in-house for its own account, in addition to processing trades for outside clients of the institution.

In effect, that firm seeks to profit from successful trades rather than commissions from clients’ trades.

Yet, independent traders generally use the term proprietary trading to describe a relationship by which they trade funds for a smaller, more speculative investment firm. In short, the traders use the firm’s money to apply their own strategies, and if successful the firm shares the rewards with the trader.

A “prop shop” is a proprietary trading arrangement with a group of individuals who trade electronically, either at the firm’s facility or in independent trading offices using the firm’s resources. Prop shops provide their traders with the resources necessary for success, including education, capital and trading platforms.

Prop shops have their historical foundations in banks’ proprietary trading. Traditionally, banks and brokerages would make a market in securities and derivatives in which they held positions, in order to facilitate liquidity in the marketplace.

Over time, financial institutions’ in-house traders developed their own proprietary strategies and systems, hence the name.

How prop trading normally works

There are a wide variety of prop trading programs offered by various funds and financial firms. Most do not require the trader to invest money, although some offer prop-trading courses or other educational purchases as part of a package.

All prop shops use performance metrics to monitor trading results and apportion compensation. Traders who have winning forex systems are usually allocated trading capital beginning at $100,000 and well-proven traders often trade far larger proprietary accounts.

Prop trading scenarios require the applicant trader to show early promise of successful trading ability. Some proprietary trading companies use a “farm team” approach by requiring applicants to trade demo accounts online and then selecting the best candidate traders.

Others accept applicants into their trader-education programs which ultimately lead to proprietary trading accounts for the traders who excel during the training phase.

For beginners who show potential, the prop shop usually offers plenty of mentoring and education, as well as technical and psychological support.

In a prop shop, it’s up to each trader to prove his or her ability to consistently squeeze gains out of forex markets. Over time, the successful trader receives progressively larger allocations of capital. So, the trader’s potential income likewise grows.

How does this apply to Shaun’s trading? Tune in for next week’s article, where I’ll cover the biggest mistake most traders make.