[Special ED]

Hello everyone,

While having a long discussion about trading with a colleague of mine a debate was sparked on the issue of capitalization. Specifically capitalization as it applies to new traders.

My position was that new traders no matter what will will face trouble due to lack of knowledge (types of days, strategies etc.), inexperience with money management or lack of rote learning trials (pattern recognition stores). Capitalization has little to do with anything (unless of course the capital is less than trading margin requirements).

His position was that even an experienced trader will have trouble without proper capitalization, due to inevitable draw down periods and flat trading. His stance was that without proper capitalization "no one can do much."

I seriously disagree, And I want to prove my point...

In my opinion a trader can build pattern recognition stores by reviewing static charts, using intra day replay, and practicing money management and execution tactics on simulators. None of these require one cent of capital!

I plan to detail a journal of an account that was setup with $10,000 through tradestation (most would consider 10k under capitalized by day trader standards) and set a goal to double the account in 4 months by using proper management and strategy.

The whole goal here is to show newer traders that capitalization is not as much an issue as getting out there and cramming your mind with market exposure!

This journal will not be a "look at me" recording. This is meant to be inspiring to traders who may feel they are at a steep disadvantage without having 40,50,200k etc.

I will detail the journal with charts, explanations (to an extent) and P/L. Goal setting is extremely important so the $ to goal will be updated by the close of each day.

I hope this helps someone out there looking for encouragement to succeed.

[Reaver]

Good idea. Looking forward to seeing it unfold man.

[Special ED]

Journal Entry no. 1

To clarify some things, I will only be trading up to 2 contracts to avoid unnecessary leverage risks. The aim here is to produce a steady gain over the next 4 months not to make a million real quick.

The trade was taken after a support level was tested and exited after a failure of the upside momentum was confirmed. With stop in place two ticks below the entry low we wait for the bars to form and CLOSE No stop reverse, no scaling, just a simple entry on indication of strength and exit on indications of weakness.

Many unprofitable traders will try to trade every wiggle, every higher high etc. Slow and steady is boring yet powerful. As the days go by you'll see how keeping gains is as much as a strategy as entering and exiting trades.

One trade was all today, why? Because thats all we need to be successful (in this context)! We have profits and we are on goal...

Entry 773.40

Exit 776.20

Total points 2.8, P/L $280 % return 2.8%

$ to goal 9,720

[TinGull]

Nice work Special Ed. Look forward to it.

[Nvesta81]

Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

[MrPaul]

Originally Posted by Nvesta81 »

Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

Nvesta81,

I see what you mean, It's tough to believe most people when they say they are actually making money consistently day in and day out, there are allot of people out there who like to pretend and not do! But I can personally vouch that the content provided here by special ED is genuine.

It may not be the best strategy enter here/exit there post, but the point may be to deliver in a holistic sense, what it is to have a trading goal, and strategically achieve it through learned skill sets.

[AbeSmith]

Excellent topic. I look forward to reading it every day.

[ant]

Originally Posted by Nvesta81 »

Let me first say that I totally encourage this effort and think it's a great idea, however I also feel compelled to say that this won't really prove anything as how are we to know you aren't posting charts with trades in hindsight? Don't take this the wrong way as I'm not trying to be an ass, and again I think this is a great idea for a thread!

I tend to agree with this post. Perhaps you can post charts of the actual instrument you're trading, such as ER207, ESU07, and YMU07. Since you're trading through tradestation, your entries and exits will be automatically displayed on the chart. Although not foolproof, it should add a little more credibility, IMO. Either way, I will follow your journal with interest. Good Luck!