Tuesday, December 4, 2007

$500 to $150,000 in 10 years or less-----

I have set up a very small trading account (#1271861---$500.00) with Oanda for a proof of concept for how a person can spend 15 minutes a day (or less) reviewing the markets and placing orders, with proper money management.

My aim is to accomplish an annual average of approximately 50% return over a period of 3 years.  Then, from a higher equity base, I will ramp up the return, with a corresponding increase in risk of deeper drawdowns--- to accomplish what the majority of mankind would consider to be a "fool's errand".

I have absolutely no doubt that this objective can be, or will be reached.
But..., I may be wrong.  We will find that out in due time.

The seemingly insignificant size of the starting account is what makes this private challenge unique.  And also, the resulting financial proof that mathematical edges can be systematically harnessed for personal profit.

Almost anyone can round up $500 or its equivalent. The idea of investing in common currencies, placing precise orders every week and profiting handsomely from such relatively insignificant efforts is what many have come to the Forex market for.  They likely will find out that it may be simple-- but not easy.

What will be the challenge is for interested traders to view over time how this can actually be accomplished, what the overriding concepts are that will be followed and how frustrating the long periods of seeming non productivity can be.  Not to forget the devastation of the inevitable drawdowns that will be experienced.

As long as I've traded, I still never get used to drawdowns. You can get used to the pain of drawdowns, making their necessity understandable; but you still don't get used to them. Well, I haven't. Maybe you will be different.

There are real costs to performance that this attempt will prove. Drawdowns of 60% and 70% will undoubtedly be experienced. In the past, I have discovered that it is the willingness to "trade through" to get to the gigantic profits made possible by a durable method that earns you the final reward.

The trading will begin on Friday, December 7, 2007.

The markets followed will be the following:


As time permits, I will totally disclose the methods used so individuals can paper trade and "Monday Morning Quarterback" to their heart's content.

Joel Rensink

No comments: