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Gentlemen, what about taxes paid each year... there is not a way to avoid that and this affects compounding big time.
Regards
Riccardo Ronco - FBR London
> Message date : Sep 24 2004, 11:01 AM
> From : "mike ball"
> To : "Jimmy" , "Gary Fritz" , "Omega-List"
> Copy to :
> Subject : Re: Re[2]: system trader
> J-
>
> Yes, I agree. That is really what I'm experiencing
> in trading full time for a living. I don't make much.
> I sweep my futures account each month.
>
> I agree with Gary, insofar as it is "difficult" to
> compound. Not impossible. I trade next to quite a
> few successful traders each and every day now who've
> done just that.
>
> Living expenses is definitely a key point to watch.
>
> But if you have CONSISTENT results with 2 contract
> plays on a 10k account getting to 4 contracts and then
> beyond is completely doable.
>
> m
>
>
>
> --- Jimmy wrote:
>
> > Years ago I lived in Crawford, Yep where the
> > President's ranch is.
> > My neighbor had a pretty nice size spread and one
> > day I asked him how
> > ranching was doing. He told me you need to have
> > your income worked
> > out before you go into ranching. Trading is kind of
> > like that isn't
> > it?
> >
> > Jimmy
> >
> > Friday, September 17, 2004, 10:17:26 AM, you wrote:
> >
> > >> I find it an incredible ever repeating cycle
> > >> that there exist so so many undercapitalized
> > would be
> > >> traders that have such supposed "really good"
> > systems.
> > >>
> > >> If what you have is truly good, aka: CONSISTENT.
> > You
> > >> won't need help for very long. Compounding will
> > stomp
> > >> out the problem of undercapitalization.
> >
> > GF> Try living on the fruits of your compounding if
> > you start out
> > GF> with $1. Make 50%, 100%, 1000% a year, doesn't
> > matter -- there
> > GF> still isn't enough to buy groceries.
> >
> > GF> Compounding works great when you have a
> > decent-sized account, but
> > GF> ***ONLY*** if you don't have to bleed it for
> > living expenses,
> > GF> taxes, etc. If your trading is your only source
> > of income, then
> > GF> you need a pretty large account. I wouldn't try
> > it with less
> > GF> than $250k, and $500k or more would be a lot
> > better. (I *DID* it
> > GF> with a $100k account, and returned over 50% for
> > several years.
> > GF> And by the time I paid taxes & other expenses,
> > my account was
> > GF> smaller after 2 years than when I started. And
> > then you have to
> > GF> have enough surplus to live through the
> > inevitable dry spells...)
> >
> > GF> Even if you have some way to shelter your
> > account from tax and
> > GF> other expenses, compounding can seem maddeningly
> > slow if you
> > GF> start out with a small pile. We all know
> > markets change, and a
> > GF> system that works now might not work forever --
> > or you might just
> > GF> prefer to retire 5-10 years sooner if you could
> > find a way to do
> > GF> it. Someone with a $10k account and a 50%/yr
> > system might not
> > GF> want to wait for 12 years for his $10k to turn
> > into $1M. If he
> > GF> can make $20-50k a year selling his signals,
> > without compromising
> > GF> his results, he has a way to grow his account
> > much faster than
> > GF> 50%/yr, and reach his goal MUCH sooner.
> >
> > GF> Undercapitalization IS a real and serious
> > problem, no matter HOW
> > GF> good your system is.
> >
> > GF> Gary
> >
> >
> >
> > --
> > Best regards,
> > Jimmy
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