Potential....

I've taken a screenshot of what one can ideally look to obtain using this ATS model. I made this Excel spreadsheet a while back and decided to show everyone just how powerful this could potentially be. As you can see, what we are doing is essentially taking a year's worth of trades (for a manual day trader) and condensing it into a weeks time. In effect, one year operating the ATS is essentially 40-50+ YEARS of day trading! As a result we can let compounding create some incredible exponential growth!

Projections in 1 year

The light pink are the fields that we have entered ourselves and the green represents the results. The figures we set are our expectations per WEEK of trading. These parameters are what we are looking for in the coming 12 months. We have two columns: low-frequency and high-frequency trading.

When talking about "low-frequency" strategies we are looking at algorithms that are quite familiar to most traders, with the use of price action, market structure and some indicators for confirmation. Trading times will be typical and on average closed by the day's end.

High-frequency means the implementation of arbitrage strategies and other algorithmic and quantitative styles used for high-speed trading. The hold times are substantially lowered, but the trade frequency dramatically increases from 240 to an expected 2000 trades a week.

The difference, we can see between the two is that LFT has less trades, and a lower win rate but also a higher R-Multiple (RR Ratio). At the same time, we are also using slightly higher risk compared to the HFT strategies. But even so, we are only risking A TENTH OF A PERCENT PER TRADE! The typical day trader usually risks 1-2%; we are risking ten or even twenty times less than that and yet gaining more! Look at how much risk we are using for our HFT strategies! Only 3 HUNDREDTHS OF A PERCENT PER TRADE! The risk is incredibly small relative to the potential upside.

Given these criterias, we are looking at a net return of 18.15% PER WEEK, which compounds to 94.88% a month while maintaining an average risk of 0.04%!

We also see that by the end of 12 months, our small investment of $20 000 is now a staggering $60 million! Now, I would like to point out that this is HIGHLY IMPROBABLE.

Why am I saying that?

Well it's simple, there are too many limitations (broker, volume, liquidity, slippage, loss of leverage) to continue with the returns. But month #9 is highly likely to be obtained after 1 year of trading. That is still an INCREDIBLE gain.

$8.1 million from $20K? Sure, I'll take that. I'm sure everybody else would as well.

I will talk about the projections and expectations in later posts as well. As well as the limitations and requirements to design, implement, operate, and run the entire ATS.

Happy Trading!