Sounds like a fun contest... I have a Roth with roughly this much in it already. Are there any rules on what products we can trade?
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Sounds like a fun contest... I have a Roth with roughly this much in it already. Are there any rules on what products we can trade?
There probably wouldn't be much rules on what you could trade, except you would have to make at least one TSLA trade a year... since this originated here. Hopefully by requiring at least one TSLA trade a year, we can keep this a part of the investors thread and this can be a learning experience for all those involved, both participating and observing.
We would have some other rules as well. Here's some off the top of my head brainstorming:
- Trading would not commence until June 1, 2014. Participants would need to open up their IRAs before that and post a screenshot with the account balance at $5500 or less.
- No other money can be added to the IRA account at any time, unless the participant withdraws from the contest.
- Each participant should post an account summary balance screenshot at the end of every month (this wouldn't show all the trades, just the amount in the account)
- Participants would be free to share trades or not, it's up to them. But for whoever reaches $1 million, we would need to verify every trade to make sure everything was done with just the starting $5500 balance and no other money was added.
- Participants are able to start over by creating a new IRA account with $5500 the following year. So, in theory one participant could have multiple entry accounts (ie., Account #1 created with $5500 in 2014, Account #2 created with $5500 in 2015, etc). The rule is though you can only set up one new IRA account every year with a $5500 max and to enter that account in the contest you need to post an account balance screenshot of the account before starting to trade. I'm not sure if we would have an enrollment period in the future or if it'll be just open enrollment based on a few rules (ie., $5500, screenshot of account, monthly screenshots, etc).
- There would be some kind of prize for the person who reaches $1 million. It might not be monetary.
- One of the purposes of the contest is to motivate and encourage participants to get better at trading/investing. It's also a learning experience for everyone involved.
Here's some additional background.
I think it's possible to take $5500 and make it into $1 million in a reasonable amount of time (within a few years). I know people have done it. But I haven't seen it done in a public, real-time and accountable fashion. For example, a person can make a blog and say that they started with $5500 in an IRA several years ago and now have $1 million. That's great. But were people really following that person in their journey and was that person held accountable (ie., monthly account screenshots)? Probably not.
I have yet to see a real-time, public contest where people start with $5500 with the express goal of trying to reach $1 million in the account without adding any additional funds. I think this would be quite fascinating. We could see how different people approach this with different trading and investing strategies. And we can see how taking big risks can pay off or give lots of pain. I think it's highly unlikely for a person to just have "luck" with no skill and reach the $1 million goal first. A person with just luck might be lucky for one or two or several trades but that's probably not going to be enough to take the account 200x. The winner will need a strategy and some real skills, along with some luck.
If/when a winner arises in this contest, it will be legendary. We will have documented, real-time, public proof that this happened and it will be a truly fascinating thread to read for a lot of people.
We might cap the contest time period to 5 years. So after 5 years, the contest is over and if no one has reached $1 million, then we'll call it quits. But if someone reaches $1 million early, then we'll still leave the contest open to see if others can reach the $1 million mark as well before the 5 year deadline.
Another reason why I like this idea is because it can be motivating to those involved. $5500 is not a huge sum of money for most people, so it's really money that can be lost. But since there's a $1 million goal, participants don't want to lose the money or else they'll have to start over the following year. Yet they need to take big trades in order to make the gains needed to reach $1 million within 5 years. This gives a concrete goal for the participants. It's kind of like how a marathon can motivate people to train for it. This contest can motivate people to get better at trading, not just by trying it out but also by investing time and resources to seek out knowledge and skills.
I also think it's possible to take $5500 to $1 million within 5 years because many of us have experienced 10x+ gains in our portfolios over the past year. If you are able to find another 10x gain with your portfolio over the next 3 years, then that would be 100x gain. Then, in the following 2 years, if you could 2x your portfolio then you would have a 200x over 5 years. A 200x gain is possible and that's what would be needed to take $5500 to $1 million.
One of the issues though with most of us is that as our portfolios increase we tend to take less risky bets. And that's probably wise and understandable since capital preservation becomes an increasingly important value as you want to preserve some of our gains. However, as we become more risk-averse this could steer us away from the looking into more speculative investments/trades. By having a separate (sandboxed) account of $5500, it allows us to seek out the big trades and to really go for it.
Some of us already might have recently started IRAs with the goal of reaching $1 million. As as side experiment, my wife and I created Roth IRAs several months ago by putting in $5500 each. My goal was to see if I could grow it to $1 million. I didn't have clear timeframe, nor did I have any accountability or outside motivation. However, both of our accounts currently are at $33k each (a 6x gain for each account). $100k is in reaching distance. And then after that $1 million is not too far away. The problem though with my personal Roth IRA I recently set up is that it's more of a sole exercise. And I think it would be a lot more fun with others involved trying to reach that $1 million goal. So, rather than each of us using IRAs that we already have $25k, $50k, $100k in, I think it's better if we all just created new IRAs from scratch and we all did it at the same time and took screenshots of the balance before we all started trading. This would make the contest fair, in the sense that everybody is starting from the same place $5500, and at the same time.
So that nobody goes out and jumps the gun, we probably need some time to finalize the rules and such. That's why trading won't start until June 1, 2014.
Anyway, discuss away.
Last edited:
Brilliant idea for trade competition, but your way of preparing for it sounds like work. I am just going to do my usual style and wing it without any strategy.
Trading is an art and can only be learned through trial and error. Everyone is different, so you have to develop your own style. I don't think you can learn it from a book, hence I never read any books on trading. You can learn the most from forums and when people post real time trades, analyze them and then incorporate into your strategy the ones you like.
Actually I'm more into continuous learning through various methods and would also probably just continue with my current style/approach but adjust it along the way. I agree that books have limitations, as do most forms of learning. I don't think there's a proven way to easily become a master trader/investor.
The great thing about a contest/goal is that everyone will approach it in different ways.
For others, please don't set up your account for this contest yet. Let's discuss it more and see where it goes first. Things haven't been finalized as I just shared the idea a couple hours ago.
I also want to make sure the mods are okay with it after we've hashed out things some more.
DaveT: If it is to be a learning experience for others, and thus acceptable to the forum moderators, you might want to have people post their trades monthly. I know this may give away some strategies/investments but it will be difficult for people to make the same amount of $ by duplicating ideas when quick trades may be needed to make the type of returns needed, at least initially, to make an investment grow 200X.
pz1975
Active Member
I agree that people should post their trades - not all of them, but ones that did really well or really had so others can learn. I still learn from this site every day about intricacies of reading strategies.
For us non-Americans, what is the significance of $5,500? I would like to participate but as a Canadian, we don't have IRAs, but have RSPs (retirement savings plan), which I think is the same. We also have TFSA (tax-free savings account) where you have paid tax on the money going in, but all capital gains made are tax-free. There is a limit per year of course.
What options level is the IRA? My RSP and TFSA are both limited to level 2. If you guys get level 5, then I would have to make a new margin account to participate in this.
For us non-Americans, what is the significance of $5,500? I would like to participate but as a Canadian, we don't have IRAs, but have RSPs (retirement savings plan), which I think is the same. We also have TFSA (tax-free savings account) where you have paid tax on the money going in, but all capital gains made are tax-free. There is a limit per year of course.
What options level is the IRA? My RSP and TFSA are both limited to level 2. If you guys get level 5, then I would have to make a new margin account to participate in this.
The Blue Owl
Endangerous Herbivore
I don't think I can muster the necessary guts to have my inexperience on full display (I'm an options beginner), but even as a bystander, I thought it might be worth mentioning a possible risk for the participants in the million dollar challenge: the S.E.C.
This occurred to me after reading the Michael Lewis article in the NYT that Causalien posted recently: Jonathan Lebed: Stock Manipulator, S.E.C. Nemesis -- and 15. It's quite unbelievable how, in that case, the S.E.C. seemed to make it all up as they went along once they decided to charge the kid with "manipulation". I don't know enough about what the rules are (seeing as the S.E.C can't properly define them either, apparently), but if participants to this challenge post their trades, and others start to duplicate them because they trust that particular player (not the best of reasons, I know, but it's a given some people will do that), players will need to be extra careful with their statements on this board (and elsewhere) while they are active in the challenge.
If you haven't read the above article, please do so; you never know when some over-eager investigator/prosecutor like the ones in the story feels the strong urge to "protect the integrity of public markets" and start going after random internet posters.
Anyway, just something to think about.
This occurred to me after reading the Michael Lewis article in the NYT that Causalien posted recently: Jonathan Lebed: Stock Manipulator, S.E.C. Nemesis -- and 15. It's quite unbelievable how, in that case, the S.E.C. seemed to make it all up as they went along once they decided to charge the kid with "manipulation". I don't know enough about what the rules are (seeing as the S.E.C can't properly define them either, apparently), but if participants to this challenge post their trades, and others start to duplicate them because they trust that particular player (not the best of reasons, I know, but it's a given some people will do that), players will need to be extra careful with their statements on this board (and elsewhere) while they are active in the challenge.
If you haven't read the above article, please do so; you never know when some over-eager investigator/prosecutor like the ones in the story feels the strong urge to "protect the integrity of public markets" and start going after random internet posters.
Anyway, just something to think about.
Are we getting a little paranoid here? If they are to go after some random internet posters for posting their trades then they should start with Carl Icahn for tweeting his trades.
That kid in the article was making up stuff with no evidence or research to back up his claims.
Don't people post trades all over the internet, like everywhere? Aren't there dedicated websites for doing so, such as stocktwits?
- - - Updated - - -
Plus that kid was pushing thinly traded penny stocks and creating hundreds of accounts to post that information to hundreds of websites.
pz1975
Active Member
Agree - as long as we don't start trading penny stocks and pumping them like he did, we are fine. I am sure most of us would stick to companies traded on NYSE, NASDAQ, etc. where us small fries would have no influence on stock price!
Thanks, Dave. I'm not sure how advanced it was, just a "perfect storm" for me of experience, intuition, data, and well, some courage, I guess. I just felt the time was right to make a big move. Fortunately it paid off, I'm sure it won't always work out like that
.
The Blue Owl
Endangerous Herbivore
I wanted to join the contest and asked my broker about setting up the account. He replied by saying, "The IRS doesn’t allow options in any IRAs Roth or traditional. The only strategy they allow is covered call writing." Is he wrong?
Similar threads
- Locked
