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Thread: Day Trading Account Balance Projection Formula

  1. #1

    Day Trading Account Balance Projection Formula

    Hey guys. I am a day trader in need of a growth projections formula and I am not mathematically articulate enough to create one myself. In fact, it's probable that one already exists but I have been unable to find what I am looking for... Anyway here are the details: My starting account balance is $5,000, and daily gain is $65. Every time the account increases by another $5,000, the daily gain increases by another $65. For example, with a balance of $10,000, daily profit is $130, with a balance of $25,000, daily profit is $325, and with a balance of $100,000, daily profit is $1300. For this formula, there are 5 trading days per week, 20 trading days per month, and 240 trading days per year. The questions I would like this formula to address are: How many trading days (y) will it take to achieve (x) account balance? What will (x) account balance be in (y) number of days? I would like to be able to plug in variables for the balance, time (in days), and daily profit since these three factors are ever changing. Thanks in advance!

  2. #2
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    Quote Originally Posted by lundies10 View Post
    Hey guys. I am a day trader in need of a growth projections formula and I am not mathematically articulate enough to create one myself. In fact, it's probable that one already exists but I have been unable to find what I am looking for... Anyway here are the details: My starting account balance is $5,000, and daily gain is $65. Every time the account increases by another $5,000, the daily gain increases by another $65. For example, with a balance of $10,000, daily profit is $130, with a balance of $25,000, daily profit is $325, and with a balance of $100,000, daily profit is $1300. For this formula, there are 5 trading days per week, 20 trading days per month, and 240 trading days per year. The questions I would like this formula to address are: How many trading days (y) will it take to achieve (x) account balance? What will (x) account balance be in (y) number of days? I would like to be able to plug in variables for the balance, time (in days), and daily profit since these three factors are ever changing. Thanks in advance!
    What % of your income you would share with us when we supply you this equation?
    “... mathematics is only the art of saying the same thing in different words” - B. Russell

  3. #3
    Quote Originally Posted by Subhotosh Khan View Post
    What % of your income you would share with us when we supply you this equation?
    Since I am only demo trading for now you can have 100%

  4. #4
    Elite Member stapel's Avatar
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    Cool

    Quote Originally Posted by lundies10 View Post
    Hey guys. I am a day trader in need of a growth projections formula and I am not mathematically articulate enough to create one myself. In fact, it's probable that one already exists but I have been unable to find what I am looking for... Anyway here are the details: My starting account balance is $5,000, and daily gain is $65. Every time the account increases by another $5,000, the daily gain increases by another $65. For example, with a balance of $10,000, daily profit is $130, with a balance of $25,000, daily profit is $325, and with a balance of $100,000, daily profit is $1300. For this formula, there are 5 trading days per week, 20 trading days per month, and 240 trading days per year. The questions I would like this formula to address are: How many trading days (y) will it take to achieve (x) account balance? What will (x) account balance be in (y) number of days? I would like to be able to plug in variables for the balance, time (in days), and daily profit since these three factors are ever changing. Thanks in advance!
    Since the conditions of this exercise would not occur in "real life" (guaranteed returns? really?!?), I will guess that this is actually an exercise you've been asked to complete (perhaps as part of an evaluation for a position). Just using arithmetic and high-school algebra, how far have you gotten in figuring out values and formulas? Please be complete. Thank you!

  5. #5
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    Quote Originally Posted by lundies10 View Post
    My starting account balance is $5,000, and daily gain is $65. Every time the account increases by another $5,000, the daily gain increases by another $65. For example, with a balance of $10,000, daily profit is $130, with a balance of $25,000, daily profit is $325, and with a balance of $100,000, daily profit is $1300.
    Does that mean that $10,000 will be reached
    in 5000 / 65 = 76.923 = 77 trading days?

    5000 + 77*65 = 10005:
    once a 5000 multiple is reached,
    should the new balance be rounded
    down to an even "5000 multiple",
    like the above from 10005 to 10000?
    I'm just an imagination of your figment !

  6. #6
    Quote Originally Posted by stapel View Post
    Since the conditions of this exercise would not occur in "real life" (guaranteed returns? really?!?), I will guess that this is actually an exercise you've been asked to complete (perhaps as part of an evaluation for a position). Just using arithmetic and high-school algebra, how far have you gotten in figuring out values and formulas? Please be complete. Thank you!
    Thanks for your reply, and yes of course this is hypothetical . The $65 is a daily average, including losing days, and is based on daily average points. It is from demo trading records and is unlikely to be so reliable with real data. The only way I have been able to project any numbers is manually, week at a time. It is pretty labor intensive and not as precise as a universal formula might be (would be much more labor intensive if it were). It has been so long since I have used them, I cannot recall any advanced formulas that would apply here. I thought a compound interest formula might apply but I couldn't figure out how to modify it appropriately [A=P(1+r/n)^nt] A=amount P=principal r=rate n=number of times compounded in a year t=time in years. Thats as far as I got. Thanks.

  7. #7
    Quote Originally Posted by Denis View Post
    Does that mean that $10,000 will be reached
    in 5000 / 65 = 76.923 = 77 trading days?

    5000 + 77*65 = 10005:
    once a 5000 multiple is reached,
    should the new balance be rounded
    down to an even "5000 multiple",
    like the above from 10005 to 10000?
    Yes, a $10,000 balance would be reached in 77 trading days, and yes, the new balance should be rounded down to the nearest multiple of 5000. $5000 is the minimum to trade 1 unit, so for every $5000 in the balance, an additional unit can be traded. This is where I run into trouble with the compound interest formula since r represents a percentage of the balance. Along with this, the rate of growth here is not a constant. I am not sure how to translate this part of the equation to accommodate for the actual growth relative to the balance.

    I have come to the realization that the FIRST DAY of every "cycle" (1 unit, 2 units, 3 units, etc.) profits 1.3% of the balance consistently ($65 is 1.3% of $5000, $130 is 1.3% of $10,000, etc.) as long as the balance is a multiple of 5000. This information seems worthless, however, since I have not been able to see it's relevance considering it has unrealistic contingencies. As you pointed out, the balance will rarely land on an exact multiple if 5000. Hope this helps paint a more clear picture, thanks for the reply.

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