What is realistic?

This is a discussion on What is realistic? within the First Steps forums, part of the Reception category; I'm pretty new at trading, but would try to follow someone else and make profits that way... However, some people ...

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Old May 29, 2013, 3:37pm   #1
 
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What is realistic?

I'm pretty new at trading, but would try to follow someone else and make profits that way...

However, some people tell me that 5% per month is way too much. Then I noticed some systems on Collective2 which gain 20-30% per month. Is that even remotely possible?

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Old May 29, 2013, 4:34pm   #2
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Re: What is realistic?

Hi new4,
Welcome to T2W.

It's possible to make returns like that in a day - so yes, 100% per month is perfectly doable. By the same token, if you play the lottery, you can make returns of many millions in a single day. What most traders strive for is some sort of consistency. Making 100% in one month is no good if you're losing the same amount (or more) the next month and the month after that. So, when you read of impressive gains, always look at the bigger picture. That's before you look at key metrics like the success ratio or profit ratio. Some traders will claim to have a 90%+ success ratio. On it's own, this sounds like an awesome statistic. However, there's no point winning $10.00 on 9 winning trades, only to lose $100 on the one losing one. You get the general idea.

If you want to start researching these ideas, check out the first two links in my signature, below.
Tim.
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Old May 29, 2013, 4:41pm   #3
Joined Oct 2006
Re: What is realistic?

Quote:
Originally Posted by new4 View Post
I'm pretty new at trading, but would try to follow someone else and make profits that way...

However, some people tell me that 5% per month is way too much. Then I noticed some systems on Collective2 which gain 20-30% per month. Is that even remotely possible?
The vast majority of people lose money, that is fact. Therefore realistically you will most likely lose some, or all, of your money. A lot of systems you see advertised use misleading statistics, for instance they will leave any losing position open and not report it whilst a winning trade will be closed and reported in their results. Believe me you will learn a very hard lesson if you fall for any of these stories about 5% a month.
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Old May 29, 2013, 5:34pm   #4
 
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Re: What is realistic?

All the stories you read about money being taken from you one way or another are based in fact. In my experience the only way to succeed is to treat your trading like a job and develop the knowledge and skills that you would in any new venture.

You should also figure out what kind of salary makes it worthwhile for you and work to that as an annual target for net trading profits.

If you believe any of the tall tales about unachievable monthly or annual returns then you are doomed from the start so don't do it.

It is hard work and a long haul but well worth it for some. Hopefully you will be one of them!

Make sure you do what Tim says and read all the stuff on here that will help you.
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Old May 29, 2013, 10:31pm   #5
 
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Re: What is realistic?

Quote:
Originally Posted by money101 View Post
Are you saying that its not possible to grab 5% of your capital per month. I think a lot more people are doing this and they use effective methods. I also go against following every little strategy posted online.
They are either lying to you, or you are sadly mistaken
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Old May 30, 2013, 10:22pm   #6
 
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Joined May 2013
Re: What is realistic?

True... Look for consistency and reasonable money management. Also compare monthly % performance vs. max. %drawdown. Anything worse then 1:2 should be avoided IMO.


Quote:
Originally Posted by timsk View Post
Hi new4,
Welcome to T2W.

It's possible to make returns like that in a day - so yes, 100% per month is perfectly doable. By the same token, if you play the lottery, you can make returns of many millions in a single day. What most traders strive for is some sort of consistency. Making 100% in one month is no good if you're losing the same amount (or more) the next month and the month after that. So, when you read of impressive gains, always look at the bigger picture. That's before you look at key metrics like the success ratio or profit ratio. Some traders will claim to have a 90%+ success ratio. On it's own, this sounds like an awesome statistic. However, there's no point winning $10.00 on 9 winning trades, only to lose $100 on the one losing one. You get the general idea.

If you want to start researching these ideas, check out the first two links in my signature, below.
Tim.
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Old May 31, 2013, 8:49am   #7
 
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Re: What is realistic?

Quote:
Originally Posted by Steve View Post
All the stories you read about money being taken from you one way or another are based in fact. In my experience the only way to succeed is to treat your trading like a job and develop the knowledge and skills that you would in any new venture.

You should also figure out what kind of salary makes it worthwhile for you and work to that as an annual target for net trading profits.

If you believe any of the tall tales about unachievable monthly or annual returns then you are doomed from the start so don't do it.

It is hard work and a long haul but well worth it for some. Hopefully you will be one of them!

Make sure you do what Tim says and read all the stuff on here that will help you.
Sorry Steve, but I disagree with aspects of your advice. Somewhat surprisingly, the very reasons people stay net losers in this business is because they treat trading like a job, and they aim to make a certain amount per year.

The sooner one can lose the "job" mentality, the quicker their bottom line will benefit. You are not paid for your desk time in this business, and if you think in terms of pay per hour, week, month or year, your chances of succeeding will be greatly diminished.

From my experience, the harsh truth is that it's incredibly unlikely you'll make a penny of profit for the first 3 years minimum, and even once you've acquired the necessary skills and expertise, you can still be losing net for weeks, months and perhaps even a whole year (you should expect this too). Profits usually arrive during a very limited and irregular window space, and it's up to the trader to sufficiently exploit this period. So, could you trade for 45 weeks without making any money, and still persist with your confidence unwavered, in order to capitalise on 3 weeks of opportunity?? If you treat trading like a job and you aim to make a certain amount per year, then I doubt it.

Trading is difficult enough on it's own, but when you add in social pressures and ego, it becomes that much harder "losing" for long periods while your acquaintances are whooping it up. If social standing, possessions and peer salaries are important to you, which when people are honest; they are (it's a question of how important), trading is just about the worst career you can possibly choose....

.....at least for the first 3-10 years anyway.
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Old May 31, 2013, 11:15am   #8
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Re: What is realistic?

Quote:
...the very reasons people stay net losers in this business is because they treat trading like a job, ......
In my view there is a significant difference between treating something as a job as opposed to a business. As you say in a job you are expecting to earn an amount each month and year and there is unlikely to be any need to engage in continuous improvements to maintain that income.

For me in business I don't make that assumption and many of the ventures I have engaged in I have known will not give any return initially and I don't rely on getting a return. What I will do is set time limits on how long I will pursue the activity and engaging in continuous improvements to achieve desired results before letting it go. Applying this approach to trading is perfectly good in my view and takes off all the pressure that would come by taking the former approach. Some ventures I have been involved in have cost me £70K with no return but then others have been very successful and I take the view that some will work and some wont. What matters is that the ones that do work return a lot more than those that don't which is a little bit like trading is.
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