Average Weekly Earnings

This is a discussion on Average Weekly Earnings within the General Trading Chat forums, part of the Reception category; Calculating earnings per week doesn't give the whole picture. I think it should come down to the return on time ...

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Old Feb 8, 2011, 12:42pm   #43
Joined Jan 2005
Re: Average Weekly Earnings

Calculating earnings per week doesn't give the whole picture. I think it should come down to the return on time invested and not the return per time period.

Eg. An algo trader would put hundreds of hours into an algo to get it going which would mean effectiviely earning less than the minimum wage but if it starts to run by itself, it pays for itself over and over and the trader earns money while he sleeps!

A day trader spends several hours a day trading actively but returns $1000 a session (would be nice!) and has a good hourly wage but will always be a slave to his screen every day.

Then comes how much you started with in the first place, 10k or 100k etc etc.

Putting a roung number of 500 on it is really irrelevant. % return on capital employed and Effective $ per hour spent on trading would be a better benchmark. 500 a week for 10mins work on a 10k account would be great in my opinion!!
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Old Feb 8, 2011, 2:28pm   #44
Joined Oct 2006
Re: Average Weekly Earnings

leonarda, that is great then! I've known a few who like the software side but never graduated from a demo account, or small test account.

>>It also reduces potential for error and should reduce the stress level as well.

meanreversion, this is spot on for me. Since fully automating my system, the stress level has dropped to nothing now. Before it would be tough, making breakfast for the kid while juggling the markets. Often I would have my laptop on and ready to go in the front seat of my car and have to pull over just after I dropped him at school to put on potential trades. It got to be very bothersome indeed! Necessity is the mother of invention!

>>. An algo trader would put hundreds of hours into an algo to get it going which would mean effectiviely earning less than the minimum wage

Coopster, when you look at it like "time invested vs monetary reward", then often it may seem like that. I read a great book once which helped me with my relationship with money and in turn my trading - "your money or your life - Joe Dominguez". Very good book as I got caught up in the greed side a few years back.

For me personally developing the software was a passion I enjoyed doing. I would have been happy to take vacation days off work just to work on it (in essence paying money to work on it !!). The reward I got out of it was beyond financial. It was like taking an awe inspiring trip to South America, where the rewards are personal growth.

But you are correct when looking at it from a purely business perspective. I probably would be fired for spending too much time on software before it became rewarding :-)
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Old Feb 8, 2011, 2:39pm   #45
Joined Jan 2009
Re: Average Weekly Earnings

Found an interesting article on high frequency FX algo trading -

http://www.fxeagle.com/HighFrequency...ingFXandMM.pdf

A little old (2004!) but the points it makes are still relevant. The issues that caught my eye were

1. The data needs to be solid, and even if it is, you can't know for certain if your order will be filled - this could dramatically alter your profit

2. There are a few large winners which make the system profitable - tdrtw, I guess this doesn't apply to you as you're operating strict profit targets?

3. The exchanges get bombarded with orders from algos. I know this is now a problem, because Interactive recently sent out a memo whereby excessive order generators would get charged (but it's a fairly high threshold)

Now, given this article was written 7 years ago and development has been significant, one wonders which timeframe the retail punter should stick to. I personally can't see any value in trying to extract below a one hour time frame using an automated system, but that might just be because I've not found anything yet.

Furthermore, I try to keep my systems as simple as possible, to avoid curve-fitting. The system I'm running with an algo at the moment has an average return of 0.08R over the last five years (approx 600 trades/year), although that number is significantly higher in the last two years. The return/drawdown ratio is around 0.8, with Sharpe of about 0.75. I suspect the banks are operating at much higher rates than that.
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Old Feb 8, 2011, 3:39pm   #46
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Re: Average Weekly Earnings

Always up and down for me, but always positive since I began trading thankfully. Right now I average about $4600 a week per $100k account. That is with a risk management of no more than 1.6% risk per trade.
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Old Feb 8, 2011, 3:44pm   #47
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Re: Average Weekly Earnings

You're making 240% a year risking only 1.6% per trade? Sounds good.
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Old Feb 8, 2011, 3:45pm   #48
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Re: Average Weekly Earnings

Quote:
Originally Posted by meanreversion View Post
You're making 240% a year risking only 1.6% per trade? Sounds good.
That is with a larger account. And several trades a day of course When I first started with a $20k account I never risked more than 5% a trade.
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Old Feb 8, 2011, 3:52pm   #49
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Re: Average Weekly Earnings

What drawdown would you anticipate/have you experienced whilst making >200% a year?
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