Realistic Goals - hypothetically

All

Let me give you a hypothetical situation.

Let's say you had an English guy living in Asia who runs a company & earns a 6-figure salary but is suffering from terminal boredom as the company virtually runs itself. This does give our hypothetical friend lots of time to learn.

Let's also say that this person has a pot of around $200,000 that he can make available for trading once he is confident that he has a method that works for him.

Let's also say that this guy is already learning to trade, trading small amounts on long term trends & understands that this is going to take a lot of time & effort to get to the point of being profitable.

Given this - would this person be able to realistically expect to replace their 6-figure income with a career in trading ?

Or is it that successful Traders are just pulling in $100-$200 a day on average ?

Of course, I know that the amount you make depends on the amount you stake per trade. Hence the numbers above !

Cheers

Pedro

Taking 50% per year minimum out of an account net of ALL costs and after reinvesting capital back into the account at the rate of inflation is a pretty heady goal. If the business runs itself, why the heck would he want to replace his income instead of simply supplementing it and growing capital until a more modest and realistic return target works?

jj

Mathemagician said:

Taking 50% per year minimum out of an account net of ALL costs and after reinvesting capital back into the account at the rate of inflation is a pretty heady goal. If the business runs itself, why the heck would he want to replace his income instead of simply supplementing it and growing capital until a more modest and realistic return target works?

jj

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Well - that of course is the hypothetical plan. Out hypothetical friend is a tad bored with working for other people (he runs the company in Asia but it is owned by a Japanese multi-national) & wants to figure out if trading or his own business is the next step. For sure, our hypothetical friend will not be able to commit sufficient time to trading if he starts his own business.

I guess the realistic target is where he comes unstuck. What is a realistic return ?

I am currently going through Trader Dante's thread but what strikes me is that the guy is still working & he's been trading for 7 years !

pedro01 said:

Well - that of course is the hypothetical plan. Out hypothetical friend is a tad bored with working for other people (he runs the company in Asia but it is owned by a Japanese multi-national) & wants to figure out if trading or his own business is the next step. For sure, our hypothetical friend will not be able to commit sufficient time to trading if he starts his own business.

I guess the realistic target is where he comes unstuck. What is a realistic return ?

Click to expand...

That is like asking what is a realistic time for you to complete a marathon. It really depends on your skill and how much risk you're willing to take. For all but the most optimistic of scenarios trying to make a 100k per year return after inflation and expenses without excessive risk on a 200k account is not realistic.

pedro01 said:

I am currently going through Trader Dante's thread but what strikes me is that the guy is still working & he's been trading for 7 years !

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That probably says more about the guy than it does about trading.

jj

Mathemagician said:

That is like asking what is a realistic time for you to complete a marathon. It really depends on your skill and how much risk you're willing to take. For all but the most optimistic of scenarios trying to make a 100k per year return after inflation and expenses without excessive risk on a 200k account is not realistic.

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I knew this was a 'how long is a piece of string' question right from the start BUT surely we can look at the average trader & say that a long-term trader with low risk can pull in x% but a day trader can pull in y%.

There has to be some target to aspire to & that should be the results of other successful traders.

Personally, if I could make 20% a year with a few hours work a day, I could be out of work in 7-8 years. That's certainly a worthy goal in my opinion. Can we say that many traders are pulling in 20% or that only the elite can manage such returns ?

Mathemagician said:

That probably says more about the guy than it does about trading.

jj

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:whistling

20% over a long period of time is very good but not unrealistic for both types of traders. Keep in mind that the average trader's return is negative.

jj

Mathemagician said:

20% over a long period of time is very good but not unrealistic for both types of traders. Keep in mind that the average trader's return is negative.

jj

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Absolutely - including those clever fund managers I tasked with taking care of my cash (with the exception of MAN Investments).

Sorry to hear you had a bad experience with your (hopefully former) advisors.

jj

Mathemagician said:

Sorry to hear you had a bad experience with your (hopefully former) advisors.

jj

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No problem - I have learnt so much since then about investing, I'd never again trust someone to tell me where to put my money.

Amongst the gems, they got me to put a lot of $$$ into a high-tech fund just before the .com bubble burst.

After the losses, I figured I needed to deal with my money myself & not take anyone else's opinion on it. I started out as a purely Fundamentals guy but now I see the sense in technical analysis plus an eye on the markets in general.

I still see that 'Financial Advisor' from time to time & I know quite a few other financial advisors. They are nothing more than salesmen.

The other day, I was out having a few beers with a currency trader & a financial advisor, we got into a discussion about trading & were getting well into it when the Financial advisor said "guys, I have no idea what you are talking about".

That said it all.