is 100% return each year realistic?

[meanreversion]

Why, if someone asks about a mathematical possibility, does everyone reply with regard to psychology?

Psychology is personal, when wondering whether 100% or whatever per year is possible the answer is purely mathematical.

Assuming you make 6000 pips per year (depending on strat but I'm going for a realistic ballpark figure) from a $1000 account at 50c per point you will make $3000 profit per year. Assuming a 100 point stop on average that is 5% risk per trade. This is 5x leverage on the whole account or you could call it 25x leverage and have the available margin to run 5 positions at a time.

That is a 300% return WITHOUT compounding and without using so much leverage that you are guaranteed to blow the account. 5% risk per trade might well show some large drawdowns but it is up to the individual to decide wether or not they can cope with that. Ultimately this is just an example, you could risk 2.5% and still make 150% profit per year.

Mathematically 100% per year from a small leveraged account is an absolute piece of cake and anyone who says otherwise is not speaking sense. The psychology and strategy for getting there is a different matter and is up to the individual.

So what you're saying is that anything is possible, if you completely ignore the psychological aspect? That's hardly a revelation, is it? It's mathematically possible to make 100% a year by asking your dog whether to buy or sell (one bark for buy, two for sell..), but this is not useful information.

I get tired of all these simple examples of how to generate these returns (if you risk R per trade, and make 0.5R average profit, and trade 100 times a year, that's 50R per year, if R is 1% then - wow - it's really easy to make 50% a year).

First of all, this presupposes that such a trading strategy is easy to come across, and I would contend that it's not.

Secondly, in the example where 5% is risked per trade - you could easily have 10 losers in a row (and please don't give me the crap about every trade being 50:50, because this implies a risk/reward of less than 1:1, and even then you could STILL get 10 losers in a row).. and then hey presto you're down 50%. Mathematically this is of zero concern, but it's probably going to affect 99% of traders.

Once again, another example of a thread where the question is simply "how many % can I make each month" when the real question SHOULD be "how much DRAWDOWN can I tolerate in order to achieve x% a month".

 

[LiamH]

Mathematically 100% per year is a piece of cake, as you say, but it depends on the level that you are starting from. 1+1=2= 100%. The higher the capital base the more difficult it gets. Are you willing to trade 50,000 or 100,000 with the expectation of getting 100% profit out of it per year? That is where the psychology comes into it because that capital could be all that the trader has.

This is where these threads get dangerous for newcomers.

Regardless of the "pie-in-the-sky" advice from those old enough to know better newcomers should know that this futures business is the biggest jungle there is.

It, really, does **** me off to read about all these percentage profits that are available to everyone who knows just the basics of arithmetic because those who are not vendors here should be setting an example.

I used to be one of those who thought that everyone should be able to take care of his money, but now I don't. There are too many poor *******s out there who are desperate to make ends meet and find this one way to do it.

There are probably 50+ strategies on this very site that will make 100% per year from a small account without using stupid leverage.

But I think this is the point... Leverage... People talk about Buffett or their own experience and they tout things like Buffett only makes x amount or that they themselves only make x amount and 90% fail and blah blah effing blah...

Seriously, 5x leverage on an account making 20% per year = 100% per year. This is not pie in the sky, unrealistic or anything bad. Newbies mostly have a dream and that dream is to get rich quick in 90% of cases. These people are adults and should know better than putting their life savings in to a spreadbet account with 100x leverage and going for gold.

I understand that you old hands here are just trying to protect people from their own stupidity but it doesn't matter what you say, how you say it or how many times you say it... People will still blow account after account until they either give up or get with the program and actually understand what it is they are trying to do.

In the mean time it is probably simpler to just say yes, of course 100% per year is possible but how are YOU planning on achieving it?

 

[LiamH]

So what you're saying is that anything is possible, if you completely ignore the psychological aspect? That's hardly a revelation, is it? It's mathematically possible to make 100% a year by asking your dog whether to buy or sell (one bark for buy, two for sell..), but this is not useful information.

I get tired of all these simple examples of how to generate these returns (if you risk R per trade, and make 0.5R average profit, and trade 100 times a year, that's 50R per year, if R is 1% then - wow - it's really easy to make 50% a year).

First of all, this presupposes that such a trading strategy is easy to come across, and I would contend that it's not.

Secondly, in the example where 5% is risked per trade - you could easily have 10 losers in a row (and please don't give me the crap about every trade being 50:50, because this implies a risk/reward of less than 1:1, and even then you could STILL get 10 losers in a row).. and then hey presto you're down 50%. Mathematically this is of zero concern, but it's probably going to affect 99% of traders.

Once again, another example of a thread where the question is simply "how many % can I make each month" when the real question SHOULD be "how much DRAWDOWN can I tolerate in order to achieve x% a month".

So you're agreeing with me then? I said already that drawdown could be huge risking 5% but then in my example that would give 300% per year. What about 2.5% and 25% drawdown still showing 150% returns. Strategy and risk tolerance is personal... Stop trying to wrap people in cotton wool and just answer the question.

Newbie's want to know these things because it fuels the dream. After a blown account or two they will either give up or start learning. Your advice, as good hearted as it may be, will not stop this process.

 

[Splitlink]

There are probably 50+ strategies on this very site that will make 100% per year from a small account without using stupid leverage.

But I think this is the point... Leverage... People talk about Buffett or their own experience and they tout things like Buffett only makes x amount or that they themselves only make x amount and 90% fail and blah blah effing blah...

Seriously, 5x leverage on an account making 20% per year = 100% per year. This is not pie in the sky, unrealistic or anything bad. Newbies mostly have a dream and that dream is to get rich quick in 90% of cases. These people are adults and should know better than putting their life savings in to a spreadbet account with 100x leverage and going for gold.

I understand that you old hands here are just trying to protect people from their own stupidity but it doesn't matter what you say, how you say it or how many times you say it... People will still blow account after account until they either give up or get with the program and actually understand what it is they are trying to do.

In the mean time it is probably simpler to just say yes, of course 100% per year is possible but how are YOU planning on achieving it?

I'll give that a cautious "ok" but the fact that you say

"People will still blow account after account until they either give up or get with the program and actually understand what it is they are trying to do."

is no excuse to wave big porcentage gains in front of them-

Those in business, like me, know how worried some of these people are. If any of them are being attracted here, I am waving them back and asking them to take a hard look at an old business saying.

"If anything seems too good to be true it probably is".

 

[leonarda]

Seriously, 5x leverage on an account making 20% per year = 100% per year. This is not pie in the sky, unrealistic or anything bad. Newbies mostly have a dream and that dream is to get rich quick in 90% of cases. These people are adults and should know better than putting their life savings in to a spreadbet account with 100x leverage and going for gold.

I actually have to agree with you here, as I must admit I don't feel as though I am putting alot of effort into my medium-term stock trading, i've actually only done 55 trades this year, but I am 100% up, and by coincidence to your example I am spread betting with a leverage of x5. So on a flat leverage basis i've only made 20%, my max drawdown has been about 16%. All I do is medium term (1-2 months) pick strong stocks on market lows. So there you go a real example...although that's not to say you don't need all the good money management, discipline stuff etc...

 

[LiamH]

I'll give that a cautious "ok" but the fact that you say

"People will still blow account after account until they either give up or get with the program and actually understand what it is they are trying to do."

is no excuse to wave big porcentage gains in front of them-

Those in business, like me, know how worried some of these people are. If any of them are being attracted here, I am waving them back and asking them to take a hard look at an old business saying.

"If anything seems too good to be true it probably is".

I agree but this is hardly waving big percentage gains... Saying 1000% per year is easy would be doing that. I think 100% with sensible leverage is entirely possible. As I've already said, personal risk tolerance and the strategy employed to get there are an entirely different subject.

You are experienced, you know the things that need to be known... After 5 years of taking an interest in the markets many of these things have only just sunk in with me but I wasn't stupid enough to throw money at the markets that I could not afford to lose when I fully understood that really I didn't know what I was doing.

People who throw their life savings at the markets without a clue will not pay attention to you speaking sense.

Anyway.. enough of this, I don't want an argument. I just hold the opinion that 100% isn't a return that is 'too good to be true' with sensible leverage.

 

[Splitlink]

I agree but this is hardly waving big percentage gains... Saying 1000% per year is easy would be doing that. I think 100% with sensible leverage is entirely possible. As I've already said, personal risk tolerance and the strategy employed to get there are an entirely different subject.

You are experienced, you know the things that need to be known... After 5 years of taking an interest in the markets many of these things have only just sunk in with me but I wasn't stupid enough to throw money at the markets that I could not afford to lose when I fully understood that really I didn't know what I was doing.

People who throw their life savings at the markets without a clue will not pay attention to you speaking sense.

Anyway.. enough of this, I don't want an argument. I just hold the opinion that 100% isn't a return that is 'too good to be true' with sensible leverage.

Possible? Definitely. Probable? Unlikely, for the majority.

As you say, let's argue another day.

 

[Liquid validity]

Original Post:
I have several systems and strategys for a range of markets and that I have the discipline trade and become consistent is it realistic to make 100% a year with out running the risk of ruin?
--------------------------------------
I understand that losses and draw down is an inevitable part of the process and of course I will take it all into consideration. After all I am in it to make money not lose it and yes I am still a beginner with no experience hence why I am on this forum trying to learn from professional and experienced traders like you. I understand it takes money to make money. Just because im only asking about profit does not mean I don’t care about losses. I must admit I have tried to find ways of avoiding losses in backtesting but iv realised its just not possible

I just wanted to know if 100% return from spread betting a year is realistic without being to optimistic IV seen too many posts of people hear saying 100% a day or 100% a week.

If you have a good consistent strategy and the discipline to trade it, you should already have a good idea of the potential returns from demo trading your strategy (or with live trading using smallest stakes possible).

In theory yes 100% is possible, that is purely hypothetical and pointless though. The only thing that matters is you and your strategy. You as an individual trader are capable of anything, and that includes total loss. Backtesting is useful up to a point with a purely mechanical strat, but when the discretionary element comes into play backtesting is nothing more than hindsight trading.

Personally I would suggest you continue demo or small stakes live trading until you can answer your own question yourself based on your own trading record. After 2 years of demo or small stakes (including time spent already) you will truly and confidently be able to answer your own question. Two years may seem a long time, then again its much shorter than the time needed to learn many other professions...

 

[Splitlink]

]

If you have a good consistent strategy and the discipline to trade it, you should already have a good idea of the potential returns from demo trading your strategy (or with live trading using smallest stakes possible).

In theory yes 100% is possible, that is purely hypothetical and pointless though. The only thing that matters is you and your strategy. You as an individual trader are capable of anything, and that includes total loss. Backtesting is useful up to a point with a purely mechanical strat, but when the discretionary element comes into play backtesting is nothing more than hindsight trading.

Personally I would suggest you continue demo or small stakes live trading until you can answer your own question yourself based on your own trading record. After 2 years of demo or small stakes (including time spent already) you will truly and confidently be able to answer your own question. Two years may seem a long time, then again its much shorter than the time needed to learn many other professions...

Good point.

 

[meanreversion]

100% a year on what amount? £1k? £5k? £500k?

What sort of drawdown should one expect from these strategies returning 100%? (I'm still yet to hear a response)

If 100% a year is easy, as it's being portrayed, and these strategies are there on the web waiting to be found, it's a wonder anyone works fopr a living. It would also imply a large number of self backed traders. I am self backed and trade from an office in Mayfair with 5 other self backed guys. We started off as 2 and it took over six months to find an additional 4 people. This is for a location in an awesome part of London at under £100 a week. (The vast majority of individual punters who trade for a living work at arcades, mainly because they don't have sufficient capital).

I also spent over ten years trading as a career on the sell side, during which time I never heard of anyone trading their own account -- it simply is not that common.

So, please stop it with the 100% is easy line, it might possibly be the case for a tiny account (under £5k, where the trader can replenish from salary) but beyond that it's horse manure. I'm not trying to 'protect' anyone, I'm just disagreeing with the premise. And by the way, I have considerably more experience than 99 pct of the people on this website.

 

[Martinghoul]

I'm with meanie here... 100% is a rather preposterous number.

 

[LiamH]

100% a year on what amount? £1k? £5k? £500k?

What sort of drawdown should one expect from these strategies returning 100%? (I'm still yet to hear a response)

If 100% a year is easy, as it's being portrayed, and these strategies are there on the web waiting to be found, it's a wonder anyone works fopr a living. It would also imply a large number of self backed traders. I am self backed and trade from an office in Mayfair with 5 other self backed guys. We started off as 2 and it took over six months to find an additional 4 people. This is for a location in an awesome part of London at under £100 a week. (The vast majority of individual punters who trade for a living work at arcades, mainly because they don't have sufficient capital).

I also spent over ten years trading as a career on the sell side, during which time I never heard of anyone trading their own account -- it simply is not that common.

So, please stop it with the 100% is easy line, it might possibly be the case for a tiny account (under £5k, where the trader can replenish from salary) but beyond that it's horse manure. I'm not trying to 'protect' anyone, I'm just disagreeing with the premise. And by the way, I have considerably more experience than 99 pct of the people on this website.

I am happy for you that you have so much experience but you're arguing against a point that is already proven... A quick look on myfxbook.com shows quite a few people who have churned out much more than 100% with eff all drawdown and smooth equity curves over a decent sample size in terms of trade numbers. You are arguing that it might only be possible with account sizes below 5K but I don't think issues with liquidity come in to it until you hit much much larger position sizes.

People work for a living because they have no idea and this way of making money doesn't tend to suit your average joe. And those that it does suit often give up after blowing an account or two before actually realising what they've done or are doing wrong.

Trading is just probability and risk:reward... Come up with a strategy that gets those right and it is only a traders psychology that slows them down.

 

[meanreversion]

I suspect it's a number thought up by someone with a job paying £30k a year, who has £2k with IG, something like that.

 

[barjon]

sigh, I suppose it's a waste of time saying it because no inexperienced newcomer to trading really wants to listen - talk about a thread that's a triumph of hope over experience - but here goes.

1. It's easy-peasy to make a net 1%, or 4 ftse points, or etc etc per day. Oh is it? Let's see you do it then - EVERY day, EVERY week, EVERY month, EVERY year. Cut and paste this into the last page of your two year diary - I'll bet my house and furniture you won't have been anywhere near it.

2. 100% a year? Well, I've done that once or twice, last was in 2004 I think. But YEAR after YEAR after YEAR. Cut and paste this into the last page of your five year diary - I'll bet my house and furniture and the winnings I got from (1) that you won't have been anywhere near it.

For Goodness sake listen to those who tell you to concentrate instead on what you are going to lose and how to keep that within manageable levels. After all, if it was all so easy there'd be 200,000 very rich people chiming into T2W

cheers

jon

 

[meanreversion]

I am happy for you that you have so much experience but you're arguing against a point that is already proven... A quick look on myfxbook.com shows quite a few people who have churned out much more than 100% with eff all drawdown and smooth equity curves over a decent sample size in terms of trade numbers. You are arguing that it might only be possible with account sizes below 5K but I don't think issues with liquidity come in to it until you hit much much larger position sizes.

If you read the Sun, you'll see that quite a few people have won money on the lottery as well.

 

[Martinghoul]

I am happy for you that you have so much experience but you're arguing against a point that is already proven... A quick look on myfxbook.com shows quite a few people who have churned out much more than 100% with eff all drawdown and smooth equity curves over a decent sample size in terms of trade numbers. You are arguing that it might only be possible with account sizes below 5K but I don't think issues with liquidity come in to it until you hit much much larger position sizes.

I just had a quick look at myfxboook.com. It doesn't tell me anything whatsoever, but maybe I am just not reading it right. Can you enlighten me pls? What exactly do you see there that makes you think those big numbers mean anything?

 

[LiamH]

If you read the Sun, you'll see that quite a few people have won money on the lottery as well.

This is frustrating... Simple...

£10k account
£5 per pip
NO compounding up or down
Forget drawdown

You telling me that it's unreasonable to think you or I can find a strategy that makes 2000 pips per year?

Does YOUR strategy make 2000 pips per year?

It doesn't matter how experienced you are, this is quite simple really.

I agree that on MUCH larger accounts it may not be possible but up to £100k I don't see how it can be any different from a £1K account.

There are many people already doing this, both here and elsewhere. There is plenty of proof if you take the time to look so don't keep hammering into newbs heads that this is not possible.. It is possible, you just need to find a strategy that can do it and that you are comfortable with. There are plenty of those around as well.

 

[Black Swan]

I just had a quick look at myfxboook.com. It doesn't tell me anything whatsoever, but maybe I am just not reading it right. Can you enlighten me pls? What exactly do you see there that makes you think those big numbers mean anything?

and fxbook has only recently celebrated it's first year of being live hasn't it?

 

[LiamH]

I just had a quick look at myfxboook.com. It doesn't tell me anything whatsoever, but maybe I am just not reading it right. Can you enlighten me pls? What exactly do you see there that makes you think those big numbers mean anything?

If you go there and click on 'strategies' at the top of the page you will see alot of verified accounts that make much more than 100% per year with nice smooth equity curves over a decent sample. If you can't see them then you don't have your eyes open.

I don't get why this is so difficult for you guys to accept? 100% per year on a leveraged account....?

If I was to ask if it was possible to make 20% per year un-leveraged what would you say?

 

[LiamH]

and fxbook has only recently celebrated it's first year of being live hasn't it?

I'm surprised you haven't waded in with the old 'if you can't make £200 per day from a £10k account...' Wouldn't that equate to 500% per year? Hell, even only 3 days a week it would equal 300%?

Granted that page on myfxbook shows only 3 months of results but check out the number of trades alot of them have made... They are decent sample sizes so they can't all be flukes. This is also besides the point, there are a few members here who prove in their journals that they make quite a lot more than 2000 pips per year.