is 100% return each year realistic?

[barjon]

Liam

Of course it's possible in theory. But, "in theory" is the operative phrase. In practice it's a different ball-game entirely and I think you'd be unwise to rely on your sums. So I'd advise you to reverse your comment "I guess I still believe in my sums until I am proven wrong" to read "I won't believe my sums until I prove them right".

You'll appreciate that it's extremely difficult to prove a negative so I can't provide tons of evidence other than that all the experienced traders (bar 4pip) have cautioned you about unrealistic expectations and changing your focus to drawdown and manageable loss.

However you might ponder on why the oft quoted 95% fail comes about (and vouched for by spreadbetting companies); and why T2W is not full of members (not vendors of course ) happy to show you their 100% a year accounts; and why many of the journals that start off with such nice returns fail to sustain them and fade away. You seem a pretty sensible chap so surely you must raise your eyebrows at the stellar returns in that fxfacebook thingy - surely the stuff of fantasy wouldn't you say? Don't care what the "accounts" pupport to say. If it wasn't we'd all be rolling in it and living it up in the flesh-pots and not spending our time on T2W..

cheers

jon

 

[LiamH]

OK, 3 replies to get me thinking! Just what I was after

OK, I realise it's a hard thing to disprove and I realise that it seems to be some of the most respected posters who are urging me to be cautious and I really do appreciate that.

I guess my belief comes from two things... Arithmetic and Fear... Fear that if I start with the kind of account I can afford (a couple of £K) I will never get anywhere..

It all seems so simple but I can see you guys believe it's not and I'm sure you're sincere.

Myfxbook is just something I have looked at a couple of times and I used it to back my case up but I guess that a year of results doesn't mean future results will follow suit. Those results though are sincere so it still leaves me confused as to what the short term possibilities are.

Is it simply the case that bad years are what makes the difference? I mean, my strategy could make 200% next year, I leave that in the account and then boom, a bad year wipes 50% of that giving me a net 50% for the two years.

Is this what makes the difference? Because I can understand that.. The short term results I'm sure can be huge although the market conditions in that particular short term cannot be predicted...

Argh I don't know. I will change the philosophy.. I will believe it when I see it and I will certainly try to achieve it.

 

[LiamH]

Robster, to acknowledge your comments regarding expected value and psychology - These things I fully understand but my initial questions were put forward without taking psychology into account and assuming a profitable strat is already there.. After all, without this it is a completely pointless question that comes with a completely obvious answer.

Psychology is what breaks most traders, this I know but when answering this question we cannot assume that the person asking or the people reading are unable to execute their already proven plan.

My questions I guess were broken down to their simplest form in regard to MM and pips BUT I did miss the long term point... This point scares me

 

[forker]

well why dont you look at the best performing funds and hedge funds in the world and see if they are making 100% returns a year. maybe this will answer your question

 

[leonarda]

well why dont you look at the best performing funds and hedge funds in the world and see if they are making 100% returns a year. maybe this will answer your question

I'm not sure I can say exactly why, but I think trading with a $30Bn account is a bit different to trading a $25,000 account... don't you think?

Let me walk through a typical individual stock trader strategy from both perspectives to see how it looks:
Me: account size $25,000
- Ok market in bullish trend, had a pullback, lets look for a strong stock to buy
- XXX strong relative strength, trending well, good earnings outlook
- Ok buy $5000 worth at $5.00 a share (1000 shares), stop at 1% risk at $4.75
Hedge fund: account size $30Bn
- same stuff etc...
- Ok buy $6Bn worth at $5.00 a share (1,200,000,000 shares!), stop at 1% risk at $4.75

Outcome trade loses:
Me: loss = - $250
Hedge fund: loss = - $300,000,000

Ok, obvious silly comparison, for obvious reasons, but that's my point...strategy for a $25k account won't work for a $30Bn one!

 

[forker]

I'm not sure I can say exactly why, but I think trading with a $30Bn account is a bit different to trading a $25,000 account... don't you think?

Let me walk through a typical individual stock trader strategy from both perspectives to see how it looks:
Me: account size $25,000
- Ok market in bullish trend, had a pullback, lets look for a strong stock to buy
- XXX strong relative strength, trending well, good earnings outlook
- Ok buy $5000 worth at $5.00 a share (1000 shares), stop at 1% risk at $4.75
Hedge fund: account size $30Bn
- same stuff etc...
- Ok buy $6Bn worth at $5.00 a share (1,200,000,000 shares!), stop at 1% risk at $4.75

Outcome trade loses:
Me: loss = - $250
Hedge fund: loss = - $300,000,000

Ok, obvious silly comparison, for obvious reasons, but that's my point...strategy for a $25k account won't work for a $30Bn one!

do you really think they would buy 6 billion worth of one security?

 

[leonarda]

do you really think they would buy 6 billion worth of one security?

exactly my point! hence you can't use the same strategy!

 

[forker]

of course you wouldn't be able to trade the same way as you have to ease onto and out of positions over a period of time. Their pot size is no reflection of their ability to make a return. if their pot size were 25k do you really think their ability to make money is vastly improved.

 

[leonarda]

ah of course.. this means big hedge funds have to deal in alot wider number of securities, which means a larger part of the market, hence lower returns as they can't just cherry pick those top 1% hot securities, more averaged out etc... Thus if "good" hedge funds in good times make say 20%, then surely that means us small traders can pick the best and make 50-100%... QED !

 

[forker]

good luck with that

 

[wallstreetwarrior87]

Comparing retail to hedge funds is not a good idea. Different kettle of fish.

However, observing the hedge funds/bigger players and their actions etc, well thats a different ball game, this is name of the game for a retail trader.

See what they are up to and you can play along too!

Hedge funds can easily make more than they do, but they are regulated and adhere to strict risk profiles according to the level of risk designated to that particular fund.

Retail traders are not regulated, hence their expectations are exponentially greater than a hedge fund. But the downside is greater too, so make sure you know what you are doing.

 

[4xpipcounter]

Warrior, that was exactly my point earlier. The thing is lots of constructive warnings have been issued to Liam, which is good. But, it concerns me that no one believes they can make 100% per year. I made 5% today on a slow day, and that's 250% for the year not compunded.
100% per year is only 1.35% compunded per week. That is 13 1/2 pips per week for me. Yes, I keep telling myself, "There is something wrong with this picture."

Comparing retail to hedge funds is not a good idea. Different kettle of fish.

However, observing the hedge funds/bigger players and their actions etc, well thats a different ball game, this is name of the game for a retail trader.

See what they are up to and you can play along too!

Hedge funds can easily make more than they do, but they are regulated and adhere to strict risk profiles according to the level of risk designated to that particular fund.

Retail traders are not regulated, hence their expectations are exponentially greater than a hedge fund. But the downside is greater too, so make sure you know what you are doing.

 

[MrGecko]

No point in a retail trader listening to what a hedge fund / real money trader is doing unless you are in a position to front run their flow.

 

[4xpipcounter]

Heed the warnings, but it will still be your experience that will prove out.
You don't need to fear you will get nowhere, as long as you don't do anything any different than you did when you demo traded.
You will also never hear from me you can't do 100% per year. I've done it in several months, much less a year. I can't help all the ones that believe you can't do it.
Just make sure you have safely ensconced your methodology.
After 6 years of trading, the number one thing I still have to guard against is simply staying mentally consistent, and not getting over-confident. Your confidence will grow with the success of every trade you make. It will grow when you see your account growing at a consistent growth. Through this, your experience will grow with it. After awhile of consistent, steady growth, you can get on here and tell people what you can make instead of asking.
BTW, you have some gauge. What rate of growth and over what period of time has your demo experienced? It is different trading live, because something happens mentally when you go live, but you'll cross that bridge when you get there.

OK, 3 replies to get me thinking! Just what I was after

OK, I realise it's a hard thing to disprove and I realise that it seems to be some of the most respected posters who are urging me to be cautious and I really do appreciate that.

I guess my belief comes from two things... Arithmetic and Fear... Fear that if I start with the kind of account I can afford (a couple of £K) I will never get anywhere..

It all seems so simple but I can see you guys believe it's not and I'm sure you're sincere.

Myfxbook is just something I have looked at a couple of times and I used it to back my case up but I guess that a year of results doesn't mean future results will follow suit. Those results though are sincere so it still leaves me confused as to what the short term possibilities are.

Is it simply the case that bad years are what makes the difference? I mean, my strategy could make 200% next year, I leave that in the account and then boom, a bad year wipes 50% of that giving me a net 50% for the two years.

Is this what makes the difference? Because I can understand that.. The short term results I'm sure can be huge although the market conditions in that particular short term cannot be predicted...

Argh I don't know. I will change the philosophy.. I will believe it when I see it and I will certainly try to achieve it.

 

[MrGecko]

If you can hit a S/R of 75% and only take trades that offer 2 times risk

don't you mean Win/Loss of 75% ?

 

[wallstreetwarrior87]

No point in a retail trader listening to what a hedge fund / real money trader is doing unless you are in a position to front run their flow.

Not true at all.

On another post Arabianights pointed out that George Soros would not look at chart patterns (H&S to be precise) to make a decision, and that may well be true. But it is the cause and effect you should be concerned with. His actions created the price action. That is what retail traders need to be aware off to maximise their potential.

Although I dont know who personally is doing the business, I do know that I dont want to be messing with them.

In the above example Mr Soros would need lots of time too off load his position which gives you ample opportunity to take advantage of the situation if you know how to.

Trade this way; 100% per year is very achievable, trade of pure T/A then its unlikely.

 

[wallstreetwarrior87]

don't you mean Win/Loss of 75% ?

Yes, S/R = strike rate.

Sorry, not to be confused with support and resistance:cheesy:

 

[MrGecko]

wtf?

75% w/l

2:1 r/r

and front run Soros

I'll have what he's having.

 

[wallstreetwarrior87]

wtf?

75% w/l

2:1 r/r

and front run Soros

I'll have what he's having.

No I said nothing about front running ( I wish I had that sort of info). You dont need to, here's why; the likes of Soros etc cant trade all in 1 go, there is no such thing as fill or kill for him/them. He/they have to do his/their business over time. If you can spot this early on, you are joining him/them, not front running. Whats more you can jump ship so much easier than he/they can. So all in all we are at such an advantage

And as for strike rates along with risk versus reward, yes, all achievable if you only select the cherries. But this is the part that causes the most problems.

 

[4xpipcounter]

Gecko, mine is 80%. Oh, wait. In the last 4 weeks, I've only had one losing trade.
R/R? Naw, I could care less about that. I'm just interested in the pips I got once I hit close.
We can't front run Soros unless we have his money.

wtf?

75% w/l

2:1 r/r

and front run Soros

I'll have what he's having.