What is considered a good return ?

I love all these big numbers people talk about.

All I know is this, professional money managers would kill for solid gains of 20%-30% a year but then non-professionals always view that sort of gain in a day/week or month as nothing special, easily obtainable so to speak (and no doubt spending just 10-20 mins a day on analysis!)

Who's right and who's wrong?
 
Anley

What big numbers, 6 points in a day?

<0.03% of the intraday swings?

increasing capital buy 1% per day when 125% has been done?

If you think you can't achieve something, then you won't achieve it.

There are too many people who put limits on themselves, the outcome
is that they just last a little longer because they lose less on each trade.

Any way, must get ready for trading the US open.
 
anley said:
I love all these big numbers people talk about.

All I know is this, professional money managers would kill for solid gains of 20%-30% a year but then non-professionals always view that sort of gain in a day/week or month as nothing special, easily obtainable so to speak (and no doubt spending just 10-20 mins a day on analysis!)

Who's right and who's wrong?
Click to expand...

Fund managers achieve these low returns because they have their hands tied. They must diversify and hedge almost everything they do, otherwise the FSA comes breathing down their neck.

Would you want your life savings split between penny stocks, Iraqi currency and Romanian fire wood futures? Thought not!
 
" The results again are "

to be honest with you , you have bandied about so many irrelevant statistics , that I can no longer understand what significance they are .

like they say : lies , damn lies and statistics . so I like to keep the stats to a minumum and simple.


" Dave was asking how many people could achieve 6 points per day net, as this is only 0.03% of the intraday swings on the Dow I would say most people. "



This has already been answered . just because 6 pts a day is 0.03% of the day swing don't mean nothing , you can still end up missing it and taking 10 net losers in a row , whether in a day or a month. I've seen it , and experienced it .


" just pointing out that you do not need to make huge gains to make a good living from trading. 6 points is just over 1% per day and will give you 25% per month and 600% over 2 years without compounding. "


Actually i'm of thebelief that you do indeed have to go for the occasional big winners rather than try for the hypothetical " 6 pts a day " .

And I can tell you that as an ex proprietary trader for a firm , that this 6pt theory doesn't work . it only has a chance if you have no stops or " mental stops " as some have said . but then , the risk are increased substantially . this is what my old firm wanted to do , to which I strongly objected , we parted company over this issue .
I would not trade each trade w/o sensible stop losses , and w/o a back office risk control.

so sure , in the very short term( 4 months ) , they got lucky and did very well , til the market got volatile , then guessing every " 6 pt move " became impossible and they began to accumalate losers very quickly.

Another 4 months down the line , and they went bust .

so no , in my view I stay as far away from this type of trading as possible . on paper its looks good , but real life is not paper , it is the market which is wild,and unpredictable and not steady and stable.

Any method that does not account for this is doomed from the start .


" I just try to help people, I recieved an email from someone who wanted help with Forex. I don't trade "


Ah, that says it all , helping someone to trade when you don't trade yourself . A bit like a non driver teaching someone how to drive ?

you will never know the psychological side of trading and it is 90% psychological . you will never understand the feelings associated with loss and success , and the feelings of how one did this .

You will never understand how deeply these emotions relate to trading , and more importantly how to control them.

" I don't trade it personally it is like watching paint dry "

trading is indeed like paint drying , it is a discipline that is a must . then again you will never know this.

And this is why I feel your theories are only that : theories , they do not account for real world trading , because the vital methods used to curb emotional excesses are missing , since you do not trade .


" I showed him a method to trade and later that day it produced 110 points profit on 2 trades. "


sorry to put a damper on this one , but anyone can be lucky over the very short term . it's the long term that counts , ( with risk control of course ).



" I what way am I contradicting myself, I trade the first hour of the US open, this has always been volatile and it is this volatility that I take advantage of. "


well, it is difficult for you to understand where the contradiction is since you do not trade . see above and previous posts .


" What was the point of asking your original question, particulary when everyone who answers is wrong "


To generate discussion , that's how we ll learn and benefit . and everyone is not wrong , I have ask for views , but ones based on reality . where they are not or are based on invalid stats or lack of experience , then I will say so.

some have already stated some very valid opinions .

you say you have results , the only thing I see is some software site and a trade statement for very small sums over a short period .

hardly " results " now are they ?


" What do you consider a good return? "

sounds like you are fishing for info to sell your " students " . question is already answered .
 
Any discussion of return is meaning less unless you also consider the risk you run to get it.

A 100% return for 30% equity risk is no the same as a 100% return for a 10% risk.

You can get almost any return you want by using greater amounts of leverage but with more and more probability you will go bust at some point. Most funds have lower returns than individual traders because they use less leverage.
 
BBB said:
Fund managers achieve these low returns because they have their hands tied. They must diversify and hedge almost everything they do, otherwise the FSA comes breathing down their neck.

Would you want your life savings split between penny stocks, Iraqi currency and Romanian fire wood futures? Thought not!
Click to expand...

The word Fund Manager can take many forms, it does not just refer to say someone who managers M&Gs Growth Income Fund. There are for example many funds who can litteraly trade anything long or short.

And Juan, I think you might have been reading a few too many of those American Self Help Books :cheesy:

'You too can be a millionare if you just believe in your goals' hahahah
 
With sensible risk management and leverage assumptions, a good, experienced daytrader should be able to consistently average upwards of 50% return on capital per annum, to make daytrading a worthwhile pursuit.

Some daytraders will pull in much more in the easier years (e.g. 300% or so in 1999-2000), but I would say that 50% (as an average) is a good long run annual return on capital.

We must not confuse the occasional glowing year of several hundred % return on capital with the consistently achievable long run average return.
 
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JonnyT said:
For a day trader I think even 300% is low

JonnyT
Click to expand...


Well, true, I have achieved this myself a few years ago, and it can be done. Obviously, though, it can not be viewed as a reasonable long run average. It should only be viewed as an occasional event.

Why not?

Well, start with a tiny stake of $10,000. Lets see what happens if you are achieving 300% a year for even only 10 years (for simplicity, ignore taxes and assume reinvestment of proceeds, and maintenance of returns at higher capital levels -- even if such assumptions are weakened, the general mathematical principle espoused below still applies).

300% is equivalent to multiplying your stake four-fold.

10,000 x 4 x 4 x 4 x 4 x 4 x 4 x 4 x 4 x 4 x 4 = $10 billion after 10 years, starting from $10,000. Only a tiny number could achieve this, which is why I say that 300% per annum is not reasonable over the long run.

Upwards of 50% per annum is achievable as an average over the long run.
 
JonnyT said:
For a day trader I think even 300% is low

JonnyT
Click to expand...


Obviously, if you have been consistently achieving 300% a year, you are well on track to becoming the wealthest person in the UK !! (even more wealthy than Roman Abramovich)
 
I agree in part what you say.

Size can become a problem so agreed it is easier for a £10,000 to £50,000 account to return 300% than it is for a £250,000 account.

If you are consistent then you can become wealthy very quickly.

JonnyT
 
Imagine you have only £5000. For every £5000 you trade 1 emini Dow future.
Imagine you make 20 measly points net per day.
Every week you make $500, every month $2000.
Every 4 months you add another contract.
After a year you are making $2000 per week
After a year you have made 300%+

If you are consistent you can do this and better.

Sucessfull day traders will win on 80%+ days thus allowing them to get a bigger bang per book than above.

Now once you have real capital the returns reduce.

Still don't beleive? Read about Larry Williams, read about the Italian that just won a trading competetion.

It can be done and why shouldn't it be you with hard work?

JonnyT
 
I don't think anyone is disputing that triple figure % returns are achievable. I myself achieved this in 99-2000 (bull market Nasdaq Level II scalping, prior to the decimalisation of prices by the SEC) with very conservative risk parameters.

The issue is not whether it can be done; the issue is whether it can be achieved consistently over the long run (i.e. through a plethora of market environments) using sensible risk management parameters. The answer is a categorical 'no', otherwise there would be more billionaires amongst us! 300% per annum as a long run average return would send even the most humbly capitalised trader to billionaire status within a few years, if he reinvested his proceeds in order to benefit from compounding (and expanded time horizon when size became an execution constraint).

In terms of what consistent and successful daytraders are achieveing, well only the brokers know the aggregate picture. But 300% in an 'easy' year is certainly possible, perhaps followed by 90%, maybe an 80% and then maybe a 60%. This is, in my view, be a better representation of the returns that can be achieved by a very "successful daytrader". If we assume that 90% of "daytraders" don't make any money whatsoever, I would put such a "successful daytrader" in the top 20% of the remaining 10% i.e. someone in the top 2% of all daytraders.

300% return per year on a long run basis (with, heavens knows, what kind of risk parameters !!) is more of a six sigma event, and should be regarded as a statistical outlier, not as a genuinely feasible expectation.

But if you, JohnyT, are achieving 300% per year over the long-run (with intelligent and sensible risk parameterisation), then you are the best trader I have ever had the pleasure to communicate with, and you are on the rapid path to becoming Britain's richest person, let alone Britain's richest trader !!!
 
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