Would you be happy with 15% a year?

[evertontrader]

I'd like to know how the traders across this forum would react to a 15% annual return, would you be happy with that return?

Today, I think it's an excellent return... but 3 years ago, when I read you could make 5-10% a week across the retail trading spectrum, I would of thought it wasn't worth getting out of bed for in relation to what I others were saying was possible.

Trading capital is a very important factor when considering return as it's directly relative to your trading capital e.g. 15% of £10,000 (£1,500) isn't going to change your life... but 15% of £500,000 (£75,000) is a respectable sum and would put you in a top 5 percent of salaries across the UK.

When you look at compounding 15% annually, it becomes even more impressive. See the following balance growing at 15% a year:

Start Balance
£10,000

Year Balance
1 £11,500.00
2 £13,225.00
3 £15,208.75
4 £17,490.06
5 £20,113.57

That's over 100% return in 5 years.

So... do you think 15% a year is worth getting out of bed for? I'm interested to see the opinions on this.

 

[tomorton]

Long-term its absolutely fine - imagine a paid job in which your salary grew at 15% a year!

But I still can't help the feeling that if you have a successful, consistent system that doesn't rely on flukey trade outcomes to maintain the 15%, why can't it be maxed up and deliver a much better % gain? At least for a few years, then it can be tapered down to reduce risk.

 

[Splitlink]

Your table of possible earnings is what gets most people hooked, in the first place. It did me. I do not know your trading capabality and it does not really matter. The point is that this is not an easy way to make money so make sure that your capital base is an amount that you could afford to lose. The pie -in-the-sky £1,500 is what one tends look at, without watching the £10,000 that you, already, have and the market wants and will try to get its hands on.

 

[lawrence-lugar]

15% is great, for the investor.
15% for a trader...is not.

 

[Aston1st]

15% is great, for the investor.
15% for a trader...is not.

Too true.

 

[evertontrader]

Your table of possible earnings is what gets most people hooked, in the first place. It did me. I do not know your trading capabality and it does not really matter. The point is that this is not an easy way to make money so make sure that your capital base is an amount that you could afford to lose. The pie -in-the-sky £1,500 is what one tends look at, without watching the £10,000 that you, already, have and the market wants and will try to get its hands on.

I'm beyond the "hooked by pie in the sky" phase you refer to. I've been doing this long enough to know how to protect my capital base, I haven't had a losing year in the last three and that's down to discipline and good money management.

I wouldn't say 15% is pie in the sky, although one of the other people who replied saying they can generate 20% a month... to me that is optimistic but good luck to him if he can.

 

[evertontrader]

15% is great, for the investor.
15% for a trader...is not.

Replies like this are why I asked the question in the first place.

How have you reached this conclusion?

 

[evertontrader]

Depends if you're investing or trading.

Madoff's clients were happy with 10% per year.

But my newsletters get 20% per month.

One's passive income; the other's active investments.

Over what period have you consistently generated 20% a month... and what is the max draw down that the strategy has experienced?

 

[Splitlink]

I'm well beyond the "hooked by pie in the sky" phase you refer to. I've been doing this long enough to know how to protect my capital base, I haven't had a losing year in the last three and that's down to discipline and good money management.

I wouldn't say 15% is pie in the sky, although one of the other people who replied saying they can generate 20% a month... to me that is optimistic but good luck to him if he can.

A lot of expert traders got caught, just a few weeks ago, by being short of the Swiss franc. Some of the traders were the dealers, themselves, so I hesitate to say that I can tell what is going to happen to me around the corner. 15% profit, or 15% loss. Who can tell,, for sure?

Confidence that it will not happen to me, is what keeps me trading, but confidence does not, always, buy the baby a new dress.

 

[evertontrader]

I never said 15% was pie in the sky. Clearly I'm saying the opposite to that if you read my OP.

I was referring to your point that people focus on the profit more than preserving capital.

 

[evertontrader]

Funny you should mention the swiss franc, for the past 6 months I've been taking longs in EURCHF when it would touch or go below the 1.2 currency peg on basis that the SNB would buy up euro's to maintain the peg. It paid quite well too.

I was very lucky that I wasn't long at the time of the announcement by the SNB or I would of suffered a major loss based on what happened. As you said, no one could of seen that coming!

 

[lawrence-lugar]

Replies like this are why I asked the question in the first place.

How have you reached this conclusion?

Depends on What you trade, and How aggressive you are, and Good money management too.

15% is Great for alot of long term, buy n'hold simple stock investors. :|
But as a trader, you can make more than that...if you're good.

One is like a basic strategy mutual fund.
The other is like a wild wild west cowboy free for all hedge fund.

 

[evertontrader]

The top hedge funds have the best talent, market experience, information access, buying power and cheapest commissions and they employ a wide variety of sophisticated trading strategies in search of return. A trader doesn't just buy an hold one stock and expect 15%, he will instead take many positions, some losers and some winners, and the overall average is the return.

Have a look at 2014 performance of the top 100 hedge funds in the world, take note of the the 3 year compounded return of the top and the variety of strategies used across the funds. http://online.barrons.com/articles/SB50001424053111903301904579566373990361000


Does it make you reconsider your opinion?

 

[Forexmospherian]

The top hedge funds have the best talent, market experience, information access, buying power and cheapest commissions and they employ a wide variety of sophisticated trading strategies in search of return. A trader doesn't just buy an hold one stock and expect 15%, he will instead take many positions, some losers and some winners, and the overall average is the return.

Have a look at 2014 performance of the top 100 hedge funds in the world, take note of the the 3 year compounded return of the top and the variety of strategies used across the funds. http://online.barrons.com/articles/SB50001424053111903301904579566373990361000


Does it make you reconsider your opinion?

Hi

NO

Repeat NO

You are talking apples and oranges or comparing chalk and cheese.

Its a totally different ballgame of large banks and Hedge Funds with multi millions of pounds compared to retail traders with a $5k or $10K account

Totally different and I will explain why.

First of all you have anomalies of both Maths and trading limitations

ie Its easy to make a 100% increase on a £100 account within a few trading days - even with just stake size of 2% - when you know what you are doing . ( PS I have taken a live account of under $100 up by 1000% in a trading week - so I know what I am on about ) - BUT - to add say 10% or even 15% on a $50 or $100 million account is extremely difficult and complex.

Next point most large Hedge Funds and large commercial players might only be using 0.05% or less size stake compared to their capital

So if they make just 20% per annum - then a retail trader with the same performance level but on 2% stake size of capital - ie will make 800% per annum

Now on accounts under $100k - 1 or 2% stake size is fine

On $100 million - NO - its not fine - - far too much risk exposed - that why the annual results are so small compared to good experienced retail traders.

My own level on account size under $70k is 25 to 50% - but not per annum - BUT per month .

Anything under 20% per month on 1 or 2% stake size is disappointing - but there again you are not going to get to high levels in just a few years - as I am sure you know it takes a long time - even decades for some retail traders.

An average intermediate level RETAIL trader with a year or 2 behind them of live money trading should be looking at 10% per month and 100% increase per annum

It will not be possible to compound it up from say $500 to $5 million every year - but thats due to another reason - mainly your own financial "wall " limit and every retail trader using their own monies will have one

Hope this explains why you should not be comparing Hedge Funds etc etc with any retail traders

Good Trading - and if you are only aiming at 15% per annum on a retail size account - Personally - i would give up and do some thing else

Regards


F

 

[evertontrader]

I seriously doubt you consistently earn 20% a month. If you did, you'd be one of the best traders to have lived and soon to be the richest man in the world when compounding your winnings and adjusting your position sizes relative to your capital base.

Your comparison of account size/risk/returns between institution and retail traders doesn't really explain the difference. Large accounts can just as easily move in and out of positions as retail, and they do. Look at the daily volume on the NYSE / LSE / CME / CBOT... what percent do you think is made up by retailers? hardly any.

The problem I see is this, people think that it's okay to expect a better return that the best in the business generate. No one apart from the outliers in this business (the people who's books you buy) consistently generate the returns that retail traders *expect*... it just doesn't happen. Now people will make up excuses and reasons to convince themselves that they're smarter, better and more nimble than "big fish" but the harsh truth is you're not better, more informed, experienced or as successful. If you think 15% annually on any balance size is not something to be proud of, then you are misinformed and think very different to the industry.

In the world of finance (I work in finance), all yield is a percent of capital, so being able to generate 20% a month on your $10k is just the same in the eyes of an institution as generating 20% a month off $10mln, the only difference is the latter scenario requires more resource and experience to manage the portfolio which they will give you if you can demonstrate that you can earn this consistently with broker account logs to back it up, the investment bank I work for would offer you a fund management job tomorrow if you could prove this paying you very well. Unfortunately when you say you can double £100 in a few days, that immediately highlights that you're happy taking far too much risk relatively to your capital base and would likely get that same offer rescinded.

Hi

NO

Repeat NO

You are talking apples and oranges or comparing chalk and cheese.

Its a totally different ballgame of large banks and Hedge Funds with multi millions of pounds compared to retail traders with a $5k or $10K account

Totally different and I will explain why.

First of all you have anomalies of both Maths and trading limitations

ie Its easy to make a 100% increase on a £100 account within a few trading days - even with just stake size of 2% - when you know what you are doing . ( PS I have taken a live account of under $100 up by 1000% in a trading week - so I know what I am on about ) - BUT - to add say 10% or even 15% on a $50 or $100 million account is extremely difficult and complex.

Next point most large Hedge Funds and large commercial players might only be using 0.05% or less size stake compared to their capital

So if they make just 20% per annum - then a retail trader with the same performance level but on 2% stake size of capital - ie will make 800% per annum

Now on accounts under $100k - 1 or 2% stake size is fine

On $100 million - NO - its not fine - - far too much risk exposed - that why the annual results are so small compared to good experienced retail traders.

My own level on account size under $70k is 25 to 50% - but not per annum - BUT per month .

Anything under 20% per month on 1 or 2% stake size is disappointing - but there again you are not going to get to high levels in just a few years - as I am sure you know it takes a long time - even decades for some retail traders.

An average intermediate level RETAIL trader with a year or 2 behind them of live money trading should be looking at 10% per month and 100% increase per annum

It will not be possible to compound it up from say $500 to $5 million every year - but thats due to another reason - mainly your own financial "wall " limit and every retail trader using their own monies will have one

Hope this explains why you should not be comparing Hedge Funds etc etc with any retail traders

Good Trading - and if you are only aiming at 15% per annum on a retail size account - Personally - i would give up and do some thing else

Regards


F

 

[Forexmospherian]

I seriously doubt you consistently earn 20% a month. If you did, you'd be one of the best traders to have lived and soon to be the richest man in the world when compounding your winnings and adjusting your position sizes relative to your capital base.

Your comparison of account size/risk/returns between institution and retail traders doesn't really explain the difference. Large accounts can just as easily move in and out of positions as retail, and they do. Look at the daily volume on the NYSE / LSE / CME / CBOT... what percent do you think is made up by retailers? hardly any.

The problem I see is this, people think that it's okay to expect a better return that the best in the business generate. No one apart from the outliers in this business (the people who's books you buy) consistently generate the returns that retail traders *expect*... it just doesn't happen. Now people will make up excuses and reasons to convince themselves that they're smarter, better and more nimble than "big fish" but the harsh truth is you're not better, more informed, experienced or as successful. If you think 15% annually on any balance size is not something to be proud of, then you are misinformed and think very different to the industry.

In the world of finance (I work in finance), all yield is a percent of capital, so being able to generate 20% a month on your $10k is just the same in the eyes of an institution as generating 20% a month off $10mln, the only difference is the latter scenario requires more resource and experience to manage the portfolio which they will give you if you can demonstrate that you can earn this consistently with broker account logs to back it up, the investment bank I work for would offer you a fund management job tomorrow if you could prove this paying you very well. Unfortunately when you say you can double £100 in a few days, that immediately highlights that you're happy taking far too much risk relatively to your capital base and would likely get that same offer rescinded.

Sorry - I have too disagree with you - even though you might work in finance - you are using box logic - and not looking at it from another angle.

I have been retail trading FX for 7 years full time.

I do not compound.

I know my own Financial wall - its approx 25 lots per per pip using my own money.

So therefore I trade under that limit - in fact I normally trade nowadays at 5 -10 lots per pip - and then I only need a Capital account of under $50 k and i can still keep under 1% stake size as my stops are all under 7 pips - ( as low as 3 pips 0n pairs with spreads under 0 5 pip )

I know from my own personal experience - its no good me having a Capital account of say $350 or $500 k +- as I would still not be comfortable trading with over 10 lots. That would mean a % on a 5 pip stop of only 0 1 % - far too low - so a waste of time

My maximum exposure is $500 on a trade and so I can take that on a capital of just $10k or even less.

Yes its a high % then - but its still and exposure or risk of $500 - in real terms - thats small - whether on a $50 k or $500 k or $5 million account

I have no reason to compound - I am not an Investor - I am a trader. I have not had more than 7 consecutive trades in a row on over 10k live trades in the last 5 years or so - I therefore know what I am on about - I have the T shirt and i am in that very small band of profitable FX traders

I am happy if i earn over $20k per month - at my age ( 61 ) I have no need to make $200k per month or more - so I gave up compounding over 6 years ago - I dont need the stress and palpitations of trading with 25 lots or 50 lots per pip - but on 5 lots per pip - to me - its like a demo account - ( check out my history )

I would be delighted with a 15% return on a $20 million capital account - thats good money

But 15% return on a $20k account per annum - would not be worth me getting out of bed and would be equivalent to say about £3 per hour on a full time basis.

I appreciate you might know all about compounding and Finance etc etc - But I also know what I am on about

Regards


F

 

[evertontrader]

With respect, I think you live in fantasy land and it's not worth continuing the conversation.

 

[evertontrader]

You deleted your last reply before I got a chance to comment. Posting images of account balances doesn't mean anything.

 

[Forexmospherian]

With respect, I think you live in fantasy land and it's not worth continuing the conversation.

I think you have lost the argument already -

Maybe this will rub it in more on proper trading - with alive money account

This second week of February cannot compare pip wise to my first - as that was a cracker - but at least I am up approx 1100 pips in this period.

Saying that my first pupil - Major Magnum - who followed me last year for over 8 months - learning and replicating my method had a great day yesterday - and beat my best day - making 492 pips net in under 13 hrs.

In a nutshell

Approx over 12 hrs -

30 trades - 25 wins - 5 losses - 83% win ratio

Largest loss - 5 pips - Largest win 55 pips - average win approx 19 pips

Gross Pips before losses -510 pips

Net winning pips after losses - 492 pips

He traded 2 pairs - Gbp / Usd and Eur / Aud

Impressed ??

Don't be - he can do better than that - but I don't know whether i can nowadays - I am too old lol

Enjoy your weekend and don't believe so much rubbish out there - hard work - study - commitment - strong mindset etc etc - and you can do the same.

MM has proved it for me

All the best


F

 

[Forexmospherian]

You deleted your last reply before I got a chance to comment. Posting images of account balances doesn't mean anything.

Actually - I will never post my own account statements - they are private,

But Major Magnum - a member here with approx now 3 yrs experience of which approx just over a year under my wing learning my method ( I dont sell courses or dvd's etc - I make my money trading ) has had several live account trading days making over 20% increase on his capital - using stake sizes under 2%

He does not mind showing his statements - but will soon change that when he trades with live capital accounts over $25k.

I am pleased you say statements etc mean nothing you are correct and I agree with you

I have been running a daily intraday thread now for approx 15 months on this forum - and make my calls everyday. My daily target is 50 pips and most days I beat it comfortably.

In fact now in over 250 days - I have had only 34 days when I have not made my target and not one losing day.

I know that is exceptional trading - but I like to call myself a retail FX trading expert - and with my record - I can do that.

I also appreciate 80% to 90% of all FX trader lose money and do not make it so 15% to them must be a dream. But to the proper full time retail traders who can hack it - then 15% per annum is really a joke on a retail size account.

You are welcome to come and follow me on my thread if you like - and then you may understand how it is possible

Regards


F