%10-40 a month with a small acccount.

[Stratos Capital]

Hey guys, I was on Quora I believe, and two guys were going back and forth about how with a small account you can make anywhere between %10-40 a month in trading.

Everything I've ever read has said this practically can't be done, unless you are using an insane amount of leverage, and taking on to much risk.

Is it true that small accounts can produce such returns, with reasonable risk control, or is that a bunch of BS?

Thanks Guys.

You will always find examples of how traders double or triple their money in a matter of weeks or months. But strangely, they never become rich doing that. I think short term performance can be totally random.

If you use a lot of leverage, eventually you will get big wins. But such performance never last as these trader eventually blow up their accounts.

If we observe the real money makers in the hedge fund industry, we see more modest returns of 15% to 20% annualised. And some of these funds have track records spanning decades.

The real game is not to try to score 1000% returns. But to score consistent 20% returns while being able to survive the bad trades and drawdowns. I would ignore any track record that is less than 3 years for day trading strategies.

 

[wrbtrader]

...I know of only one strategy that you can do that on, but you won't find it on any investopedia or trading websites/books.

You using that strategy that you know about ?

 

[DeltaRisk]

You using that strategy that you know about ?

Yes.

 

[DeltaRisk]

You will always find examples of how traders double or triple their money in a matter of weeks or months. But strangely, they never become rich doing that. I think short term performance can be totally random.

If you use a lot of leverage, eventually you will get big wins. But such performance never last as these trader eventually blow up their accounts.

If we observe the real money makers in the hedge fund industry, we see more modest returns of 15% to 20% annualised. And some of these funds have track records spanning decades.

The real game is not to try to score 1000% returns. But to score consistent 20% returns while being able to survive the bad trades and drawdowns. I would ignore any track record that is less than 3 years for day trading strategies.

That is what is called variance in returns.
Say you take a million random people..... you ask all of them to randomly pick stocks.
Someone in all probability will be correct 100% of the time and make amazing returns. But, is that skill? No.

 

[DeltaRisk]

I should add on short timeframe.
I've met or known about a handful of people who've done perfectly accurate predictions with stocks daytrading on or around a year. What they don't get is it's not because they're special. Even inside information can hurt returns at hedge funds. You see, if you don't have a statically provable concept it's almost impossible to make a dime. No one will give it to you, that's what trading entails. It's selfish, but trading is the most American view of capitalists you'll ever see. You'd be better off going to school and becoming a surgeon. and that's for 99.99% of retail traders.
At least you get a high salary and a pension

 

[MrMuppet]

Allow me to counter your expert intelligence with one of (many awesome) Paul Tudor Jones' quotes:

"After a while size means nothing, it get's back to whether you're making 100% rate of return on $10k or $100millions. It doesn't make any difference."

I will let you take out of that quote whatever you want.

While trading is not scalable in unlimited fashion, it is scalable way beyond what you would consider "satisfactory" for you. And even then you can keep on increasing your size further with little modification to your plan/method.

Of course trading scales well, that's why everybody is trying.
But there is a difference in scalability when it comes to short timeframes, because execution becomes a factor above a certain size.

As soon as you move a market a couple of ticks you need to lengthen your timeframe because those couple of ticks probably were all you had as a profit target. On top of that, you will hit a wall when you trade against retail OTC - Market makers. Don't expect FXCM, Oanda and the likes to take the other side of your 2Yard bet...

So while I truly respect PTD, I'd restrict the viability of this truism to his trading style. If you hold for weeks and months, it doesn't matter if you are short 300 or 30.000 contracts.

 

[propwarrior]

lol at all the anonymous retail trading forum posters who replying 'yes it's possible because I have done it'. Yes it's possible in 1 month if you get lucky, but consistently hitting those numbers not possible. If you are well capitalised and a superb trader then 30-50% returns per year is possible, 50% to 100% returns per year you are pushing the boat out with your risk, the very best could possibly do it year in year out if there isn't a black swan. all this is my personal opinion given what I have seen and heard at the coal face. for disclosure the guys who I have seen who do this have accounts sub $5m. I guess larger account sizes would have issues scaling returns.

 

[Xela]

consistently hitting those numbers not possible.

Indeed - it's the "consistently" that's the point.

I'm very risk-averse, and I know that my position-sizes are smaller than those of many people trading the same account-sizes.

Many years ago, trading a small spot forex account with high leverage and what I now regard as unacceptable risk-management, with very hard work, long hours, a run of dramatic good luck and a following wind, I once managed to make 20% profit on my little account in a single month. I'll never trade like that again, and wouldn't ever try to, now.

If you are well capitalised and a superb trader then 30-50% returns per year is possible, 50% to 100% returns per year you are pushing the boat out with your risk, the very best could possibly do it year in year out if there isn't a black swan. all this is my personal opinion given what I have seen and heard at the coal face. for disclosure the guys who I have seen who do this have accounts sub $5m. I guess larger account sizes would have issues scaling returns.

Your experience and impressions of this subject match mine.

 

[volente_00]

lol at all the anonymous retail trading forum posters who replying 'yes it's possible because I have done it'. Yes it's possible in 1 month if you get lucky, but consistently hitting those numbers not possible. If you are well capitalised and a superb trader then 30-50% returns per year is possible, 50% to 100% returns per year you are pushing the boat out with your risk, the very best could possibly do it year in year out if there isn't a black swan. all this is my personal opinion given what I have seen and heard at the coal face. for disclosure the guys who I have seen who do this have accounts sub $5m. I guess larger account sizes would have issues scaling returns.

Return on capital ?
Or returned on investment value ?

Assuming 1 ES contract

Trader makes $13,000 profit in a year
Using $500 day trade margin

What is their return in your eyes?

$13,000 profit on $500 ?

Or $13,000 profit on a contract valued at $123,900 ?

 

[propwarrior]

Return on capital ?
Or returned on investment value ?

Assuming 1 ES contract

Trader makes $13,000 profit in a year
Using $500 day trade margin

What is their return in your eyes?

$13,000 profit on $500 ?

Or $13,000 profit on a contract valued at $123,900 ?

ROC. The traders capital.