You make good points. Consecutive losses even while having positive expectancy would certainly hurt someone using levered assets. However, using proper risk management can certainly help to mitigate that, especially if you only take trades within certain risk parameters and are very disciplined about targets, etc.
100-300% Yearly Returns Discussion
- Thread starter JoshM
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You make good points. Consecutive losses even while having positive expectancy would certainly hurt someone using levered assets. However, using proper risk management can certainly help to mitigate that, especially if you only take trades within certain risk parameters and are very disciplined about targets, etc.
Leveraged position sizing can get 100%+ returns but give 50%+ drawdowns as well.
The only other variable i can think of is high frequency, but that is not viable for retail traders due to commissions that will start adding up if you do 1000s of trades a year.
I find pushing beyond 40% annual return difficult while leaving a margin of safety with regards to blow ups, even in the best of circumstances. And this is trading in a way that most would find very aggressive. I have had times where I new I could "easily" go for 100%, based on my analysis, yet held back a reserve in case I was wrong and ended up with a low 40% return.
And this is (40%) at least for me not sustainable, it is a feature of doing a niche approach with the appropriate amount of capital. That said, It is highly possible to get a phenomenal return with a small account if you don't mind blowing it up if it doesn't work. In my experience, aggressive trading is actually more likely to succeed in a meaningful way - meaning the risk is often worth it. The problem is by the time a trader figures something out, they are older and don't have the stones to "go for it" the way their younger self would.
And this is (40%) at least for me not sustainable, it is a feature of doing a niche approach with the appropriate amount of capital. That said, It is highly possible to get a phenomenal return with a small account if you don't mind blowing it up if it doesn't work. In my experience, aggressive trading is actually more likely to succeed in a meaningful way - meaning the risk is often worth it. The problem is by the time a trader figures something out, they are older and don't have the stones to "go for it" the way their younger self would.
OP ... I doubt you've even compounded (at least) 50% per year over the past 5 years. Stop dreaming and do trade your best. Trading ain't an outcome but a process. Returns are secondary (Derivatives). These are simple formality that's good for accountants only (Or dreamers, newbies). Traders don't talk this shit. They talk strategy, opportunity, risk & Co. It's your business and not discussions (Polls, Opinions) that will tell you what's likely or not. Uh ... Just waste my time. But it's not because you've lost 100% in a day that you'll make 100% in a day. Forget about making it consistently. Periods over periods. It's better to make 1% a year with a billion than 100% with a penny. Ciao
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Let's be honest here tho for a moment...
If ur trading 2 contracts on the mini with a 5k account and ur stops are 25pts out.. you shouldn't even be trading that instrument, with that account size and that wide stop.
Am I wrong here or.....?
Indeed ... and the thing you missed is itself neatly illustrated by the entire frame of reference of what you're discussing. As illustrated by a few of the replies above about how easily you could lose your account on the theoretical basis you describe: you missed the fact that long-term, successful trading isn't about profit maximisation: it's about risk management.
Lol really? So you and everyone else in the industry trade purely for the strategy and not money? I'll bet no. Talking returns is by no means taboo in trading nor in any business for that matter. Sure, strategy and other aspects are important but everything comes down to the bottom line.
And yes, true, but you and the like will claim that 100%-300% returns is "dreaming" and yet making 3 pennies from one would be pretty darn easy. Your statement just highlights that higher returns are easier with less money than more (which is something I never disagreed with).
Likewise, let's be honest. A 10% annual return on two contracts and their underlying value (same as if you had 200k in s&p mutual funds) is $20,000. With a 20k account and proper risk management that would be a 100% return. That is by no means "dreaming." I'm not saying it's easy, but it's funny how many people will act like it's impossible. In my opinion though, if one can't navigate the markets enough to get at least a 5-10% annual return consistently of the underlying assets they trade, you shouldn't be a trader and should just invest in mutual funds.
I don't know where you got the interpretation that I didn't understand risk management, but I've definitely mentioned it as a key to success in prior posts. It's obviously important to take trades within smart risk parameters so as not to blow an account up with consecutive losers even with a positive expectancy
"Others" wouldn't be a retail trader like you and me, right? Who cares what Zuckerberg is doing, that doesn't apply to us. If you have a $5000 account and you made $2000, you made 40%, doesn't matter what you traded with its real asset value. If you were correct 2 traders trading different futures could end up with different return %, although they both made the same profits with the same account size. Just think about that.......
End of story...
No. I trade for the money but I don't earn money by talking money. I can tell what I've done (No problem) and live accordingly but not tell what I'll make and live accordingly. It's A Posterioris since A Prioris aren't reliable in this domain.
I've made 80% last month from a small account and currently down 18% this month. 50% monthly (1300% Yearly) is my objective. Therefore I won't tell it's dreaming (Theoretically) but some will just never experience it (Practically).
Yeah ... Have you ever doubled, tripled your money on the market ? It's like the lottery... Every week there are new millionaires (It's possible) but they are the exceptions. So keep saying it's doable but you'll probably never achieve it (Without screwing up latter). That's the difference btw talking and walking.
Anyway... Expectations can be more or less realistic but they keep being dreams (More or Less BIG) until Realized !!!
By the way ... IMHO The bottom line comes after the process. Since I don't like making money the wrong way.
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You're right -- it's definitely not "nearly impossible" to make great returns in trading...but it's also not easy.
That's why alot of people may claim making high returns is basically impossible.
You need a great plan, and skill and strategy -- and leverage too, to accomplish such a feat.
