- What stock was that?
- I assume the stock tanked 15% or so after an earnings report?
That's right. AMBA. Revs and EPS were great, guidance was terrible.
23% Annual Returns
- Thread starter Eighteen Aces
- Start date
That's right. AMBA. Revs and EPS were great, guidance was terrible.
Not full time. Not yet. I have an unrelated day job and do most of my trading on my smart phone.
If you are producing those kinds of returns then, the probabilities of loss will most likely catch up with you ...
- Don't quit your day job.
- Take some of that "house" money that you've generated and open and fund a Roth IRA. The tax deferral will help compound assets over taxable much faster.
- Gravitate towards holding longer term. Use academically and empirically proven ( by Nobel laureates ) research and invest in stock universes that have produced the highest alpha premium of all stock universes over decades *.
For example, in applying simple, quantitative variables within a tactical framework using the large / small cap value universes, utilities sector, and cash equivalents has produced robust returns over 35 years with a couple transactions a year
http://tinyurl.com/goeqe7o
* https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing
James
Director Quantitative Research
- Don't quit your day job.
- Take some of that "house" money that you've generated and open and fund a Roth IRA. The tax deferral will help compound assets over taxable much faster.
- Gravitate towards holding longer term. Use academically and empirically proven ( by Nobel laureates ) research and invest in stock universes that have produced the highest alpha premium of all stock universes over decades *.
For example, in applying simple, quantitative variables within a tactical framework using the large / small cap value universes, utilities sector, and cash equivalents has produced robust returns over 35 years with a couple transactions a year
http://tinyurl.com/goeqe7o
* https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing
James
Director Quantitative Research
Thanks for the input!
I wouldn't use leverage either if I had an account the size of yours.
I have the same problem with volatility in my account. Too many ups and downs. Need to minimize the draw downs. I try to keep things under control by limiting my position sizes, and sticking mostly to large-cap stocks. I only trade stocks with an average daily volume of 1,000,000 or higher and a share price of $18 or higher.
20% so you may have a maximum of 5 trades on at any one time.
When you say depending on the situation regarding taking profits I'm not sure how you will continue getting consistent returns without a consistent way to manage.
I don't like stops in fact if you had used them you may have had negative returns. It looks like in the past you were long when you opened the trade and you waited until it was profitable to close. Your risk was undefined without stops. The problem with stops is your holding until your wrong rather than holding until your right. Or if you have a profit target you are doing both at once.
One thing options can do for you is you can wait until your right while limiting your risk at the same time. So its like a stop except if your wrong then your right you profit, with a stop if your wrong at any time its over for a loss. If I understand properly your trades did not have any protection and you were fortunate that none of your trades tanked. Because if they did that's a possible 20% draw down for each position.
I recommend learning how to put on trades that define risk yet give you time to be right. I like to risk 10-20% per trade but with a very high probability of profit. To increase your probabilities your can exit early and take only a percent of maximum potential profit. There are also ways to increase your probabilities by lowering basis. Its a learning curve worth putting the time into.
Thanks for the advice, James!
I do have one question. It seems you are implying that my probability of loss is directly related to, or influenced by, my level of returns. Pardon my ignorance but, how does that work?
I rarely have more than 3 trades on at once. I don't like the idea of being all-in, or completely exposed, especially since I trade with margin.
As for profit taking... I think every trade is unique. For example: I am currently long GILD. The trade is in profit right now, my target is to sell at $100. However, if some negative news breaks, or the stock starts looking overbought, or shows some other kind of weakness, I would not hesitate to sell under $100 to make sure I take some profit. So, I determine my targets based on what I know when I enter a trade. Some trades I want to get in and out quickly (lower profit target), others I am willing to hold longer (to a certain extent) for a higher return.
Interesting insight on using options as a sort of stop. I don't know much about trading options, but I am intrigued.
Thanks for the advice!
Stockmarketmap is just using standard ET blanket statements that carry no meaning, usually used to collect Likes. Similar to these blanket statements:
- Perhaps you should buy lotto tickets instead.
- Your money is better spent in Vegas.
- You are better off trading binary options.
- Have you tried a roulette wheel?
- You don't have the capital to trade.
- Spend the money on a hooker, at least you will get something out of it.
- I will fade that trade.
Suppose you have a record of annual 23% after commission.
Then you must pay 1040 in 30% tax bracket, for example.
Final return after all comm+tax is therefore roughly 23*(7/10) =16%, with assumption of annual compounding.
If you are sure to compound your logic next 50 years, under your personal confidence with your cash-guaranteed, then your initial seed of 10K (for example) is supposed to grow up to 10*1.16^50= 16707.04= 16.7M (similarly 100K becomes 167M)
If you tell me that "Give me money then I promise to make annual 16% for you.", then I can answer "If you perform under annual 16% then your personal money should be mine for the portion".
Since my 100K shall become 167M with YOUR BRILLIANT logic, then I gladly pay you 100M to OP's pocket, for the next 50 years. If so, I am satisfied that my seed of 100K becomes 67M.
Furthermore note that stock market was running 400 years.
If someone has a logic with annual compounded 16% for the last 400 years, then probably Buffet ans Gates is now broke with no asset. / How much is 1.16^400?
Of course someone should be some family, such as Rothschilds with at least 10 generations with inherited logic.
Since there was NO SINGLE person with annual 16% at all for 400 years, quite possibly OP's proposition of annual 16% logic may NOT be possible in the future too.
If someone has a logic with annual compounded 16% for the last 400 years, then probably Buffet ans Gates is now broke with no asset. / How much is 1.16^400?
Of course someone should be some family, such as Rothschilds with at least 10 generations with inherited logic.
Since there was NO SINGLE person with annual 16% at all for 400 years, quite possibly OP's proposition of annual 16% logic may NOT be possible in the future too.
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