50k account profits POLL

[TradingScrub]

It's just weird to me to talk about monthly returns.

From my experiences you're either an active trader watching/trading the market on a daily basis, in which case you want to talk about daily returns, or you're more of an investor putting on longer term positions, in which case you you want to talk about yearly returns.

For an active trader with 50k of buying power 1% returns per day would not be an unreasonable goal. $500 a day, 10k per month, so 20% monthly return. Of course, every day you're flat your returns go down a percentage point, and every day you lose $500 your returns go down two percentage points...flat/down days can add up quickly, and commissions and other expenses are going to eat into your profits. If you ended up netting 5k per month I'd say you're doing great. Of course the next step from there is to up your buying power to 100k, scale up your size accordingly, and push it to 10k per month. Eventually you'll find a limit where more size doesn't equal more profits given your strategy and you'll hit your ceiling. Just 200k at 1% per day is nearly 500 grand a year...not bad at all.

Good luck with that though haha, much easier said than done. If you don't know what you're doing and slinging around your full account size from the start you'll easily have days where you lose 1-2% and soon enough wont even have enough buying power to put on the trades you want.

 

[trefoil]

Quote from HowardCohodas:

Make the case. A statement without explanation lacks credibility.

What he's referring to, I think, is pretty simple: at large sizes mere differences of a bp can be significant. At very very large sizes, like institutional, fractions of a bp become important. So, to talk about making something stupid like 10% a month is just not realistic.
Which is true. For a small retail investor, double digits per year are certainly doable, but not per month. High single digits per month on a consistent basis is, simply, close to impossible. I know you said you're doing 8 per, but that's over three months, not exactly a large sample size. Go through an episode like the fall of 08 or even the spring of 09 and continue to do that, and then you'll know you've got something. In these relatively tranquil markets, you haven't done anything yet.
Also, it's the mark of someone who's undercapitalized and dreaming that his little nest egg will yield enough for him to lounge on the Riviera. Ain't gonna happen.

 

[JoePaterno]

Quote from HowardCohodas:

Why would you project an end game of a blow out and bankruptcy?

because when you understand Risk-adjusted reward, it is the 800 pound gorilla in the room with the basis of this thread. Another term: Risk of Ruin.

 

[trefoil]

Quote from Mr J:

Why settle for less? You may think those that talk about percentages have no idea, but at least it shows a little ambition. Nothing great has been achieved by the attitude you have shown here. You may be willing to settle for mid 6 figs, but why criticise those who won't?

It's also misleading to suggest that you only use 100-200k of capital. If you lost it, you would replace it, yes? Your capital includes everything you are willing to throw into trading, not just what is sitting in your account.



No mention of risk profile or strategy. A lesser trader may achieve a better return due to a more aggressive risk profile, or more trading opportunities. A brilliant trader is going to be held back by limited opportunity due to size, and to a lower risk profile to please investors. He may make far more, but his return might be far lesser than inferior traders.

Risk profile is assumed in the percentages:

1 - Every bp over the risk free rate means, by definition, whatever you're doing is taking on enough risk to raise that return to that level. This is well understood with bonds (junk vs AAA vs Treasuries), but stock & options folks sometimes seem to forget this as a starting principle.
2 - 12% per year is around the average return, dividends reinvested, of the stock market, so risk on that would be equivalent.
3 - After that, it goes up from there. 50% annualized isn't achieved with a riskless profile.

 

[Mike Morrison]

Quote from HowardCohodas:

Make the case. A statement without explanation lacks credibility.

What case would you like me to make? that traders don't give a rats ass about percentages? Go read Lescor thread. Thats pretty much proof of everything I'm talking about.

As trader all I care about is income, period. 20K-30K/mo minimum and I"m good. On 100K thats no problem. Give me 2 million and I doubt I'd do a lot more. Thats why we don't become billionaires, doh.

 

[HowardCohodas]

Quote from Mike Morrison:

What case would you like me to make? that traders don't give a rats ass about percentages? Go read Lescor thread. Thats pretty much proof of everything I'm talking about.

When I reference something outside the current thread, whether in the same forum or somewhere else on the internet, I provide a link. I don't know what thread you are talking about, so perhaps you would take a moment to provide a link for all of us.

Quote from Mike Morrison:

As trader all I care about is income, period. 20K-30K/mo minimum and I"m good. On 100K thats no problem. Give me 2 million and I doubt I'd do a lot more. Thats why we don't become billionaires, doh.

All of us have different amounts of capital to work with, so percentages are a nice way to gauge the efficacy of learning a new approach to trading.

$20K to $30K per month on $100K capital is a remarkable achievement and quite outside any of my experience. Perhaps you will take the time to improve the results of the rest of us.

 

[HowardCohodas]

Quote from JoePaterno:

because when you understand Risk-adjusted reward, it is the 800 pound gorilla in the room with the basis of this thread. Another term: Risk of Ruin.

The Gambler's Ruin Theorem (a mathematical proof) illustrates that even with a positive expectation, sizing your bets is critical to achieving my favorite adage. "You must survive to thrive."

 

[Mike Morrison]

Quote from HowardCohodas:

When I reference something outside the current thread, whether in the same forum or somewhere else on the internet, I provide a link. I don't know what thread you are talking about, so perhaps you would take a moment to provide a link for all of us.



All of us have different amounts of capital to work with, so percentages are a nice way to gauge the efficacy of learning a new approach to trading.

$20K to $30K per month on $100K capital is a remarkable achievement and quite outside any of my experience. Perhaps you will take the time to improve the results of the rest of us.

Howard, you can find Lescor's "grinding it out day by day" thread in the Journal section here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=187730

My numbers are only remarkable depending upon how you do the math. Is 300K on 100K a HUGE return? I think I have 1 million in buying power (i never use that much so can't remember if it's 1 or 1.5). Is 300K on 1 mil that great? What if it's actually 1.5 if were using those numbers?

As for learning a new trading approach my advise is don't use percentages as a guage. Look, this is hard enough, you're just making it even more difficult. A good trading strategy is simply taking small losses and getting big wins. If you're profitable it's a good strategy and you should do more of it and less of whatever isn't profitable.

I always say that I personally don't know anyone who trades successfully with some rigid, signal generating, program and in my experience getting too technical is a bad idea. Instead of hoping to unmask the secrets of the market I would suggest several years of screen time. After a while you'll find that things happen and your confidence about the outcome is sky high. Those are the trades that make you all the money. Example- sometimes I have 1K shares in a trade (low confidence), sometimes I have 30K shares ( I've seen this movie before).
Anyhow, what I do is far from remarkable except that I'm remarkable at screwing up damn near every trade I make. If I got all the profits I get close to I'd make 5 million.

 

[1flyfisher]

Very true. and funny.


For any person starting out if they are lucky they won't end up in the red or blowing up their account after their first year.... depending on market conditions in that time period of course. during the internet run up it was pretty easy to make profits.
I voted 1% for a lucky first year trader.

Quote from tivthetrader:

Lets see, the average hedge fund last month in the best September 70 years was up a point or two. but you think some newbie schmuck with 50k should average 10% a month, or at worst 5%.

Did I miss where California already legalized crack, or is that still on the ballot for November?

 

[HowardCohodas]

Quote from Mike Morrison:I always say that I personally don't know anyone who trades successfully with some rigid, signal generating, program and in my experience getting too technical is a bad idea.

In spite of the fact that I am a retired software engineer and an automation specialist, I am not a black-box trader. I believe in automation only to the extent of "decision support" and execution. I've experimented with adaptive systems where the rules try to adapt to a changing environment with limited success. I have more experience with rules discovery using AI (genetic algorithms specifically), but come back to the human brain as the most adaptive control system. Automation of the mundane to reduce the pain and permit the brain to do the thinking.