Anyone not making 200k a year from trading is a piker
- Thread starter gmst
- Start date
It seems like it kind of depends on where you're starting out. If I had a real job and started out making 30k/year and in 5 years was making 50-70/year I would be happy with that and it seems like a normal progression. If you started trading with a 50k account making 20 to 30k for 5 years that is just amazing. If you started with a 500k account making 50k/year is kind of ehhh.
I'm curious how you interpret this as being a good benchmark, because I see it as more baseless theory that gets tossed around on forums. But I am curious as to how you are looking at it, maybe I'm misunderstanding your point.
If I make 60/hr in the corporate world but I average 100/hr trading, I should at some point go back to the corporate world because I'm not hitting this ambiguous 3x income rule?
These are my reasons:
1) Specific Edges in trading can disappear over time. So you could be profitable now but not any more say by 2017. Take Neke's example. (Lets not argue if he had any edge or not. The fact is he was making 200k or so every year and for last 2 years now he has not been making any money).
2) Markets can change in a major way - e.g. advent of HFTs, subpenny, people talking about not getting filled.
3) Markets can enter a prolonged low volatility period - say 5-7 years at a stretch. If someone is making 100k in a good year, it is possible the PL in a low vol year would be 40k.
4) Real life examples which give credence to above points are numerous posts shared by very respected traders aka EricP, Lescor etc. who have time and again commented that they are making much less coin now compared to what they have made over the years. EricP went to the extent of saying if he has to start trading today, he might not do it at all.
5) If after making money for 6-7 years say 80k every year, your edges disappear. It will be very hard to get another job.
All above points apply to at home career traders, not to people who trade on sidelines with a job or work with a fund/a team.
Lets talk about 3x being a good benchmark. Say, one can make 80k per year in a job, if you make 240k per year from trading over a 5 year period - you will have a million in your account. Even if trading profits stop for a few years after this, you will be ok.
A big problem that is highly underestimated is following - let us say you make and have 600k in your trading account and then your edge vanishes. It is very easy to lose another 200k over the next 2 years before you will realize that your edge is no more. So, you will never end/pause your trading career at a your high point, rather in a substantial drawdown.
Just my thoughts - I am myself comparatively new in this field and my views might change over time.
Thanks for taking the time to respond, I better understand the point you are making now. I live below my means and save quite a bit (the same I would do in any occupation) which takes care of the volatile times I do encounter.
The problem that I see frequently is that people think they have an edge, and then think it disappears when realistically they never had an edge to begin with.
The only "edge" that will never go away is the option of risking a lot less than I am trying to make, then it's just a very simple numbers game. This edge can't be taken away and although my equity has been volatile in the past, it's nothing like I see a lot of traders speak about and experience in their careers.
I think this is a reasonable goal.
If you have ever made money trading, you realize that even in a winning strategy, overcoming the psychological barriers to increasing size (assuming it can be done, sometimes the liquidity is not there) is not trivial, and as well it should be.
Taking on more risk because of all the money that is just sitting there to be picked up means you have not been trading for very long. I don't care, EVERY strategy is going to have a day that is going to challenge your very existance. If you are trading your own money, imo the key to making it big when you have something that works is to push hard enough to continue to increase your account base so that a horrible day/week/month will be kept in check.
There are people that will tell you differently. But their success had a great deal to do with being in the right place at the right time, not so much that they are better traders. No question, they had the balls, but if your number is up, watch out when doing size. So the OPs statement is poorly stated at best.
There is an artful balance between sheer balls and worriesome cynicism.
you made 70k without leaving the house,your biz expense is $70 a month for internet access and a 400 laptop, only tool needed is the one between your ears, great biz,now if that tool were a chisel,you would be dulling the edge by using it to think about the imaginary money,just watch the screen,wait for an opportunity,take the money and repeat the process,if you are trading 5 max lots,add 1,this is all you should be using that tool for..if 300k a year is going to happen,you want it to happen slowly ,build up to it,so that when it does you have the knowledge/mentality to repeat it annually
A trader is a piker...
if he starts threads like this.
if he starts threads like this.