i am putting together my trading plan and i am wondering what is a reasonable monthly return, or yield, on trading credit spreads on indicies. i would like to return 12-15% per month using this strategy - is this within reach or should i adjust my expectations? any thoughts would certianly be helpful. thx.
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Credit Spreads - Reasonable Returns?
- Thread starter fakie99
- Start date
if you limit your risk to 5% a day and don't give a lt back,and you have found a profitable setup to watch and trade, that seems reasonable , 5% a day on 10k is $500 times 20 days is 10k, minus 25% for losers is 7.5k which is 75% return, sorry i didn't see the part about credit spreads, so disregaurd
Quote from mihalich:
how do you calculate return?
http://www.poweropt.com/bpspreadhelp.asp
net credit / (margin required - net credit)
another way of saying max profit / max loss
Fakie
Phil has a very lengthy journal on option spreads...2302 pages
You can see what a very experienced trader earned month by month, and more importantly, how he managed risk.
http://www.elitetrader.com/vb/showthread.php?threadid=49586&perpage=6&pagenumber=1
plenty of websites hawking promises of easy money with credit spreads and iron condors...you might get lucky, but without an edge and good risk management, the losing trades will wipe out an account.
post a trade you are looking at, including the bid/ask for the trade. I'm sure the feedback will alert you to some issues you may not have thought of. Good Luck.
Phil has a very lengthy journal on option spreads...2302 pages
You can see what a very experienced trader earned month by month, and more importantly, how he managed risk.
http://www.elitetrader.com/vb/showthread.php?threadid=49586&perpage=6&pagenumber=1
plenty of websites hawking promises of easy money with credit spreads and iron condors...you might get lucky, but without an edge and good risk management, the losing trades will wipe out an account.
post a trade you are looking at, including the bid/ask for the trade. I'm sure the feedback will alert you to some issues you may not have thought of. Good Luck.
Quote from fakie99:
thanks for the input. understanding that each trader's results are different, what would be a reasonable expectation for returns on a monthly basis using credit spreads?
Reasonable is quite subjective depending on your appetite for risk but 15% monthly? I wouldn't even dream about it. With a credit of 15% on your account, an adverse move against you and you'd be instantaneously wiped out.
I'd look at 2-3% a month as somewhat reasonable on a small account (less than 250k).
2%
3%
2%
5%
12%
9%
15%
20%
(-67%)
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3%
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5%
12%
9%
15%
20%
(-67%)
2%
3%
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