Day trader monthly performance and returns

trefledez

trefledez

Hello,
I have researched the performance of day trader and most people say that the best traders earn around 18% of their capital per month, but on youtube there are day traders who advertise their earnings that exceed 50% per month (by proof).
For me as an intermediate trader how much percentage do I set as a target? 18% or 55% per month?
Please share with me your experiences in terms of performance.
Thanks everyone.
 
1) trading involves a good portion of randomness/variance due to its nature unless you have a super high Sharpe ratio/strong clean alpha (not you - some HFT or statarb for instance).
2) stopping when you reach a target (but not having a maximum loss) skews win ratio in your favor but limits your profit potential as to offset losses, so if setting a target, please add a maximum loss i.e. stoploss as well. Otherwise you skew your RR in a bad way.
3) stopping when things are going well doesn't make a whole lot of sense, you have to make hay while the sun shines (see point 1) as markets change.
4) most people on YT and other public channels are FOS; everyone is a trading expert since start of COVID in particular.

That said, 55%/month is absolutely achievable, for a limited time period, if you're fine with significant blow up risk. Managing the size of your account additively (fixed size bets, withdrawing gains) can help with that. Not to say that you shouldn't grow, but nobody is going to grow by a factor 1.55 every month for long for several reasons. And that's assuming you can actually make 55% for a single month without a massive gamble in the first place, because just because one guy can do doesn't mean you can [that's the hard truth of this business].

I do think 55% is too much because you will be depressed once the market changes and no longer lets you win so easily.
 
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Snuskpelle said:
1) trading involves a good portion of randomness/variance due to its nature unless you have a super high Sharpe ratio/strong clean alpha (not you - some HFT or statarb for instance).
2) stopping when you reach a target (but not having a maximum loss) skews win ratio in your favor but limits your profit potential as to offset losses, so if setting a target, please add a maximum loss i.e. stoploss as well. Otherwise you skew your RR in a bad way.
3) stopping when things are going well doesn't make a whole lot of sense, you have to make hay while the sun shines (see point 1) as markets change.
4) most people on YT and other public channels are FOS; everyone is a trading expert since start of COVID in particular.

That said, 55%/month is absolutely achievable, for a limited time period, if you're fine with significant blow up risk. Managing the size of your account additively (fixed size bets, withdrawing gains) can help with that. Not to say that you shouldn't grow, but nobody is going to grow by a factor 1.55 every month for long for several reasons. And that's assuming you can actually make 55% for a single month without a massive gamble in the first place, because just because one guy can do doesn't mean you can [that's the hard truth of this business].

I do think 55% is too much because you will be depressed once the market changes and no longer lets you win so easily.
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thank you for sharing your knowledge.
 
For strategies that are capacity constraint up to 1M you should be aiming at 300%-500% per year.

People always confuse investing with trading.

Investing: unlimited (huge capacity) -> lower returns, huge scaling
Trading: limited capacity -> very high returns, low scaling

What I mean is: Let's say you are a scmall cap momentum trader and you're making 1k/day, how much capital do you really need to trade? At most 100k with a decent clearing house.

But you're not gonna boost that to 50k/day just because you have more money. The stocks you are trading are not going to suddenly soak up 100k shares just because you can afford them.

That said big returns =/= big leverage. You should be sitting in a niche and exploit it's inefficiencies on low leverage again and again.

That does NOT mean, that you should take out a 100k loan and start to daytrade just because it's achievable, you have to find that niche and become good in order to think about deploying your working capital in an efficient manner.
 
trefledez said:
Hello,
I have researched the performance of day trader and most people say that the best traders earn around 18% of their capital per month, but on youtube there are day traders who advertise their earnings that exceed 50% per month (by proof).
For me as an intermediate trader how much percentage do I set as a target? 18% or 55% per month?
Please share with me your experiences in terms of performance.
Thanks everyone.
More...
Deffo 55% :)
Here is a reality check: 90% of UK day traders lose money (a fact, not an opinion). So much so that large parts of day trading are tax free here and classified as gambling. Now try to square this fat circle when setting target returns. I would start by hopping not to lose money, you will be top 10% if you do.
 
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tonyf said:
Deffo 55% :)
Here is a reality check: 90% of UK day traders lose money (a fact, not an opinion). So much so that large parts of day trading are tax free here and classified as gambling. Now try to square this fat circle when setting target returns. I would start by hopping not to lose money, you will be top 10% if you do.
More...

I mean, either he already knows he can come close to that figure or it's a pipe dream. For the sake of a productive discussion most replies (including mine) assume the former. The reality in aggregate for day traders is certainly as bleak as those stats hint, but keep in mind the statistics for the group "all day traders" are probably heavily skewed by people who start day trading without knowing what they're doing, until they quit a few days/months/years later after depleting their accounts and credit [or before if a bit smarter].
 
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