If you attempt to compound your returns, you will blow your account, because you will eventually be max levered.
ES Journal - 2021/2022
- Thread starter Buy1Sell2
- Start date
If you attempt to compound your returns, you will blow your account, because you will eventually be max levered.
You can’t set a rate because you win some and loss some, you don’t keep the underlying asset. set a dollar target instead.
With a 20% daily return and compounded each day, after one year (252 trading days), you will have about $89,882,264,183,608,770,560.00 assuming you start with $1.00! That's OK, but this is EliteTrader -- you should probably aim higher.
With a 20% daily return and compounded each day, after one year (252 trading days), you will have about $89,882,264,183,608,770,560.00 assuming you start with $1.00! That's OK, but this is EliteTrader -- you should probably aim higher.
89 quintillion dollars is a bit of a reach.
If one wishes to be a bit more conservative, they should stop at around 1 quadrillion. That can sustain a modest lifestyle of Kraft mac 'n cheese dinners for a while, and an occasional jaunt to Tahiti for a vaca.
With a 20% daily return and compounded each day, after one year (252 trading days), you will have about $89,882,264,183,608,770,560.00 assuming you start with $1.00! That's OK, but this is EliteTrader -- you should probably aim higher.
Idiot. Your calculation makes no sense at all.
Ever heard of the maximum size one can trade in any commodity, or about well performing systems that have a limitation in size or a limited edge? Probably not.
Your reaction is a typical newbie reaction.
Eternal compounding does not work in trading, so what you do, does not exist in real trading. You will experience that when you stop papertrading and go for real.
According to your calculations:
- On day 178 he should buy that day the total daily turnover of all stock markets in the world.
- On day 203 he should buy that day more than 100 times the total turnover of all the stock markets in the world.
- On day 251 he should buy that day more than 700,000 times the total turnover of all the stock markets in the world.
That would also mean that the entire stockmarket of the world should increase from that moment on a daily basis by 20% and he should be the counterparty for all trades in the world. ROFLMAO.
https://www.visualcapitalist.com/the-worlds-10-largest-stock-markets/
This is indeed ET, a lot of idiots who have no clue about trading.
A lot of people still don't understand that this "you would be the richest man on earth" calculation is utterly stupid.
And this calculation start only from $1. Which is also impossible as you cannot trade just with $1.
I also assume that he makes this 20% daily in 1 trade. If he would need more trades to reach 20% it would even massively increase the volume he has to trade. And that volume is already more than the total daily turnover of all stock markets in the world when he is only half way your calculation.
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I get your point fellers. I was asking because it was surprisingly easy to generate a 20% return per day in calm markets and about 40% when volatility is high. I've never had these kinds of experiences in forex, it was a lot tougher there to generate a decent return. I get it 20 is unsustainable but surely there are some of you here who can compound your accounts at the rate of 5% per day, no?!
What do you trade, and how big (small) is the margin you use?
When I see your returns I think you trade at very high risk.
Compounding works but is limited, not like @ph1l was calculating.
High risk combined with compounding leads in general to a wipe out. To survive that you need to be a very good trader.
Are you trying to say the $89,882,264,183,608,770,560.00 which is about 957 times the estimated 2021 gross world product ($93.86 trillion) is an unrealistic goal?
I guess I thought the absurd number and the
would give away my opinion that a 20% daily return is not likely to happen very often.
So far been trading only micro SP500 to learn how futures trading works.
Usually I open a series of trades with a single "pilot" contract to help rivet my attention on price action. As time progresses I add 2, maybe 3 more contracts, and after some time another 2,3 or more. My SL and TP are far from the price to discourage traders who rely on DOM order flow from thwarting my plans. If a TP zone is reached I drag the TP line there and exit.