From rags to riches, 700$ to 100k in 2013
- Thread starter dfantome
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Quote from Put_Master:
<<< But again, I have to remind you % returns on very short trades are 100% meaningless, in terms of how the value of your portfolio will actually turn out at year end.
If you did 50 - 100 very S-T trades through out the year, with each earning 50%, you'll end the year earning A LOT LESS than 50%.
Those very S-T % returns are 100% meaningless.
The shorter the trade the more meaningless the % return. >>>
This is a response to justtrading, who placed a "?" after I stated the above.
Remember, my discussion was about very short term trading.
Thus, just to make the point, I'll use an extreme example of someone who does a one day trade "every other day", with each trade earning 50%,.... that person will NOT end the year earning a 50% return on his account value.
At best he will earn 25% at year end.
Do a 50% day trade every 2 days, and you will lower your year end results even more.
On the other hand, an investor who trades monthly, earning 50% on each trade, with the same one day gap between trades as the day trader above, will actually end the year earning extremely close to 50%.... minus commissions.
The reason is obvious. With very S-T trades, there are too many gap days of no trading.
The more gap days during the year, the less likely your year end results will match your consistent daily 50% trades.
Do just one annualized LEAPS trade during the year, which earns 50%, assuming you use all your cash,... and your year end result will then match the same 50% return at year end.
No trading gaps.
<<< But again, I have to remind you % returns on very short trades are 100% meaningless, in terms of how the value of your portfolio will actually turn out at year end.
If you did 50 - 100 very S-T trades through out the year, with each earning 50%, you'll end the year earning A LOT LESS than 50%.
Those very S-T % returns are 100% meaningless.
The shorter the trade the more meaningless the % return. >>>
This is a response to justtrading, who placed a "?" after I stated the above.
Remember, my discussion was about very short term trading.
Thus, just to make the point, I'll use an extreme example of someone who does a one day trade "every other day", with each trade earning 50%,.... that person will NOT end the year earning a 50% return on his account value.
At best he will earn 25% at year end.
Do a 50% day trade every 2 days, and you will lower your year end results even more.
On the other hand, an investor who trades monthly, earning 50% on each trade, with the same one day gap between trades as the day trader above, will actually end the year earning extremely close to 50%.... minus commissions.
The reason is obvious. With very S-T trades, there are too many gap days of no trading.
The more gap days during the year, the less likely your year end results will match your consistent daily 50% trades.
Do just one annualized LEAPS trade during the year, which earns 50%, assuming you use all your cash,... and your year end result will then match the same 50% return at year end.
No trading gaps.
700 what?
Dollars?
Have you done the math?
To achieve this you would have to be God and even if you were...you probably Still wouldn't achieve this because the market is imperfect.
Destined for failure. At the same time $700 is really nothing to lose.
"If you shoot for the moon you will get at least to the top of the trees."
$700 to $1400 to $2800 to $5600 to $11, 200 to $22, 400...like Surfer said, if you could do well your first 5 trades then you can take smaller risks to not blow up you account.
It is easy to make 100% in one or two days buying the correct weeklys, but it is also easy to lose 100%.
You will need some luck. Good luck!
$700 to $1400 to $2800 to $5600 to $11, 200 to $22, 400...like Surfer said, if you could do well your first 5 trades then you can take smaller risks to not blow up you account.
It is easy to make 100% in one or two days buying the correct weeklys, but it is also easy to lose 100%.
You will need some luck. Good luck!
The difficulty I'm having is that you seem to be confusing an annualised rate of return with absolute return.
When you say a trade earns 50%, that gives the impression it is an absolute return. Even with no compounding, an absolute return of 50% per trade will give you several thousand percent per year, assuming few to no losing trades in your example.
Yes, if you make 0.20% per trade, do 1 trade per day, and assuming you annualise on the basis of 250 trading days per year then that is 50% per annum. Since you are annualising your return for each individual trade, not trading daily is going to reduce the final percentage realised.
Earning 50% per trade is way different from earning 50% annualised return per trade.
When I speak in terms of % return, I am always speaking in terms of annualized % return.
It's important to be "consistent" when evaluating and/or comparing various trades.
Otherwise, what may seem like a good trade, may actually not be quite as good as it seems,... or it may actually be better than it seems.
Important to have a "standard benchmark",.... as it smooths out all the inconsistent variables, like length of contract, cash at risk, dollars earned, R/R.
And it makes it easier to establish a "minimum benchmark" as well.
That being, I want all my trades to earn a minimum of 13%.
If it only earns 12%, then I know i need to wait for a higher credit.
If by not annualizing, I earn 500% on this or that very short term trade, (which won't fill my car with gas,), and then end the year earning 15%.... what was the relevance of this or that meaningless 500% return trade?
Who am I hoping to impress with that meaningless 500% return trade???
Going out. Read you later.
It's important to be "consistent" when evaluating and/or comparing various trades.
Otherwise, what may seem like a good trade, may actually not be quite as good as it seems,... or it may actually be better than it seems.
Important to have a "standard benchmark",.... as it smooths out all the inconsistent variables, like length of contract, cash at risk, dollars earned, R/R.
And it makes it easier to establish a "minimum benchmark" as well.
That being, I want all my trades to earn a minimum of 13%.
If it only earns 12%, then I know i need to wait for a higher credit.
If by not annualizing, I earn 500% on this or that very short term trade, (which won't fill my car with gas,), and then end the year earning 15%.... what was the relevance of this or that meaningless 500% return trade?
Who am I hoping to impress with that meaningless 500% return trade???
Going out. Read you later.