How good of a trader do you need to be to make a living?

peilthetraveler

peilthetraveler

Everyone talks about what a great trader Buffet so lets use that measure. He has had a 22% avg return for the last 45 years.

Lets look at a trader today. Most traders start with $25k. Imagine if they earned the same as Buffet over the next 5 years.

By the year 2018, that trader, assuming he didnt use any of that capital to live on, would have his trading account at about $67,500 in the year 2018. A whooping $42,500 for 5 years work.

Anyone who plans to replicate what Buffet does(which can be done easily) needs to either have a $500k account minimum, or needs to build his $25k account up over the next 15 years before he can start living off it.

If you want to live off your $25k account now, you need returns of 200%+ per year just to live an AVERAGE $50k per year lifestyle. If you want your account to grow, you have to make greater than 200% every year.

So...you think you can do it? Because thats how good you need to be.
 
one also needs to consider drawdown period. Longterm investing can be easily underwater for 3 years even if that good. So, you need more than 500k of real cash.

Buying on margin is not advisable as one can be kicked out easily. See example of gold shares where gold is pretty high but gold shares down on levels from 25 years ago. Hard one to predict in real time.
 
Depends on the setting. If you're trading your own account then yes, you do have to be concerned about your rate of return but it should be noted that doing 100% on a 25k account is much easier than doing the same on a 25M account.

If you trade prop, with the firm's money, you aren't the least bit interested in your rate of return. It's not as though you are handed a 50k account and your performance is tracked by rate of return. You're given position size limits and the more successful you get the higher your position size limits. Your performance is measured on how much money you bring in, relative to how much you leave out there.

To answer your question....you need to be very good to make a living at it, no matter the setting.

Quote from peilthetraveler:

Everyone talks about what a great trader Buffet so lets use that measure. He has had a 22% avg return for the last 45 years.

Lets look at a trader today. Most traders start with $25k. Imagine if they earned the same as Buffet over the next 5 years.

By the year 2018, that trader, assuming he didnt use any of that capital to live on, would have his trading account at about $67,500 in the year 2018. A whooping $42,500 for 5 years work.

Anyone who plans to replicate what Buffet does(which can be done easily) needs to either have a $500k account minimum, or needs to build his $25k account up over the next 15 years before he can start living off it.

If you want to live off your $25k account now, you need returns of 200%+ per year just to live an AVERAGE $50k per year lifestyle. If you want your account to grow, you have to make greater than 200% every year.

So...you think you can do it? Because thats how good you need to be.
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Buffet runs a different risk model than the traders here.

He doesn't worry about volatility. He is willing to suffer drawdowns for years.

He can do this because he bought and built a business that generates enormous cashflow. So much cash he doesn't know what to do with it.

If you think that equates to a trader with a 25,000 account you dont really understand how the markets work.
 
Quote from newwurldmn:

Buffet runs a different risk model than the traders here.

He doesn't worry about volatility. He is willing to suffer drawdowns for years.

He can do this because he bought and built a business that generates enormous cashflow. So much cash he doesn't know what to do with it.

If you think that equates to a trader with a 25,000 account you dont really understand how the markets work.
More...

I bet many here could crush buffet on a 25k scalping challenge.

I'm gonna make a statement that some people here will laugh, but its how I see it. IF YOU HAVE A GOOD SYSTEM...you dont need more then 20k in your account to make a living. 1000% percent a year should be easy, but you NEED Buying power. 10:1 preferably 20 or 30 to 1.

Here is why, and I will give you an example. Last friday, GMCR opened at 71, dropped to 69.5 and then retraced to 71 again...heavy resistence, I took a short at 71 with a .25 stop x 1000=250$ risk. I covered 500 at 70.36, and 500 at 69.17=1200 profit.

thats 1200 profit off of a 5k account with 20:1 buying power and only risking 250 bucks

I made 25% percent in a day...buffet raves about that for a year, hes a little leaguer
 
Quote from cmb:

I bet many here could crush buffet on a 25k scalping challenge.


I made 25% percent in a day...buffet raves about that for a year, hes a little leaguer
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cmb, you are a new trader bro, but when you become an experienced trader, you will look back at your statements and wonder how you could be so wrong and state it with such arrogance.


investing or trading is about value.
 
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