Originally posted by T/A_Bo
Here is something to ponder....
This is a quote from the Ed Seykota interview in the âmarket wizardsâ book....
âDuring this period the accounts that Seykota managed have witnessed an absolutely astounding rate of return. For example, as of mid 1988 one of his customer accounts which started with $5,000 in 1972 was up over 250,000%....I know of no other trader who has matched this track record over the same length of time.â
Letâs break this down. 250,000% on 5k is $12,500,000. If you take the 17 years between â72 and â88, this gives you 192 trading months. Take this to a compound interest calculator, and you will find that a 4.2 monthly return (50.4%/year)on $5,000 will return $13,476,343 over this period.
Next...
Paul Tudor Jones....
âHe launched the âTudor futures fundâ in sept 1984, with 1.5 mil under mgnmt. At the end of October 1988each $1,000 invested in the fund was worth 17,482"
4 years and one month gives us 49 trading months... $1,000 compounded with a 6% monthly rate of return would yield $17,378 for this period.
So here are two of the most successful traders in a generation, and their avg gain is under 10% a month! I have seen a number of traders in my room who could consistently bring in 5% a month fail because they desperately tried to make 20% In this business CONSISTENCY is the key to the big bucks, not speed. Slow and steady wins the race
Good Luck and Good Trading!
-Bo Yoder
DON'T EVEN look down on 5% a month compounded return!! That's like INCREDIBLE!! Humans don't understand about exponential growth and thus UNDERESTIMATES the effects of compounding!!!
5% compounded return per month is insanely good. But that's like 79.5% a year! Uncompounded, linear return of 5% a month is only 60%/yr. And that divergence between compounded and linear return increase exponentially as you go out further in time! If you can do that on a large capital base year in and year out then you are a Trading Wizard!
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