How much trading profit is enough to live on?

[globalarbtrader]

There's a huge difference beteeen hedge funds managing hundreds of millions or billions and smaller accounts. You can't really use the same % return logic for both situations. At some point after a massive scale up in profits everybody has to apply to the 10-20% is excellelt but the institutional and retail world is completely different.

Like turv said, it's dangerous and borderline irresponsible to tell new traders they need 150k to start. They are going to blow their first account regardless of the size.

The OP has been trading for several years already. And has already blown up at least once.

I didn't say he needed 150K to start; I said he needed more than 100K if he was going to rely on producing 18K a year of trading income with no other job.

I think it's far more dangerous and irresponsible to encourage people to think they can make sky high returns with no downside and trade with far too much leverage.

GAT

 

[Turveyd]

The OP has been trading for several years already. And has already blown up at least once.

I didn't say he needed 150K to start; I said he needed more than 100K if he was going to rely on producing 18K a year of trading income with no other job.

I think it's far more dangerous and irresponsible to encourage people to think they can make sky high returns with no downside and trade with far too much leverage.

GAT

He's unemployed he hasn't like most of us got the option of 100k+ so have to just get really good.

 

[globalarbtrader]

For a day trader I consider 18% barely profitable for a year.

I'm small 4K account and clearing 10-20% per week fairly consistently, haven't really traded this week only monday down 4%.

You can't compare % returns of million $+++ hedge funds against small day trading accounts.

Congratulations. You're eithier very very good or you've just been very very lucky.

You also can't compare the returns of someone with another job trading part time for a few hundred bucks a week against someone who needs to generate that money to live on. The OP can't rely on being very very lucky.

Yes it's true that not all strategies scale up to multi billion dollars because of capacity, but pretty much everything scales up to the multi million dollar level without any problem. Even if you are trading small illiquid stocks in which you can only take a $10,000 position without incurring market impact that is still 100 positions you can hold.

I think its absurd to think that someone trading at home could expect to massively (by orders of magnitude) outperform a well resourced professional firm.

GAT

 

[smallStops]

globalarbtrader: I think Turvey is trying to explain to you that retail traders have "advantages" that huge funds do not have. As you have never done retail trading, and lived off trading as retail trader, you won't know these "advantages". I think this is what Turvey is trying to explain to you.

 

[globalarbtrader]

globalarbtrader: I think Turvey is trying to explain to you that retail traders have "advantages" that huge funds do not have. As you have never done retail trading, and lived off trading as retail trader, you won't know these "advantages". I think this is what Turvey is trying to explain to you.

Thanks. On a point of fact, I currently earn my living as a retail trader and have done for the last 3.5 years.

I'm curious what these advantages are. They must be massive if retail traders can make 10 times more risk adjusted returns than even the very best hedge funds. Could you, or @Turveyd, give some examples please?

This might help in getting you started:
http://qoppac.blogspot.co.uk/2015/11/david-versus-goliath.html

GAT

 

[smallStops]

Thanks. On a point of fact, I currently earn my living as a retail trader and have done for the last 3.5 years.

I'm curious what these advantages are. They must be massive if retail traders can make 10 times more risk adjusted returns than even the very best hedge funds. Could you, or @Turveyd, give some examples please?

This might help in getting you started:
http://qoppac.blogspot.co.uk/2015/11/david-versus-goliath.html

GAT

I think these "advantages" are what they learn when learning to trade starting with a lot of disadvantages.
These "advantages", you can not come across if you started learning to trade with trading huge funds.
Basically, I think Turvey is explaining that by starting trading from a very disadvantaged place,
these retail traders could not cut any corners ( any corner cutting leading to a slap from the market) , contrary to other traders who started in better place.

 

[globalarbtrader]

I think these "advantages" are what they learn when learning to trade starting with a lot of disadvantages.
These "advantages", you can not come across if you started learning to trade with trading huge funds.
Basically, I think Turvey is explaining that by starting trading from a very disadvantaged place,
these retail traders could not cut any corners ( any corner cutting leading to a slap from the market) , contrary to other traders who started in better place.

I'd still like specifics. Otherwise you'll understand if I'm sceptical about these "advantages".

It's an interesting point of view you have, which means trading is the only activity where having no education or training in the subject is a huge advantage. As far as I can tell having no education or training just means you are likely to do silly things (the OP is still trading with way too much leverage after several years).

It also implies that institutional managers don't make mistakes or learn from their mistakes. Which speaking from personal experience, is not true.

GAT

 

[smallStops]

I'd still like specifics. Otherwise you'll understand if I'm sceptical about these "advantages".

It's an interesting point of view you have, which means trading is the only activity where having no education or training in the subject is a huge disadvantage. As far as I can tell having no education or training just means you are likely to do silly things (the OP is still trading with way too much leverage after several years).

It also implies that institutional managers don't make mistakes or learn from their mistakes. Which speaking from personal experience, is not true.

GAT

Sorry GAT, you are infering things that I have not.

Here, you are assuming that these retail traders who started from a disadvantaged place did not get an education or training in the subject. I'd say they actually get "street" trading education.

You are implying that institutional managers do not learn from mistakes. That is false.

May be it is a bit like "entrepreneurship": some get their entrepreneurship education from the "street", aka school of hard knocks; others get their entrepreneurship education from MBAs and justly make the most of it IF they choose to start a business. Obvisouly the "street-wise" entrepreneur will see things
a bit differently from the "MBA-wise" entrepreneur.
Just different ways of doing things, but at the end of the day, all entrepreneurs.

 

[globalarbtrader]

Sorry GAT, you are infering things that I have not.

Here, you are assuming that these retail traders who started from a disadvantaged place did not get an education or training in the subject. I'd say they actually get "street" trading education.

You are implying that institutional managers do not learn from mistakes. That is false.

May be it is a bit like "entrepreneurship": some get their entrepreneurship education from the "street", aka school of hard knocks; others get their entrepreneurship education from MBAs and justly make the most of it IF they choose to start a business. Obvisouly the "street-wise" entrepreneur will see things
a bit differently from the "MBA-wise" entrepreneur.
Just different ways of doing things, but at the end of the day, all entrepreneurs.

I agree with a lot of what you are saying. I'm not saying that self taught traders are massively inferior to professional traders. I realise I probably come across as a bit of a snob. I'm not saying that self taught traders are all dumb hicks. In reality there isn't much in an institutional trading training course that is useful, and which couldn't be found in a book.

And yes institutional traders have some constraints, apart from capacity. Although of course they also have some in built advantages.

But what I am saying is that I don't think the average self taught trader is 10 times better than an institutional manager. I don't think that any advantages that a self taught trader might have is worth anywhere near that much.

And the fact is that for the OP to be able to consistently make a living as a trader with their current capital base they would have to be 10 times better than the very best institutional traders.

GAT

 

[smallStops]

I agree with a lot of what you are saying. I'm not saying that self taught traders are massively inferior to professional traders. I realise I probably come across as a bit of a snob. I'm not saying that self taught traders are all dumb hicks. In reality there isn't much in an institutional trading training course that is useful, and which couldn't be found in a book.

And yes institutional traders have some constraints, apart from capacity. Although of course they also have some in built advantages.

But what I am saying is that I don't think the average self taught trader is 10 times better than an institutional manager. I don't think that any advantages that a self taught trader might have is worth anywhere near that much.

And the fact is that for the OP to be able to consistently make a living as a trader with their current capital base they would have to be 10 times better than the very best institutional traders.

GAT

This is where starting from a disadvantage place has an advantage ( but is a very costly process) :
they can't cut corners, so if they survive, they then become pioneers in the "impossible".
This phenomena is actually quiet current wherever superior performance happens: they
change the way the "game is played".

One very obvious example of the process disadvantage, forced to not cut corners, surviving etc.
and superior performance :