How much trading profit is enough to live on?

globalarbtrader said:
It's a common misconception that day traders are exposed to less risk than longer term traders. They take on less risk per trade, but put on more trades. These effects net out.

I trade slow partly out of choice, and partly because the effects of commission and spread make it very hard to make money trading faster. By bringing your holding period down to minutes your creating a huge headwind to overcome and still make money.

I trade conservatively, i.e. with less leverage, because otherwise I'd be exposed to a high risk of losing a large percentage of my capital. This has nothing to do with the absolute amount of money I have - it's a pure mathematical truth.

It's true that for me to make $18,000 a year (on average) and for the OP to make $18,000 a year would require the OP to take on much more leverage than I do. But that doesn't mean the OP should try and make that kind of money.

You should never target return as a certain amount of $, but always target risk at a prudent and appropriate level.

GAT
More...

Investing a good investor has a 55% win rate pretty much at best, which is why your only making 18% per year, the longer the trades the less control you have in short.

A good daytrader can be 90% win rate and make 2% many times per day, until there contract size is maxed out.

Ofcourse this means a bad daytrader can lose 90% of the time, thats the flip side. Where as a bad investor can worst loss rate 55%


End of the day works put the same, just investor loses and gains slower that is all.
 
Turveyd said:
Investing a good investor has a 55% win rate pretty much at best, which is why your only making 18% per year, the longer the trades the less control you have in short.

A good daytrader can be 90% win rate and make 2% many times per day, until there contract size is maxed out.

Ofcourse this means a bad daytrader can lose 90% of the time, thats the flip side. Where as a bad investor can worst loss rate 55%


End of the day works put the same, just investor loses and gains slower that is all.
More...
No sense arguing, he's pretty clearly a know it all guy, doubt you'll get anywhere.
 
algofy said:
No sense arguing, he's pretty clearly a know it all guy, doubt you'll get anywhere.
More...

Teaching him isn't the point, he's old school and rich/fake rich and against margin, its the others, if you work at daytrading long and hard enough you can ( many will fail ) turn a small sub 1k even account into a good life style.

That's my mission and major progress :) sadly manic week :(
 
globalarbtrader said:
Like I said that equates to an annual Sharpe Ratio of just under 4. Please tell me the names of the hedge funds making that sort of money, consistently, outside of high frequency trading firms (which the OP clearly isn't doing).

GAT
More...
when a hedge fund says how much they earned.. didn't they already subtract salaries and costs of place of business etc..? they are talking return to investor. but when the retail trader talks return, they usually don't have the overhead. And.. a retail trader can mostly get in and out pretty much without much splash. The large fund can't always. The return of a hedge fund vs the retail return.. apples to oranges
 
O(1) said:
when a hedge fund says how much they earned.. didn't they already subtract salaries and costs of place of business etc..? they are talking return to investor. but when the retail trader talks return, they usually don't have the overhead. And.. a retail trader can mostly get in and out pretty much without much splash. The large fund can't always. The return of a hedge fund vs the retail return.. apples to oranges
More...
Plus the dollars under management difference.
 
Best advice here: listen to GAT, everything he says makes sense. And he's a risk taker. His strategies run at 25% vol per annum (if I'm not mistaken). That's pretty agressive: DD scales linearly with vol, and for most (surviving!) CTAs that multiplier is 1.5. So I think he's looking at a maxDD in the range of 35 to 40%. Pretty significant.
I very much respect his patience in this thread...
 
FCT said:
Best advice here: listen to GAT, everything he says makes sense. And he's a risk taker. His strategies run at 25% vol per annum (if I'm not mistaken). That's pretty agressive: DD scales linearly with vol, and for most (surviving!) CTAs that multiplier is 1.5. So I think he's looking at a maxDD in the range of 35 to 40%. Pretty significant.
I very much respect his patience in this thread...
More...
Lol @ 35-40 % drawdown, that's no trading expert sorry.
 
You must log in or register to reply here.
Back
Top