Im confused.. how much should I expect

I also want to add I suspect there are very few individual actual traders (not institutional) who are making a living trading as their sole or primary income.

If you have 5k in savings and make 50k per year then that's 10x return on savings at zero risk.

Imagine a trader has 500k and shoots for the 25% returns at 1:1 risk using active trading. He will either be up or down 125k at the end of the year. If he goes to work and can get a job making 125k per year then he has a 25% guaranteed return at 0% risk plus the expectation of future benefits, raises, and vacation time. If he were willing to take risk, then he could also earn money by using passive investing or less active strategies.

I'm surprised there are so many brokers, vendors, programmers, etc in this industry. Obviously they aren't making money from professional traders.
 
Quote from tycoonman:

you can make an avg. of $500/day trading ES using just one contract. You only need about 6k to meet minimum requirements.
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Are you seriously telling him that he should expect to average 10 ES points per contract after commissions on a daily basis?

50 points per week? 200 points per month?

Have you achieved such results yourself?

If you are telling the OP to expect such results, you are simply giving him false hopes.

If only 10% of those who try to trade succeed, then only a very small fraction of those 10% would produce results anywhere near what you stated.

This is not being negative, this is being realistic and honest.
 
Quote from intradaybill:

Futures trading is trading on margin. 50%/yr is average performance for consistent winners.
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Huh? This is ridiculous. Just do that for a couple of years and you will go down in history as the greatest money manager of all time. Geeeez, talk about being removed from reality.
 
Huh? You seem to have a disconnect between what it means to be a money manager managing large sums of money vs what it means to be an individual daytrader with the flexibility to nimbly move in and out of the market several to many times a day. 50% a year for a skilled, leveraged, daytrader is not that great.

Quote from Dalmation:

Huh? This is ridiculous. Just do that for a couple of years and you will go down in history as the greatest money manager of all time. Geeeez, talk about being removed from reality.
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Lucias gave you a very sound answer from what I know from my own experience as a discretionary position trader.

I think returns are much like pencil size. Every guy thinks the fellow beside him has a bigger pencil. It is actually a meaningless statistic on its own.

I prefer lower risk, lower return and consistency since I retired in 2005. I have also diversified investments to lower the pressure to produce and have a lot more fun trading now. I only make part of my income from trading. I can tailor my returns depending on the chance I want to take in failing to make my return.

Interestingly enough, I submitted a series of my real trades to a system guru who concluded that I was earning twice what any system he had ever tested (of hundreds he and his friends tested). He also noted something very interesting about my trades that he had never seen before in any system he had tested. I knew instantly what caused it but it is part of my edge if any. I then realized he didn't understand something vital about trading. Doubtless there are many things I don't understand either which is why I strive to learn constantly.

Lucias also pointed out that your question is not framed correctly since you likely want to know the level of certainty that your returns are not due purely to chance. IMO the best traders don't go for highest returns but for consistent returns in all market conditions.

I would recommend that you study Ralph Vince for more information of the questions to ask. Good luck.
 
Although most responses were thorough and genuine I am still confused and as suspected no real straight answers.

Keeping it simple I just want to know if I give this guy some doh to daytrade with should I be happy with his returns of 48% pa or are there funds or other things that can offer me a better rate of return?
 
Quote from falcon:

Although most responses were thorough and genuine I am still confused and as suspected no real straight answers.

Keeping it simple I just want to know if I give this guy some doh to daytrade with should I be happy with his returns of 48% pa or are there funds or other things that can offer me a better rate of return?
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I think your question is too simple. There are many variables involved.

On what base is the 48% pa return calculated? Return on assets or return on equity?

Do you trust your friend's assertion that he has made 48% pa, or will you seek documentation to prove this?

For how long has your friend generated these returns?

What is the fluctuation of returns and maximum drawdown while your friend has been trading?

If your friend has made 48% pa for a few years, it's likely he will find it difficult to earn this return based on a higher account size. Will you be willing to accept a lower return as a result?
 
Its return on his total funds in his trading account which I have viewed and trust is correct. He has been trading independantly for just over 3 full years now with 48% being the average year.

Im not totally ignorant so I know what I could acheive with a term deposit or some either kind of fixed income with very low risk and I know daytrading is risky so I could lose it all. Its just that I happen to have a friend who can trade for me but can't understand why I read 20% year after year is considered great by someone like Buffett yet I also hear 20% is very average for daytrading.
 
Quote from falcon:

Its return on his total funds in his trading account which I have viewed and trust is correct. He has been trading independantly for just over 3 full years now with 48% being the average year.

Its just that I happen to have a friend who can trade for me but can't understand why I read 20% year after year is considered great by someone like Buffett yet I also hear 20% is very average for daytrading.
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Buffett has limitations of size that someone with a sub 1 million account may not have.

People saying that 20% is average might be referring to return on equity rather than return on assets.

People saying that 20% is average might be taking on far greater risk, which will likely result in large drawdown(s).

People saying that 20% is average might be overstating their returns.
 
Thanks for that.

There is risk he says as its day trading but he exercises sound risk management and has only had a few small negative months.

What do traders go by, return on equity or return on assets? He goes by return on capital in his account.
 
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