Certainly size is limiting to large hedge funds, but even the best team from the best hedge fund given $100K wouldn't commit to a 5% per month return with any kind of reasonable max drawdown amount over any reasonable span of time. If you find something like the timeline arbitrage opportunity that once existed in international mutual funds you could pull this off. Just "trading", well I won't say never because you could be some kind of crazy prodigy the likes of which the world has never seen, just be aware that it's that level of skill you'd need. As an aside, I'd say the sweet spot on size is significantly north of $100K, something like $10M-50M to allow you to amortize the investment you'd need to get the benefits of being big without the limits of size moving markets, but of course just an opinion there.
Is it possible to make 5% a month in stocks and ETFs ?
- Thread starter etradeqeko
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5% per month was my original goal going back about 7 years ago.
It took about 5 years and 8000 hours to learn how to do 5% per month on average.
I do it with futures, it is possible, but you have to WORK HARDER THAN 95% OF THE PEOPLE ON THIS FORUM, STUDY HARDER THAN A 95% OF THE PEOPLE OUT THERE...IF YOU DO THAT, YOU HAVE A CHANCE.
The larger the account the harder it is... but most of us don't have 10 million dollar accounts so... it is possible with a 250k acct or 2.5 million account. Market can soak up most strategies and not try to hustle you and jack you for your dough. Bigger the account... Market is going to make it more difficult for you to operate and pick your pocket more assuming you are trading short term.
It took about 5 years and 8000 hours to learn how to do 5% per month on average.
I do it with futures, it is possible, but you have to WORK HARDER THAN 95% OF THE PEOPLE ON THIS FORUM, STUDY HARDER THAN A 95% OF THE PEOPLE OUT THERE...IF YOU DO THAT, YOU HAVE A CHANCE.
The larger the account the harder it is... but most of us don't have 10 million dollar accounts so... it is possible with a 250k acct or 2.5 million account. Market can soak up most strategies and not try to hustle you and jack you for your dough. Bigger the account... Market is going to make it more difficult for you to operate and pick your pocket more assuming you are trading short term.
Its not hard to commit to a mean return of 5%+ per month on $100K, or even $1M, if you are risking 2% to 5% on each trade. Even 1.5% per trade.
That is the main difference between a hedge fund and a private trader.
A private trader can risk between 1.5% and 5%, but that seems to be way too much risk for most hedge funds these days, most risk 0.5% or less.
Although there still maybe smaller hedge funds around today who are prepared to take bigger risks for bigger rewards. In the past you had guys like Monroe Trout taking those kinds of risks in his Hedge fund and making 60%+ a year. He was risking upto 1.5% on each trade. His largest drawdown was 8%. But even 20% would be acceptable to me in order to make 60%+ a year.
If some of you guys haven't figured out how to average 60% a year on $1M with 20% drawdowns, then you guys need to do more research
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Different era...just out of curiosity how are Trout Trading funds doing today?Its not hard to commit to a mean return of 5%+ per month on $100K, or $1M, if you are risking 2% to 5% on each trade. Even 1.5% per trade.
That is the main difference between a hedge fund and a private trader.
A private trader can risk between 1.5% and 5%, but that seems to be way too much risk for most hedge funds these days, most risk 0.5% or less.
Although there still maybe smaller hedge funds around today who are prepared to take bigger risks for bigger rewards. In the past you had guys like Monroe Trout taking those kinds of risks in his Hedge fund and making 60%+ a year. He was risking upto 1.5% on each trade. His largest drawdown was 8%. But even 20% would be acceptable to me in order to make 60%+ a year.
If some of you guys haven't figured out how to average 60% a year on $1M with 20% drawdowns, then you guys need to do more research
Doesnt matter about the era that was just an example, if you still have a good edge today and risk in the range of 1.5% to 5%, you can easily make 60%+ a year in this era. Most hedge funds trade weakened edges because of the high competition from other funds. So they can only risk 0.5% or less. When there was less competition in the hedge fund space those early funds could risk a lot more and got bigger returns to match.
A private trader, if he knows what he is doing, is not competing against professional hedge funds, he is trading a low capacity method and so is competing against other small traders.
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I modeled the way I trade after Trout...I believe (not certain) that I trade very similar to his style.
He is far better than me because he figured out how to trade size and put up high percentage. My returns are better than his with lower draw downs ( I risk about 1.7% per trade ) and my worst draw down is 4% and I rarely have a losing month. My returns are about 6% per month.
I'm layering on a new system that will go active in the next couple months, I think I will average closer to 8% per month.
When you have a smaller account sub 5 million... you can put up these kind of returns after 1000's of hours of study and an ability to take many punches per month that equate to the costs of honda civics.
He is far better than me because he figured out how to trade size and put up high percentage. My returns are better than his with lower draw downs ( I risk about 1.7% per trade ) and my worst draw down is 4% and I rarely have a losing month. My returns are about 6% per month.
I'm layering on a new system that will go active in the next couple months, I think I will average closer to 8% per month.
When you have a smaller account sub 5 million... you can put up these kind of returns after 1000's of hours of study and an ability to take many punches per month that equate to the costs of honda civics.
I would have to disagree with the term "easily". Trout was in the top .001% of traders, and the markets were unquestionably completely different decades ago. Still curious how the Trout funds are doing today?
Once you have done the intense research and found good edges then trading become a lot easier than most struggling traders imagine. Sadly most never get to that point. I take it from your sceptical posts that you are in that group at present, but don't give up on the search, those good edges are out there if you look hard enough.
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Thanks for the condescending post, hope that made you feel better somehow.
Edges come and go, I mentioned one that was quite profitable for me (and many others) over a decade ago, so it's certainly not my first rodeo, although a personal attack on me is really irrelevant to my point so I don't feel much need to defend against it. Nothing you or I have said would change the fact that it's a miniscule percentage of traders who simply don't lose money over time, let alone make 5% a month. So clearly the answer of if it's realistic for an average trader to make 5% a month is no, that's just reality. As I clearly pointed out, if you have a very high opinion of yourself then you may conclude you're in the tiny percentage who could accomplish that, just be aware that if you think you can make 5% a month you also think you're among the very top handful of traders in the world.
I am still curious about how the Trout fund is doing today?
