Let's get real about returns

Quote from Foz:



Good point, candletrader. In fact, if Mr. Scientist is making money but only having tiny little drawdowns, he could be making so much more money if he leveraged up and stomached the larger drawdowns. 25% per year with a 5% max drawdown is equivalent to 100% per year with a 20% drawdown at 4X leverage. I'd rather have the 100% return, thank you.
More...
It'll get ya -one day-, buddy :D

By the way, who says I'd be satisfied with a 100% return?

~Mr.Scientist
 
If you want to see where the real ES-mini points are made everyday for FREE then this is the place to be. Just sit back, relax, watch and listen as trades are posted with live charts and add the points up yourself and you will see why 300/400 people are trading here every day. This room moves the market so you better be there or be a 'johnny-cum-lately' and lose!
We even have our own coffee shop for OFF trading chat so why not drop in and shoot the breeze..........!

If you are NEW to the room - please NOTE
The Room Slogan, No Boasting, Just Posting

goto:- http://woodiescciclub.com

We live by Woodie's Mottos:
- Traders helping traders
- Positive attitude and positive posts
- There will be better trades down the road!

Woodies Top 7 Setups in order of results are
1. Reject of the Zero Line
2. Shamu Trade
3. Trend Line Break
4. Ghost Trade
5. Reverse Divergence
6. Hook from Extremes
7. Horizontal Trend Line Break

With over 300/400 people in this room we must all have some respect for Woodie and other moderators.
Before jumping in with both feet listen and learn for at least a week about how we do things in here.
1. Will all new people to Woodie's CCI Club please keep the questions down to a minimum.
2. Go and research the indicators we use CCI/LSMA/EMA/Square of Nine.
3. Go and research the patterns we use SHAMU, GHOST, TLB, SLINGSHOT, ZERO LINE, BATMAN etc.
4. The moderator's are all traders realtime and are willing to answer questions after hours.
5. Please leave all microphones off during trading hours, except for the daily moderator.
6. Please do not post charts or pictures unless there is a good reason and it contributes to the room and you point out the area of interest on the chart, CCI tlb, slingshot, hook, shamu, ghost or whatever.
7. Please post questions in text, the daily moderator will answer if and when they are not in a trade.
8. We all encourage you to post your trades in and out and if possible why. NO ego's, NO total $ or points for the day.
9. Absolutely NO Soliciting and NO Private Messages [PM]'s allowed in this room.
10. Enjoy this room and your CCI trading - it is free to be here - you will love it and it will feel like home - have fun and contribute......8).

for that information goto:-
http://www.e-minitraders.com/phpBB/
http://www.talkstox.com/forum/forumdisplay.php?s=&forumid=13
http://www.woodiescciclub.com
http://www.r7.com

From the words by The Eagles song 'Hotel California'
sums up how we all feel about Woodie and this room
'You can checkout anytime you like' - 'But you can never leave'

If you have had a good week trading you will need this website
Woodies CCI Club supports The Make-A-Wish Foundation®
goto:- http://www.makeawish.org/

MANY thanks to everyone that have made this room a very positive and rewarding experience
"By Traders, For Traders – Sharing Information Freely To Help Each Other Succeed"
-------------------------------------------------------------------------
Woodie June 2003

If you want to help move the market then just come with a smile on your face .... :)
tonyuk
 
Hi tonyuk.. even if people don't ultimatley feel comfortable trading Woodie's methodology, it is great to see people like Woodie providing a pretty complete approach to trading for FREE...

Over the years, I have visited his room a few times (particularly when it used to be on Paltalk, prior to it migrating to Hottcomm) and my hat goes off to Woodie for the generosity that he exudes in providing this free service which is evidently enjoyed by so many people... although his style is not for me, it is for many others...
 
Quote from Scientist:


It'll get ya -one day-, buddy :D

By the way, who says I'd be satisfied with a 100% return?

~Mr.Scientist
More...

Agreed, "It'll get ya -one day" ...may not be today, or even next year, but trading on large leverage with no additional capital to back it will come back to haunt you one day. The chance may be 1 in 100, or 1 in 1,000,000....depending on your risk controls.

Unbelieveable market events DO occur and people get permanently blown out. Even the best of the best.

Just as important is a trader's, own risk tolerance. If a trader is very comfortable with a system making 250%/year with 1x leverage, then why not make 1000% a year with 4x leverage?

Simple, the trader may simply be a basket case when attempting 4X leverage to boost returns and actually end up reducing returns.

Every trader finds their own equilibrium, if it is changed to something they are not, returns will likely go backwards...not forwards.
 
Quote:

Let me say this here, once and for all, LOUD AND CLEAR:
Nobody gives a hoot how much somebody can make "per contract" in a day! This is a completely relative figure! It's all about margin! Doesn't anybody here talk about that?
Thus, all these "how many points" figures are completely distorted and misleading in terms of "%returns on account"!

Unquote.

First of all, thank you Scientist and Candletrader for your contributions on this thread already - they are perfect examples of the gems that can be found on this forum.

I don't think I fully understood your post Scientist "Dear Super-Return Trading Brethren".

Would a simplifyied version of it be: annual percentage return on capital (ie. Net Proceeds after commissions, before other expenses divided by Capital Used to Fund Trading Accounts)?

And secondly, wouldn't AVERAGE Net Dollars/contract/day, if averaged over the life of a particular trading method, be some sort of useful tool to compare different trading "skills" (whatever one wants to mean by that)?

Help me out here but isn't at least a net dollar return on some sort of base criteria like contracts/day a better measure than "average points per day"?

(I am clear about the fact that when someone says they made 10 points/contract/day is meaningless when this is one day.)

Any comments greatly appreciated. Your posts are very helpful and constructive. - rcm
 
Quote from AAAintheBeltway:



I realized I was comparing apples to oranges in using mutual fund managers and hedge fund managers with huge amounts of capital. But it makes my point even more clearly. Certainly it is easier to make high returns with a small to moderate trading account, yet few seem able to do it, at least consistently.
More...

In general, managers who trade other people money take less risk than individual traders who manage their own private capital. That's why some individual traders can have higher returns. The question is: whether they can consistently beat big players in terms of risk-adjusted return. We have 10+ year audited track records for many CTAs and funds. There're no such statistics for small traders. Or at least they aren't available to the public. Sure, anyone can show his/her account statements. But still, we don't know how many accounts does this person blew out before. Or how many accounts trader runs.

Regarding Scientist's "law of diminishing returns". I don't think it has significant impact here. Go to www.iasg.com site and view "Top 100 Managers Ranked by Latest 60 Months Annualized Return" or ranked by Sharpe ratio. Did you notice any negative correlation between return and asset under mgmt? I don't see it. There's more, these funds diversify their portfolios. Take for example Abraham Trading. It trades on 51 markets (http://www.abrahamtrading.com/method2.htm). They manage ~$20M now, ~$100M few years ago. That is $0.4M for every market, 2M few years ago. Do you think trading that kind of size must be connected with substantially higher slippage in today's markets? I don't think so. Larger funds, ~$1B can trade on forex, which is super-liquid.
 
Quote from AAAintheBeltway:


I think the real lesson of this exercise is that there is a very fine line for daytraders between being a star and being part of the 90% crowd.
More...

AAA, you make some very good points in your post. From what I have seen in real life, the 90% consistent loser stat is pretty accurate. In the current market conditions especially, I am only seeing about 1 in 10 traders consistently making money. That statistic aside, I do believe it is possible to be a consistently profitable trader...and in fact to be a highly profitable trader. But as you have observed, there is a fine line for day traders between being a star and being a 90%-er (those that lose consistently). What separates the winners from the losers? Once Methodology and Money Management have been learned and mastered, I think it is all a matter of Discipline, and then even more discipline. IMHO, you can teach a trader great entry and exit techniques and how to size positions and manage trades, but until they make the full commitment to personal discipline 100% of the time, they will not become a long-term success.

PEG LEG JOE
 
Quote from AAAintheBeltway:

It is frequently said that 90% of traders are consistent losers. That number apparently was derived from the records of one daytrading firm, but I would not be surprised if it was accurate. Despite the fact that many ET members are relatively new traders, it is common to see surprisingly large numbers thrown around as the bare minimum they will accept. I'm not singling anyone out, so please no angry responses that I have insulted your intelligence or ability. But let's get real.

A 12% annual return would be better than virtually 99% of mutual funds over the past three years. A return of 24% over a period of years will put you in the same league as such neophytes as Warren Buffett, Bill Miller and Peter Lynch. Bump that up to 50% a year and they will reserve a spot for you in the Hedge Fund Hall of Fame, right between Julian Robertson and George Soros. What does that take anyway?

One percent a week with no compounding is 52% a year. On a $100,000 account, that is a measly $1,000 a week, or about what many newbie ES traders expect to make per day trading five lots. That is only $200 per day, a crummy $.20 move on a 1000 shares of stock. How easy is that? If you traded 5 lots in the ES, that is less than a point a day. Who trades 5 lots with a $100k account, not me for sure. More likely 10 lots, so you only need TWO TICKS per day. Two lousy ticks per day and the world will literally beat a path to your door, the rich and famous will toast you, beautiful women will throw themselves at you like you were an NBA star and you will have to have a secret address to prevent people from sending you money to manage. Two ticks per day.

If I started a chatroom and said my goal was two ticks per day, not only would I have no members, I doubt I could pay people enough to join. I certainly wouldn't join. We know it is possible to make much better returns. Honestly, it is not unreasonable to triple a futures account in a year. The trick is to do it year after year, and almost no one has ever been able to do that. Why not? Who knows, I guess because it is possible to get lucky for a few months and shoot the lights out. Markets change, but few will abandon a winning method.

I think the real lesson of this exercise is that there is a very fine line for daytraders between being a star and being part of the 90% crowd.
More...

All I can say is I like your style!!!

Thx
Wavetrader
 
Great question, AAA. Doesn't seem like there was much interest in getting "real about returns", though. I guess that's not surprising.
 
Quote from spect8or:

Great question, AAA. Doesn't seem like there was much interest in getting "real about returns", though. I guess that's not surprising.
More...
spect,

you must have been napping.
:)
 
You must log in or register to reply here.
Back
Top