Realistic Rate Of Return?

T

tminuspi

Is there any type of formula for figuring out where an experienced trader "should be", percentage-wise, during a given year's worth of stock transactions? Starting with half a million (margin included), and subtracting all expenses to arrive at a mean average.

Also, does an increase in available capital make these percentages more, or less difficult to maintain over time?
 
If you can make a 25% return every year, consistently and with low drawdowns, you'll be a super star, and people would beg you to take their money and manage it for them.

Now, in this thread, you'll see a bunch of people telling you that they (and you) could make 100%, 200%, and in some cases, "I double my money every month". These folks are simply lunatics, and we have quite a few of them on board.
 
High returns have a high degree of risk and are not sustainable over longer periods of time.
Most often than not such returns and more are given back to the market.
 
Quote from tminuspi:

Is there any type of formula for figuring out where an experienced trader "should be", percentage-wise, during a given year's worth of stock transactions? Starting with half a million (margin included), and subtracting all expenses to arrive at a mean average.

Also, does an increase in available capital make these percentages more, or less difficult to maintain over time?
More...
Triple digit returns are a possibility provided you use short term approach.
 
Quote from nonlinear5:
If you can make a 25% return every year, consistently and with low drawdowns, you'll be a super star, and people would beg you to take their money and manage it for them.

Now, in this thread, you'll see a bunch of people telling you that they (and you) could make 100%, 200%, and in some cases, "I double my money every month". These folks are simply lunatics, and we have quite a few of them on board.
More...
Very good post with a realistic expecation. I agree on every point.
 
Interesting responses all, and I greatly appreciate them. Continuing along the same path, would it be advisable (as a form of risk management) to deposit as much capital gain as tolerable into a different account consisting of long-term, high-dividend holdings? The idea being, to take better advantage of extended market movement (along with the occasional stock splits), and to possibly off-set inevitable periods of drawdown by selling off "x" amount of shares.
 
Quote from nonlinear5:

If you can make a 25% return every year, consistently and with low drawdowns, you'll be a super star, and people would beg you to take their money and manage it for them.

Now, in this thread, you'll see a bunch of people telling you that they (and you) could make 100%, 200%, and in some cases, "I double my money every month". These folks are simply lunatics, and we have quite a few of them on board.
More...

For short term trading, it is possible to make 100% or 200% annually on your small-based capital. However, this kind of return is not sustainable when your capital becomes bigger.

For long term investments, even Warren Buffett cannot have a sustainable return of his historical average (24%) when his capital is more than 50B. The only sustainable return for long term investments is the market return.
 
Quote from nonlinear5:

If you can make a 25% return every year, consistently and with low drawdowns, you'll be a super star, and people would beg you to take their money and manage it for them.

Now, in this thread, you'll see a bunch of people telling you that they (and you) could make 100%, 200%, and in some cases, "I double my money every month". These folks are simply lunatics, and we have quite a few of them on board.
More...

It depends on account size. Right now I can do better than what you described, but if I were managing even a measly $25M I know I couldn't do it anymore.
 
Quote from tminuspi:

Is there any type of formula for figuring out where an experienced trader "should be", percentage-wise, during a given year's worth of stock transactions? Starting with half a million (margin included), and subtracting all expenses to arrive at a mean average.

Also, does an increase in available capital make these percentages more, or less difficult to maintain over time?
More...
It depends on the market you know.
But about a consistent 15-20% should be considered good returns.
15% may not sound incredible but how many banks or funds pay you that? none, at least not with moderate risk.

500k is the sweet spot, you have a large enough account to minimize commissions, yet small enough to not have liquidity problems.

It would be very hard to scalp with 500k, so forget about it.
You can well daytrade with 500k but not everyday, and your trades would tipically last more than an hour.
 
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