stock trading: monthly return
- Thread starter Nemsy
- Start date
It doesn't matter whether you have access to margin or not, percentage return is always based on initial capital at risk, not available buying power.
Margin magnifies wins AND losses and at the end of the day the borrowed money goes back where it came from, so this only makes sense.
Point being, your 'no margin' qualification is probably unnecessary.
p.s. i don't think anyone is doing +300% a month except Waxie
Margin magnifies wins AND losses and at the end of the day the borrowed money goes back where it came from, so this only makes sense.
Point being, your 'no margin' qualification is probably unnecessary.
p.s. i don't think anyone is doing +300% a month except Waxie
lets say everybody out there how can make 10% each moth over a year or two, do not risk more then 10% each moth and only have 2 draw down moths each year is IMHO a magician .......
Commisso:
First off, let me say that u da man. Out of curiosity, care to share some stats w/out getting too personal? Your typical trading frequency, winning percentage, reward/risk, average risk per trade?
i'll post my general stats just to get the ball rolling:
30 to 50 trades per month
(used to be higher but frequency has been cut back)
55% typical hit rate
1.25 to 1 typical r:r
30 to 50 bp's planned risk per trade (0.30%-0.50%)
I beleive that margin does matter alot in percentage of return.
It's called leverage i think.
If I have 10k and broker gives me 2x margin power, i have 20k buying power.
With that, I can make or lose twice as much as a person who has 1x buying power even tho we both put in the same amount of money.
So if the guy with 1x makes 10%, he now has 11k
If the guy with 2x makes 10%, he now has 12k
margin makes a big difference, as i understand it.
It's called leverage i think.
If I have 10k and broker gives me 2x margin power, i have 20k buying power.
With that, I can make or lose twice as much as a person who has 1x buying power even tho we both put in the same amount of money.
So if the guy with 1x makes 10%, he now has 11k
If the guy with 2x makes 10%, he now has 12k
margin makes a big difference, as i understand it.
You missed my point. The industry does not factor margin into stated returns. Everywhere and always, percentage gain or loss is assumed to be factored from initial capital at risk. Whether you used zero leverage or 200 to 1 leverage to get your return, it does not matter when it comes to reporting, because initial capital at risk is the universal benchmark.
This is why nobody says I made X percent using XXX leverage. They just say 'I made X percent' and that's it.
The second guy proportionately took on more risk, so he gets the fatter return. Live by the sword, die by the sword. Leverage is like dynamite, how much you want to use is up to you. More of it gets the job done faster, but too much increases odds of blowing yourself up. This is why reward always has to be proportionally measured by risk. And furthermore it's useless to strip out the use of leverage because how much or little leverage used is often a key component of the methodology.
Dakrhorse,
First off I would not go as far as to say I am the man... I have been playing the game for a long time now and my results are simply the product of a lot of bloodshed...
Pulling up my DB to give actual #'s would really not tell any type of story... My trading and methods are continualy evolving in order to adapt to the current environment or my current mood state...
With that said I was never ever too concerned with win %... I'd say 3/4 of my methods produced more losers than winners over the last 3 years... and I never stuck with a method that did not produce an avg win / avg loss ratio above 2 to 1... My most profitable strats over the last few years hit at about a 35% clip...
Oh and I always risked more than 1/3 to 1/2 % of my equity per trade (once of course I was convinced the edge was viable)... When I stopped trading stocks I was risking 1 to 1.5% per trade BUT I was only taking 1 maybe 2 shots per day...
I know that does not tel much BUT that is about all I have to tell...
PEACE and good trading,
Commisso
Edit; Dark here is a link where I posted my results of my NQ trading about a month ago... http://www.elitetrader.com/vb/showthread.php?s=&threadid=5153&perpage=6&pagenumber=7
BUT I put the style or method on the back burner about 2 weeks ago, I am now sample testing a method that I feel may be much more profitable and much more accomodating to my personality...
