Min 15% annual compounded return at least, otherwise it is not worth your time.
Equity peak to valley draw down should be contained within 20%. If you have DD larger than 20%, you have problems.
Just calculate the hourly pay. Hours spent in a year divided by your return. If too low it is a waste and one should do something else that pays more, like becoming an entrepreneur and starting your own business.
Agree with the earlier points about referencing a benchmark. The benchmark should be appropriate. If you're just trading US stocks, then the S&P 500 probably makes sense (you'd do much better with a wider set of assets, but thats another story).
15% return on 20% maximum drawdown works out at a sharpe ratio of 1.5. That strikes me as rather optimistic. Many highly diversified sophisticated hedge funds get a sharpe of 1.0 or less. I'd expect my return to be significantly less for that drawdown.
FWIW I expect to make between 10% and 20% a year
over the very long run, with a maximum drawdown of 40%.
Yes, you should be compensated for the time you put in, over and above getting a decent return on capital*. Let's say you expect to make 5% a year from buy and hold investing (reasonable if you're limiting yourself to just US stocks). If you make 15% spending all day trading; then you're being paid 10% of your capital** to work say 10 hours a day. If you've got a $250K account you're being paid $10 an hour. That's less than minimum wage in the UK.
* And all of this of course is after commissions and other costs of doing business.
** This is ignoring the extra risk you're probably taking on that makes that extra 1% less valuable than the other 5%.
As I trade systematically with a fully automated system my hourly rate is somewhat better.
But you need to be careful about not over leveraging to get the return you need to properly compensate for your time, if you've got a small account size.
GAT
