What realistic annual % return you expect?

[flipside21]

What realistic annual % return you expect? What kind of annual max drawdown you willing to take to accept that return? How much you willing to risk on a particular trade?

The above are ideal situations, but in reality a risk can run further if you tolerate a losing position longer than you should. 15% expected gain balanced with 15% annual drawdown for a 1:1 ratio would not be too great. Ideally 30% expected gain vs. 15% max drawdown balanced with 5% max risk per trade, imo. However, very few people can consistently make 30%/yr for many years.

 

[pattern39]

Quote from flipside21:

What realistic annual % return you expect? What kind of annual max drawdown you willing to take to accept that return? How much you willing to risk on a particular trade?

The above are ideal situations, but in reality a risk can run further if you tolerate a losing position longer than you should. 15% expected gain balanced with 15% annual drawdown for a 1:1 ratio would not be too great. Ideally 30% expected gain vs. 15% max drawdown balanced with 5% max risk per trade, imo. However, very few people can consistently make 30%/yr for many years.

What is unrealistic is expecting a realistic return. Some years, you'll be happily surprised, other years, you're in the red. Simply do not expect to make "consistent" income in this game called trading...

 

[efficiency]

There's quite a few people that make 20% per annum. Compounds quite nicely.

Beyond that nice round percentage, as capital (and thus position size) increase, returns don't rise exponentially.........consistently.

A rising tide lifts all boats.

Drawdowns are a matter of discretion. The hallmark of good trader is routinely cutting losses. Quick and with emotional detachment. Can't be completely eliminated due to surprise gaps. You control what you can control.

It's a river of fish or, another bus coming down the road in 15 minutes.

 

[SkepticTrader]

Doesn't it have to a lot to do with your account size? When my account was small I was obsessed with % returns. Now that it is seven figures all I care about are absolute dollar returns. However, regardless of account size, I try to keep my maximum drawdowns under 3% to 4% which I did just fine with until 2008 when I suffered my worst drawdowns ever around 12%.

 

[feng456]

thank you all who replied. it's given me much to think about.

 

[cooolweb]

Quote from SkepticTrader:

Doesn't it have to a lot to do with your account size? When my account was small I was obsessed with % returns. Now that it is seven figures all I care about are absolute dollar returns. However, regardless of account size, I try to keep my maximum drawdowns under 3% to 4% which I did just fine with until 2008 when I suffered my worst drawdowns ever around 12%.

Isn't it the opposite? bullshit?

When you hit 7 figures, u HAVE to calculate using %percentages, because dollar amounts don't make sense and you can't calculate risk properly using $.


Its when you have a small account, you use $amounts

 

[Betapeg]

Quote from flipside21:

What realistic annual % return you expect? What kind of annual max drawdown you willing to take to accept that return? How much you willing to risk on a particular trade?

The above are ideal situations, but in reality a risk can run further if you tolerate a losing position longer than you should. 15% expected gain balanced with 15% annual drawdown for a 1:1 ratio would not be too great. Ideally 30% expected gain vs. 15% max drawdown balanced with 5% max risk per trade, imo. However, very few people can consistently make 30%/yr for many years.

50% is my target. Maximum risk on a particular trade is a 1-2% loss. Expected gain on a trade is the same. I make money by simply making more winning trades than losing ones. 80% win rate is my target.

 

[macroman]

my approach: every trade is different and I am looking for 100% win rate.

Key is to be motivated so bet has to be appropriate size.

 

[failed_trad3r]

20% compounded return for 100 years means you will own the entire stock market.

Think about that for a second.

The stock market grows less than 20% a year.

 

[SkepticTrader]

Quote from cooolweb:

Isn't it the opposite? bullshit?

When you hit 7 figures, u HAVE to calculate using %percentages, because dollar amounts don't make sense and you can't calculate risk properly using $.


Its when you have a small account, you use $amounts

To each their own. I am into the compounding of my capital. With a small account it was about % returns and I strived to compound at a 50% to 80% clip in order to get that small account to a much larger one. Now that it is seven figures I can't compound anywhere near 50% to 80% and settle for a larger dollar return but on a smaller % return.