Yearly return... What should amateurs aim for?

[dumb_mother]

Quote from DDmaster:

I believe the reason people aren’t listening to you is because simply put your wrong.
If someone sets $ € targets then they get fixated with that amount and as the account grows they tend to have trouble increasing their target in accordance to the new account size , were as if there target is 1% of their account they will find it easier to adjust to new increased unrounded targets.

All aside I don’t personally believe in setting targets, just take what you can and give nothing back to the market and don’t stop just because you have hit your target for the day , week, month or year.

+1

 

[gaj]

as others have said, wrong question.

should be:

1) do you have either good risk/reward or high winning % with good money management?
2) are your trades good?

those are better things for amateurs to aim for.

 

[AAAintheBeltway]

Quote from empee:

Wrong question. You should be asking how little can you lose. The winners will take care of themselves.

If you put on a trade that makes 10% in a month, it could also lose 10% in a month (volatility). You might hit a winner with high vol that gives you a great return, but what matters is what your series of trades return over time.

I would focus on just not blowing up; you will spend a lot of time thinking about how not to blow up with leveraged products like FX or futures, which will make you a infinitely wiser trader. Why? Because it makes you think about the risks you take, and what upside is realistically possible without losing everything. Ie if you have +100% years for 3 years and lose everything in year 4, were you successful?

Spend time thinking about how much you could lose with your strategy; its a smarter way to play it.

Yes, exactly.

Paul Tudor Jones is said to aim for a return of three times max drawdown.

 

[Lucias]

This question is about setting goals.

Some goals I have found useful:

Profitable every month
A risk/reward of 1:1 or better
A return of 30% or better

However, I must add that goal of 30% return is somewhat not rewarding if you have a tiny account. Also, provided you can keep reloading it then you can trade at 100% capital. I.e if you make money. I can see myself 2x-3x-4xing my account.

The goal of "not losing capital" makes sense if you have a large/moderate account. but, it must be balanced with "using all available capital possible".

Return by itself is not a good indicator of future performance. More important is to develop a style of trading that has an edge.

Out of 100 people, the returns of 99 will be random. It means nothing unless you are the one

Quote from Debaser82:

Any thoughts on this?

Doesnt matter what you bought this last 2 years, be it sugar, oil, Amazon or Citi....

If you held it for longer then a few months you are up more then 10% at the very minimum.

Is this a realistic longer term return or are these special circumstances that should not be taken for granted at all...

 

[Covertibility]

+1% above inflation over the long term.

 

[turkeyneck]

Quote from Lucias:



The goal of "not losing capital" makes sense if you have a large/moderate account. but, it must be balanced with "using all available capital possible".

What's your definition of a large/moderate size account?

 

[morganist]

Quote from Martinghoul:

If you're returning in excess of your personal funding rate, you should be happy.

Yep. At the moment that is good even for a professional.

 

[heech]

I don't understand where "account size" comes into it. Unless you're really running into scalability issues (and 99.9999% of the retail customers out there aren't)... your returns have nothing to do with the size of your account.

Someone with $500k in their brokerage account would work just as hard for a 50% return as someone with $5k in their brokerage account. In fact, you might argue they'd work harder. In any case, the probability of consistently generating 30%+ return is probably the same for both investors (slim).

If you're saying its "boring" or meaningless to get 30% on a $5k account... I think you're completely right. And that's in fact exactly the lesson retail investors should really keep in mind. If you're looking for excitement, try craps. If you're looking for quick riches, try lottery tickets.

My own thought on this is: if you have less than $100k in your trading account, work on improving or building your career outside of trading... statistically speaking, that's where your greatest value would be. If you have more than $100k in your trading account, then you can work on your trading.