# Large capital base vs. small capital base returns



## pavilion103 (10 December 2011)

I'm curious to know the results (ROI) people have made with large v small accounts and what can be expected of those who trade them. 

For example I'd imagine it would be more difficult to produce returns of over 25-30% on a $500,000 account than on a $10,000-20,000 account?

Is achieviable to say double a $10,000 account in a year without gambling?  Or would, say a 30% return, on a $10,000 account be all that can be expected from a good trader?


I ask because I hear people, including professionals make huge returns on small accounts, so I am wondering if this is generally achievable by a good trader?


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## Julia (10 December 2011)

*Re: Large capital base v small capital base returns*



> For example I'd imagine it would be more difficult to produce returns of over 25-30% on a $500,000 account than on a $10,000-20,000 account?



Can you say why you think this?


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## tech/a (10 December 2011)

*Re: Large capital base v small capital base returns*

200% on a $10K account when your nett worth is say $500K.
Is not a huge return--it is on capital.
Start trading the same way with your full nett worth and see how your psych handles it.
Particularly the odd 60% Peak to Valley draw down.

Just saw Julia's post.
I dont think 25-30% is  impossible to return.
Difficult in this market ---well perhaps impossible if trading long only with $500k.---in this market.
i dont know of anyone doing that well with that sort of capital.


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## craft (10 December 2011)

*Re: Large capital base v small capital base returns*

Without getting in returns –because that just turns into a **** fest on an anonymous forum . There are two things that I found.

1.	Risk control dictates that you need adequate capital to make a decent income – Push the required return and you inevitably push the risk. 

2.	At least for me Trading was not scalable beyond a certain point. I had to limit the account size to maintain returns.   (that meant I couldn't compound trading profits) Investing has the advantage for me of being scalable.


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## McLovin (10 December 2011)

*Re: Large capital base v small capital base returns*

I think it's significantly harder with a larger capital base in Australia. The market just isn't that big and we don't have companies that can grow for long periods of time at high rates. Also, taking a position in small caps with a large capital base is difficult to do because often insiders own significant amounts of stock and liquidity is thin. Someone like JBH makes the point about reaching the limit of growth well. In the US/Europe a company the size of JBH would still have significant growth still in front of it, whereas in Australia it is starting to reach maturity.

Most of what is discussed in Australia as being "small cap" would be considered micro cap in the US.


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## Julia (10 December 2011)

*Re: Large capital base v small capital base returns*



tech/a said:


> Just saw Julia's post.
> I dont think 25-30% is  impossible to return.
> Difficult in this market ---well perhaps impossible if trading long only with $500k.---in this market.
> i dont know of anyone doing that well with that sort of capital.



Tech, I was just interested to know how Pavilion had formed the view he had.


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## tech/a (10 December 2011)

*Re: Large capital base v small capital base returns*



Julia said:


> Tech, I was just interested to know how Pavilion had formed the view he had.




Yeh I know wasn't trying to reply although it looks that way.


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## waimate01 (10 December 2011)

*Re: Large capital base v small capital base returns*



pavilion103 said:


> I'm curious to know the results (ROI) people have made with large v small accounts and what can be expected of those who trade them.




Yep, sp much easier to make a good return on $20k or $200k or $2000k or $20000k than it is on $200m or $2000m.

That's a good thing to aim to worry about


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## pavilion103 (10 December 2011)

*Re: Large capital base v small capital base returns*



Julia said:


> Can you say why you think this?




I was thinking both from a psychological point of view and liquidity.


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## pavilion103 (10 December 2011)

*Re: Large capital base v small capital base returns*



tech/a said:


> *200% on a $10K account *when your nett worth is say $500K.
> Is not a huge return--it is on capital.
> Start trading the same way with your full nett worth and see how your psych handles it.
> Particularly the odd 60% Peak to Valley draw down.
> ...




But is that achievable?


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## skyQuake (10 December 2011)

*Re: Large capital base v small capital base returns*



pavilion103 said:


> But is that achievable?




0~3 years market experience - No.
3~6 years: slight chance
6+: possibly

This is all assuming you're trading responsibly and not say putting all ur money into a superleveraged cfd position


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## tech/a (10 December 2011)

*Re: Large capital base v small capital base returns*



skyQuake said:


> 0~3 years market experience - No.
> 3~6 years: slight chance
> 6+: possibly
> 
> This is all assuming you're trading responsibly and not say putting all ur money into a superleveraged cfd position




Yes I agree
More luck than skill I'd suspect.
Getting on a few 50 to 100+ rise


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## odds-on (10 December 2011)

*Re: Large capital base v small capital base returns*



McLovin said:


> I think it's significantly harder with a larger capital base in Australia. The market just isn't that big and we don't have companies that can grow for long periods of time at high rates. Also, taking a position in small caps with a large capital base is difficult to do because often insiders own significant amounts of stock and liquidity is thin. Someone like JBH makes the point about reaching the limit of growth well. In the US/Europe a company the size of JBH would still have significant growth still in front of it, whereas in Australia it is starting to reach maturity.
> 
> Most of what is discussed in Australia as being "small cap" would be considered micro cap in the US.




Invest overseas!

IMO, the asx has probably 1 bet a year where you could have enough confidence to put a serious % of your funds on to obtain a 30-50% return on total funds worth a million or so. The patience and research required to make these types of bets is not to be underestimated, it would more or less be a full time job and take some serious conviction. If you want more bets per year and be able to invest larger sums, the best bet is to invest overseas.

Cheers

Oddson.


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## pavilion103 (12 December 2011)

*Re: Large capital base v small capital base returns*



skyQuake said:


> 0~3 years market experience - No.
> 3~6 years: slight chance
> 6+: possibly
> 
> This is all assuming you're trading responsibly and not say putting all ur money into a superleveraged cfd position




Obviously you are a far more experienced trader than I. 

Are you using the rough estimate of the above years for the "average" trader? 

Obviously different people have different levels of discipline, hours spent working on trading, teachability, quickness to grasp concepts. 
I'm sure there are some who in 2 years and achieve far more than others in 6. 

I'm not claiming myself to be one of those, but surely there are those who are more committed and spend more time looking at charts and developing their system who can get there quicker.


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## sinner (12 December 2011)

> Is achieviable to say double a $10,000 account in a year without gambling? Or would, say a 30% return, on a $10,000 account be all that can be expected from a good trader?




Returns are nothing more than a function of risk and trade execution. Looking at "returns" as anything else is a bit of an illusion imho.

Which means you have the question backwards, and you shouldn't be asking us!

"Is achievable to say return 100% per annum on my account without experiencing a 100% drawdown? Or would, say a 30% return per annum be all that can be expected if I used proper risk management techniques and trade execution to limit drawdown to 1/3 or less of my expected returns?"


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## skc (12 December 2011)

*Re: Large capital base v small capital base returns*



pavilion103 said:


> I was thinking both from a psychological point of view and liquidity.




On liquidity it obviously depends on the instrument you trade and your trading style. With $500k account you probably won't have any troubles in futures/big caps unless you are trying to steal 1 tick with the full account balance as margin and leverage it up 20x. On the other hand, you will run into liquidity issues if you play only in small caps. 

On the psychological level, the absolute account size is irrelevant. What is important is the account size relative to total net worth of the trader imo. 

Trader A with a $500k account risking 2% per trade ($10k) might actually only has 50% of his net worth deployed to trading. He risks only 1% of his net worth per trade.

Trader B with a $50k account risking 2% per trade ($1k) however took out a margin loan and that $50k account represented 150% of his net worth. He is risking 3% of his net worth per trade. It will be much harder for him psychologically, and he might decide to risk only 1% of his net worth per trade (like Trader A), which means he had to reduce his position sizes etc by 1/3 (and his return accordingly). 

In this example, it is the smaller account that is harder to generate a higher return...


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## odds-on (11 May 2012)

Imagine little Johnny is a 20 year old student with $10k of initial capital and has after many hours research created a simple trading system that produces a consistent return of 25%, but the simple trading system only works up to a capital amount of $500k. Assuming little Johnny retains all returns and does not add further capital, he will have $500k in approximately 17.5 years due to compounding. 37.5 years old and a capital base of $500k. Now little Johnny’s simple trading system is no longer able compound returns. Each year he earn $100k on his trading capital of $500k which he saves so by the time he is 60, he will have 22.5 * 125k + 500k trading capital. Little Johnny is now worth $3.3million. All good. 40 years later he has turned $10k into $3.3 million, which is a CAGR of 15.6% over 40 years, good effort. Playing round with the numbers, it starts to get scary, keep the consistent return at 25% but drop the capital amount to $250k, and little Johnny has a CAGR of approx 13% over 40 years, now this is more or less index tracker fund returns. Interesting results, especially when you have to take into account trading consistently for 40 years one could say that Little Johnny at 20 should put down the trading book, read John Bogle, get an index tracker fund with his $10k then spend his time surfing. He will probably be better off in the long run.

From the posts in this thread it begs the question why trade to get rich if such a small % of traders can actually do it consistently well? The odds are against you.


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## tech/a (11 May 2012)

odds-on said:


> Imagine little Johnny is a 20 year old student with $10k of initial capital and has after many hours research created a simple trading system that produces a consistent return of 25%, but the simple trading system only works up to a capital amount of $500k. Assuming little Johnny retains all returns and does not add further capital, he will have $500k in approximately 17.5 years due to compounding. 37.5 years old and a capital base of $500k. Now little Johnny’s simple trading system is no longer able compound returns. Each year he earn $100k on his trading capital of $500k which he saves so by the time he is 60, he will have 22.5 * 125k + 500k trading capital. Little Johnny is now worth $3.3million. All good. 40 years later he has turned $10k into $3.3 million, which is a CAGR of 15.6% over 40 years, good effort. Playing round with the numbers, it starts to get scary, keep the consistent return at 25% but drop the capital amount to $250k, and little Johnny has a CAGR of approx 13% over 40 years, now this is more or less index tracker fund returns. Interesting results, especially when you have to take into account trading consistently for 40 years one could say that Little Johnny at 20 should put down the trading book, read John Bogle, get an index tracker fund with his $10k then spend his time surfing. He will probably be better off in the long run.
> 
> .




Pretty well no one considers tax.
Its a big slice out of profit even if you hold for 12 mths or longer.
Portfolio trading with up to 3 million shouldnt be a worry in Australia.
Particularly if you trade the ASX 200.



> From the posts in this thread it begs the question why trade to get rich if such a small % of traders can actually do it consistently well? The odds are against you




I doubt any trade on this forum to get rich.
I think most trade with a capital base that wont ever see them rich---it will give them an opportunity eventually when their capital base grows.
Those that do "get Rich" from trading Fundamentally or technically will find themselves on the right side of an outlier.
So more luck than design.

The others like me look to trading as a passive form of income or are trading (Dirty word--should be investing) their SMSF.

The Odds are against you just as they are with ANY business.


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## skc (11 May 2012)

odds-on said:


> Imagine little Johnny is a 20 year old student with $10k of initial capital and has after many hours research created a simple trading system that produces a consistent return of 25%, but the simple trading system only works up to a capital amount of $500k. Assuming little Johnny retains all returns and does not add further capital, he will have $500k in approximately 17.5 years due to compounding. 37.5 years old and a capital base of $500k. Now little Johnny’s simple trading system is no longer able compound returns. Each year he earn $100k on his trading capital of $500k which he saves so by the time he is 60, he will have 22.5 * 125k + 500k trading capital. Little Johnny is now worth $3.3million. All good. 40 years later he has turned $10k into $3.3 million, which is a CAGR of 15.6% over 40 years, good effort. Playing round with the numbers, it starts to get scary, keep the consistent return at 25% but drop the capital amount to $250k, and little Johnny has a CAGR of approx 13% over 40 years, now this is more or less index tracker fund returns. Interesting results, especially when you have to take into account trading consistently for 40 years one could say that Little Johnny at 20 should put down the trading book, read John Bogle, get an index tracker fund with his $10k then spend his time surfing. He will probably be better off in the long run.
> 
> From the posts in this thread it begs the question why trade to get rich if such a small % of traders can actually do it consistently well? The odds are against you.




The numbers in this example are kind of hypothetical, aren't they? 

1. Why does the trading system only works up to $500k? If it is so small a market,  I bet you the returns won't be 25% consistently.

2. You'd think little Johny would be wise to, during that first 17.5 years of compounding, investigate different strategies on a larger, more scalable instruments. When I first started out trading I found this edge which got me 10% return per month... I knew it was too good to last and so while I traded that I spent time looking for different strategies. It turned out that the edge only lasted 3 months and a bit. A trader who doesn't evolve with the markets will not be consistently profitable in the long run.

Oh yeah... and there's the tax issue and living expense etc as mentioned by Tech/A.


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## odds-on (11 May 2012)

tech/a said:


> Pretty well no one considers tax.
> Its a big slice out of profit even if you hold for 12 mths or longer.
> Portfolio trading with up to 3 million shouldnt be a worry in Australia.
> Particularly if you trade the ASX 200.
> ...




I personally would not class any form of trading/investing as passive. The returns from trading/investing have to compared to if you spent the same amount of time that you do trading/investing doing overtime and dumping the extra cash into an index tracker fund - probability wise you will probably be better off in the long term.

Trading/investing is all about probabilities so why do traders/investors not accept the odds?


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## odds-on (11 May 2012)

skc said:


> The numbers in this example are kind of hypothetical, aren't they?
> 
> 1. Why does the trading system only works up to $500k? If it is so small a market,  I bet you the returns won't be 25% consistently.
> 
> ...




The numbers are hypothetical but i am trying to get a "feel" for the odds and capital.

1. What is realistic capital base for the ASX? 1 million? 2 million?

2. The point is if a trading system is scalable to a certain amount of capital then the trading system can be used for income if there is sufficient return, however the income will stop growing and in the long run you will start earning less. This has to be compared to just sticking your capital into an index tracker fund.


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## CanOz (11 May 2012)

odds-on said:


> The numbers are hypothetical but i am trying to get a "feel" for the odds and capital.
> 
> 1. What is realistic capital base for the ASX? 1 million? 2 million?
> 
> 2. The point is if a trading system is scalable to a certain amount of capital then the trading system can be used for income if there is sufficient return, however the income will stop growing and in the long run you will start earning less. This has to be compared to just sticking your capital into an index tracker fund.




Oddson, here is an investment plan where you can use both short term and long term trading to create wealth and income and is very _similar_ to what my wife and i have been doing:

100,000 AUD in a stock trading account trading ASX Stocks, long only momentum system (20%Flipper).

25,000 AUD in a futures trading account to trade indices and FX intraday to generate cash flow.

100+k Superannuation Account: 20% Flipper Russell 3000

You must leave the stock accounts alone so they can compound, otherwise index fund or not, you'll never realize the CAGR.

CanOz


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## skc (11 May 2012)

odds-on said:


> The numbers are hypothetical but i am trying to get a "feel" for the odds and capital.
> 
> 1. What is realistic capital base for the ASX? 1 million? 2 million?
> 
> 2. The point is if a trading system is scalable to a certain amount of capital then the trading system can be used for income if there is sufficient return, however the income will stop growing and in the long run you will start earning less. This has to be compared to just sticking your capital into an index tracker fund.




The capital size limit depends not only on the liquidity of the instrument, but also how thin your margin is. A scalpe who takes 2-5 points per trade on the SPI can do that easily for 5 contracts but the same strategy falls apart with 25 contracts. Whereas a position swing trader taking 40-50 points can probably swing 100 contracts and still make the strategy work, albeit slightly less profitably due to slippage.

I do pairs trading and a lot of my trading are on ASX200. While the margin is quite thin on pairs trading, I do often hit the bid/ask when there's volume available. With most of the larger stocks there are usually ~$2-300k at each price level. I trade a lot of REIT and they can have >$1m at each price level. Given that my position is usually 10-15% of my account size, and I can break the trades up through the day, I think this strategy can work up to an account size of at least $10m. If I start with $250k today and make 25% return each year, I can at best compound the account at may be 15% after tax and living expenses. So the $10m limit is good for ~33 years of compounding. Hopefully I'd be retired before then.

The other thing to consider is that many other professions have a ceiling somewhere in terms of income, unless you are the top of the top. Trading is no different. And by being a top of the top trader, you would have a scalable strategy or a strategy that works with your large account size. Otherwise you are just a competent professional trader, and your reward is capped by what you can and cannot do with all that money.


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## johenmo (12 May 2012)

pavilion103 said:


> For example I'd imagine it would be more difficult to produce returns of over 25-30% on a $500,000 account than on a $10,000-20,000 account? ....
> ...I ask because I hear people, including professionals make huge returns on small accounts, so I am wondering if this is generally achievable by a good trader?




Not even amention of trade costs.  Consider trader 1 : $10K capital, position size is 5% = $500 per trade.  IB cost to buy/sell of $12 is 2.4%, CS of $40 is 8%.  Got to beat that to breakeven.
Trader 2 = $500K, position size is only 1% = $5K per trade.  IB is 0.2% and CS is 0.8%.

A small capital base makes it more challenging on this point. And this is discussed in many threads.  Not impossible, just increases the size of the obstacle you have to hurdle.


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## village idiot (12 May 2012)

> Imagine little Johnny is a 20 year old student with $10k of initial capital and has after many hours research created a simple trading system that produces a consistent return of 25%, but the simple trading system only works up to a capital amount of $500k. Assuming little Johnny retains all returns and does not add further capital, he will have $500k in approximately 17.5 years due to compounding. 37.5 years old and a capital base of $500k. Now little Johnny’s simple trading system is no longer able compound returns. Each year he earn $100k on his trading capital of $500k which he saves so by the time he is 60, he will have 22.5 * 125k + 500k trading capital. Little Johnny is now worth $3.3million. All good. 40 years later he has turned $10k into $3.3 million, which is a CAGR of 15.6% over 40 years, good effort. Playing round with the numbers, it starts to get scary, keep the consistent return at 25% but drop the capital amount to $250k, and little Johnny has a CAGR of approx 13% over 40 years, now this is more or less index tracker fund returns. Interesting results, especially when you have to take into account trading consistently for 40 years one could say that Little Johnny at 20 should put down the trading book, read John Bogle, get an index tracker fund with his $10k then spend his time surfing. He will probably be better off in the long run.




doesnt this calc leave out  the returns that would be made on the 125k banked each year, which should be compounding up as well, unless he keeps the 125k under his mattress. that would make a huge difference to the end result


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## odds-on (12 May 2012)

village idiot said:


> doesnt this calc leave out  the returns that would be made on the 125k banked each year, which should be compounding up as well, unless he keeps the 125k under his mattress. that would make a huge difference to the end result




Good point! My mistake. Following the feedback i have received i will do few more scenarios for little Johnny. I find this interesting.


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## Starcraftmazter (14 May 2012)

pavilion103 said:


> I'm curious to know the results (ROI) people have made with large v small accounts and what can be expected of those who trade them.
> 
> For example I'd imagine it would be more difficult to produce returns of over 25-30% on a $500,000 account than on a $10,000-20,000 account?
> 
> ...




Where do you draw the line?

Assuming no limitations on instruments and leverage, you would probably have to be trading billions before there is any real limitation on your ROI. Whether you would actually want to risk a lot of money (say $1m) in such ways as to be able to get let's say 1000% ROI in a year is another matter.

IMO the sensible approach is to have the majority of your money (maybe 90%) in safe instruments like shares with minimal leverage - stready gains of a few hundred RIO per year; and a small portion of your money (maybe 10%) in highly speculative and highly leveraged instruments - unlimited potential gain, small potential loss. But that's just me.


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## CanOz (14 May 2012)

Starcraftmazter said:


> IMO the sensible approach is to have the majority of your money (maybe 90%) in_ safe instruments like shares with minimal leverage - steady gains of a few hundred RIO per year;_ and a small portion of your money (maybe 10%) in _highly speculative and highly leveraged instruments - unlimited potential gain, small potential loss._ But that's just me.




Perfect....Sounds easy.:dimbulb:


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## Spongle (10 July 2012)

Ok so very soon I shall have at least 10k to play with...

I have made approx 50 -100 paper trades gaining 3% every 3 weeks... i have been correct 85% of the time so That
s an increase of 44.2% pa (less some for brokerage)

In reality i reduce the figure to give myself a conservative estimate.

Maybe Im not being realistic i dont know... oh and the psychological  factor does not effect me... i don't care about money


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## skc (10 July 2012)

Spongle said:


> Ok so very soon I shall have at least 10k to play with...
> 
> I have made approx 50 -100 paper trades gaining 3% every 3 weeks... i have been correct 85% of the time so That
> s an increase of 44.2% pa (less some for brokerage)
> ...




What's the %gain if you have to brokerage? Can $10k support all the positions that you paper traded?


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## Spongle (10 July 2012)

skc said:


> What's the %gain if you have to brokerage? Can $10k support all the positions that you paper traded?




if i use a conservative return of 30%pa it would bring it down to28%


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## tech/a (10 July 2012)

Spongle said:


> Ok so very soon I shall have at least 10k to play with...
> 
> I have made approx 50 -100 paper trades gaining 3% every 3 weeks... i have been correct 85% of the time so That
> s an increase of 44.2% pa (less some for brokerage)
> ...






Spongle said:


> if i use a conservative return of 30%pa it would bring it down to28%




Ohh My!


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## skc (10 July 2012)

Spongle said:


> if i use a conservative return of 30%pa it would bring it down to28%




Probably should check your maths... if you've made 50-100 paper trades (say 75), at $15 commission per trade times 2 for buy and sell, you've paid $2,250 in commission.

That's 22.5% of your account in commission alone.

Your trading has to be doing pretty well to make 30% on top of that...


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## Spongle (10 July 2012)

ok lol

so im obviously not being conservative enough

whats a realistic return for an above average novice chartist would you say?


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## skyQuake (10 July 2012)

Spongle said:


> ok lol
> 
> so im obviously not being conservative enough
> 
> whats a realistic return for an *above average* *novice chartist* would you say?




Long term avg would realistically be 0 or lower. No trolling.


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## skc (10 July 2012)

Spongle said:


> ok lol
> 
> so im obviously not being conservative enough
> 
> whats a realistic return for an above average novice chartist would you say?




I thought you were calculating your annual return based on your 50-100 paper trades... then taking into account you only have $10k, the commission and the number of positions you can hold etc...


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## tech/a (10 July 2012)

skyQuake said:


> Long term avg would realistically be 0 or lower. No trolling.




+1

I hear ya.

Similar to an above average Fundi


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## Spongle (10 July 2012)

Sorry you've misunderstood, i didn't explain myself properly.

the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is...  i chose a large number of stocks so i had a larger data set.

OK so lets take 10k to trade with 2% increase over a 3week period. 80% succsess rate. 10 (x2) brokerage. stop loss at -2%.

52weeks divided by 3weeks = 17.3 weeks. 17.3weeks multiplied by $20 brokerage = $346.66 

$10000 x .02 = $200 (1st 3week period) + 204 + 208 + 212 + 216.5 + 216.8 + 221.15 + 225 + 230 + 234.6 + 239.3
+ 244 + 249 + 254 (14week series = 80% success rate 

Total gain = $12946 - 346.66 (brokerage) - approx $589 at 20% fail rate = 12010.34 

17% increase from 10k

My 3week fake trades thus far are closer to 4% so the above example is a modest estimate


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## Spongle (10 July 2012)

why i didn't put that series in sigma notation i'll never know haha

Keep in mind also that i intend to supplement the trading money with regular weekly sums, prolly a couple of hundred + my late father has left me an unknown sum in his will: 25 - 50 k im guessing


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## AlterEgo (10 July 2012)

Spongle said:


> Sorry you've misunderstood, i didn't explain myself properly.
> 
> the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is...  i chose a large number of stocks so i had a larger data set.
> 
> ...




So your total account is 10K, and you're putting this entire capital on each trade? Is that correct?


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## Spongle (10 July 2012)

2 at the absoloute most... pointless otherwise i figure.

There is obvious risk involved but I have a fair bit of time before I attain these funds anyway.

I don't intend to make stupid mistakes but if I do who cares? Better to lose 10k and learn stuff than 200k and learn stuff


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## skc (10 July 2012)

Spongle said:


> Sorry you've misunderstood, i didn't explain myself properly.
> 
> the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is...  i chose a large number of stocks so i had a larger data set.
> 
> ...




These calculations are all very wrong...

Why are you applying $20 brokerage per 3 week period? Are you only intending to trade 17 times a year?

I don't know over what period was your 50-100 paper trades, but you need to know that the market is correlated. If you chose a period where the overall market rose, then 80% win rate may be easily achieved. Do the same exercise over a month where the market tanked and you will find your win rate is a lot lower.

You need to properly read up about backtest, position sizing, expectancy etc etc so you can conduct proper assessment of what to expect.

And once you've done that, be happy if you can breakeven on $10k, long only in this market.


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## tech/a (10 July 2012)

Spongle said:


> Sorry you've misunderstood, i didn't explain myself properly.
> 
> the 75+ paper trades are so i acn learn how to chart and see what my sucess rate is...  i chose a large number of stocks so i had a larger data set.
> 
> ...




Wow could you do my books!



> I don't intend to make stupid mistakes




Best start again.



> but if I do who cares?




You will



> Better to lose 10k and learn stuff than 200k and learn stuff .




They say fools and their money are easily parted
In the above case a Fool wouldnt have $200K.
But the guy who did would have a 5% drawdown on 10k loss.
The fool 100%
Suggest you take a lot more time.


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## Trembling Hand (10 July 2012)

skc said:


> You need to properly read up about backtest, position sizing, expectancy etc etc so you can conduct proper assessment of what to expect.
> 
> And once you've done that..............




And once you've done that?  You'll be like the rest of us and know you need heaps more money, lots of time AND the right market before you order your Ferrari. :guitar::car:


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## Spongle (10 July 2012)

That makes so much sense i've been thinking about this way too ridgidly.

So What would you guys advise for trading with such small amounts

I know bugger all about this stuff but am keen to learn


Thanks


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## CanOz (10 July 2012)

Spongle said:


> That makes so much sense i've been thinking about this way too ridgidly.
> 
> So What would you guys advise for trading with such small amounts
> 
> ...




Paper trade & save...I've been paper trading for months trying to develop an intra-day discretionary method. Not only have i yet to realize any measure of success trading live, but you find yourself second guessing everything you do, and the even the small losses hurt psychologically.

Once you master the techniques, you have to master yourself. Its very difficult.

Equities in a bear market, and its doubtful you'll be shorting, so that leaves futures or CFDs. Unless you have experience tradings CFDs you'll lose your money. 10,000 is not enough for futures IMO.

CanOz


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## tech/a (10 July 2012)

> 10,000 is not enough for futures IMO.




Eminis'


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## CanOz (10 July 2012)

tech/a said:


> Eminis'




and....?

CanOz


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## pavilion103 (11 July 2012)

Mate, I'm no expert but I've been working on a system for about 18 months. Working out specific entry setups, exit strategies, money management etc. On top of that looking at chart after chart to try to gain the best understanding I can. 

From the calculations you put up it seems like you have a long long way to go in understanding the mathematical side of things for one. I don't even know what your trading strategy is. 

I'd say, don't take your $10,000 and trade it at the moment when you have no idea what is going on. You will lose it. Continue to build it up. Spend hours and hours developing a methodology that works well for you. Learn about risk management and money management. Paper trade an account as you would a real one, using the same capital base and risk per trade, only taking the number of positions that that capital base will allow. 
Then see where you are in 12 months and reassess. If you're not confident, keep going with the paper trading.


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## Spongle (17 July 2012)

cheers for the info!

I really know next to nothing regarding this sort of thing so it seems the best POA is to save, create a system over the next couple of years (and beyond) and soak up as much info as possible.

Good info here


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