10%, 15%, 20% - what is a consistent realistic expectation?

[mime]

40% is very ambitious especially now that the market has slowed down. You will find that even though some people make bumper profits they have also made some serious losses too or will in the future and will even out their earnings. Don't get carried away from other peoples hyped stories and write your own.

Sorry about the crappy english.

 

[IGO4IT]

To be very frank, I see that even very experienced proffessionals lower their expectations in bad market conditions.

My golden theory is that if you could achieve a positive return as a start then & only then you can start counting your eggs & try to increase it.

As many said in here...this is not easy & in most cases its not fun, especially if you lose many times in a raw.

a lot of studies & a nice system with ANY positive return is what you're after in the begining.

CFD will be self destruction for a beginner. Know your roles & IF & ONLY IF you could say that your formula is returning little money & the only thing missing is funds then probably you still need few years of expereince before you touch CFD.

Sometimes you may get a kick out of a nice return & you feel invencible..... ....... you're not.

Tech/a said a very wise word: STAY IN THE GAME! to achieve that, you'll have to learn a lot, read a lot, win a lot & of course lose a lot.

 

[swingstar]

With regards to CFDs, they can be very benefical if starting with a small account, as most new traders do. Using the leverage of CFDs allows you to free up equity to trade more positions and consequently diversify.

 

[It's Snake Pliskin]

U need to read and read and read and then u can start doing some more reading; trading stocks is what they call a zero-sum game, somebody wins, somebody loses. You are up there against professionals, and since ur new, the average would probably know more than u, wat makes u think that initiall u will win?

Many successful traders today lost heaps of money in their first few years...

Take your time and u may get there, but slow and steady wins the race, and nobody starts off at the top...

Actually, it is a minus sum game.

Good words re: the patience.

 

[ducati916]

damok

The areas that I am particularly interested in is technical analysis with trend trading and CFD's.

This is the logical starting place; viz. strategy selected
The second factor to consider is timeframe

As an example;
An investor who can earn a return of 15% in excess of the Treasury rate, with 10% volatility. Calculated via standard deviations;

Probability of making Money
Scale...................................Probabilit y
1yr.........................................93%
1Quarter.................................77%
1month...................................67%
1day......................................54%
1hour.....................................51.3%
1min......................................50.7%

In the short-time frames, it is a 50/50 proposition, but stretched out to the longer time frames, the probabilities rise very high.

The combination of the above should provide the following; strategy + timeframe = expectancy

Now that you have a handle on your strategy, timeframe, and expectancy, only now can you start to consider leverage
*amount of leverage
*type of leverage
*cost of leverage

Is the type leverage selected compatible with;
*strategy
*timeframe

Is the amount of leverage compatible with;
*strategy
*timeframe

Is the cost of leverage compatible with;
*expectancy

Now my question is pegged to people who are 'proficient' traders that have proven their returns over a 'suitable' period of time. By 'proficient' I mean someone who has confidence in a market and applies a strategy that gives them a certain amount of consistency. By 'suitable' time, I'm not so interested in what someone has done over one month, but more what you achieved over an entire year... or even more.

As a daytrader, I returned 87% over a 9mth period.
Now come the caveats;

*the risk I took was very high
*the day-to-day stress was very high
*psychologically I hit a wall in terms of risk I could effectively trade.
*the win/loss ratio was almost exactly 50/50
The result, I switched strategies, and lowered my requirements on return.

Now to my second question:
Trading with CFD is it realistic to expect a relatively simple 20x return? Before I get stomped on, here are my assumptions:
*5% Margin
*good money management limiting potential loss
*stop losses to manage the above

I shall echo the good advice already proffered;
*do not trade CFD's in your first 2/3yrs trading
*do not trade any leverage in your first 2/3yrs trading
*if you cannot make money in common stocks going long in any market, you will blow up your account with leverage
*do not go short, until you consistently can return a profit long unless you are an arb.

To answer your question directly, as to your expectation of returns on CFD's;
You will return [-x%]
That is the reality.

jog on
d998

 

[tech/a]

Tech/a said a very wise word: STAY IN THE GAME! to achieve that, you'll have to learn a lot, read a lot, win a lot & of course lose a lot.

Actually to be fair I nicked that from Nick Radge.

 

[nizar]

Actually, it is a minus sum game.

Do u mean as in: because of brokerage expenses, u have to actual make a profit just to break even?

That in itself already gives traders an unfavourable edge...

For those that havent already:

"Winner take all" by William Gallacher (1994) is a really good read...

 

[It's Snake Pliskin]

Do u mean as in: because of brokerage expenses, u have to actual make a profit just to break even?

That in itself already gives traders an unfavourable edge...

For those that havent already:

"Winner take all" by William Gallacher (1994) is a really good read...

HI Nizar,

Yes the brokerage ensures it is a minus sum game. Yes there is someone who takes from someone else, but they both lose more, or, win less.

Winner takes $600
Loser loses $600
WRONG!

The winner takes $565
The loser loses $635
An example of one way commisions and the brokers laugh all the way to the bank with $70.
$1200 -$70 = a minus sum

Thanks for the book title.