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