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.
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.