Realistic Rate of Return?

peter2 · 27 May 2013

My advice for the newbs.
Don't worry about other peoples stated ROI's. Most of them are misleading either intentionally or unintentionally. Anyone mentioning a % return without also mentioning the max draw down (% risked) to get that reward is intentionally misleading their audience.

If you feel the need to compare your return against others, recognise this need as a typical newbie trait and that you haven't traded enough or traded through different market conditions.

Your only concern should be whether your trading plans are capable of fulfilling your risk/reward goals. If they are, then do it, if not, improve them.

beachlife · 27 May 2013

Trembling Hand said:
How long is your string?????

10K?
100k?
1 mil?
20 mil?

When position sizing is % based it is all scalable until you reach liquidity problems, so it makes no difference.

$5000, 4% risk is $200, 100% gross return is $5000

Double it

$10,000 4% risk is $400, 100% gross return is $10,000

multiply by 50

$500,000 4% risk is $20,000, 100% gross return is $500,000 (assuming you can get your trades filled)

That's why I asked for % not $$, once proven small it can to scaled to whatever I want - within the limits of liquidity.

Trembling Hand · 27 May 2013

beachlife said:
When position sizing is % based it is all scalable until you reach liquidity problems, so it makes no difference.

$5000, 4% risk is $200, 100% gross return is $5000

Double it

$10,000 4% risk is $400, 100% gross return is $10,000

multiply by 50

$500,000 4% risk is $20,000, 100% gross return is $500,000 (assuming you can get your trades filled)

That's why I asked for % not $$, once proven small it can to scaled to whatever I want - within the limits of liquidity.

In a lot of instruments it doesn't take much to reach liquidity limits where you cannot just hit the buy or sell button, especially in the ASX. If you are using CFDs you will find very very quickly that you cannot trade with anything worth while.

Thats why its so hard to answer you question. There are some here trading a few thousand up to a few million or more. But really if you knew your system and your markets it seems hard to believe that you aren't the best one to answer your own question!

beachlife · 27 May 2013

Trembling Hand said:
In a lot of instruments it doesn't take much to reach liquidity limits where you cannot just hit the buy or sell button, especially in the ASX. If you are using CFDs you will find very very quickly that you cannot trade with anything worth while.:

That is why I am starting small with cfd's over currency and commodities so I can switch to the futures contracts when cfd liquidity becomes a problem.

Trembling Hand said:
Thats why its so hard to answer you question.:

What's so hard. Either of these would have spared a lot of time for everyone.
1. my usual rate of return is somewhere between x & y. Good luck.
2. none of your business, I hope you fail. (seems to be the general preference)

Trembling Hand said:
it seems hard to believe that you aren't the best one to answer your own question!

I know what my system should make. If I knew what returns others were generating I wouldnt have asked.

Trembling Hand · 27 May 2013

beachlife said:
What's so hard. Either of these would have spared a lot of time for everyone.
1. my usual rate of return is somewhere between x & y. Good luck.

You are quite thick aren't you? My usual rate of return swings massively. I'm pretty sure most profitable traders are the same.

There is no NORMAL YEAR... FFS!

beachlife · 27 May 2013

Trembling Hand said:
You are quite thick aren't you? My usual rate of return swings massively. I'm pretty sure most profitable traders are the same.

There is no NORMAL YEAR... FFS! :

Insults are the arguments employed by those who are in the wrong.
Jean Jacques Rousseau

boofis · 27 May 2013

beachlife said:
Insults are the arguments employed by those who are in the wrong.
Jean Jacques Rousseau

Alright, you win, everyones been wrong this whole time. None of us actually trade, or have traded for longer than you, it's actually really easy to make 1000% every year on a $500 account. Let us know how you go mate!

skc · 27 May 2013

Trembling Hand said:
You are quite thick aren't you? My usual rate of return swings massively. I'm pretty sure most profitable traders are the same.

There is no NORMAL YEAR... FFS!

Stop loss, my friend.

Trembling Hand · 27 May 2013

skc said:
Stop loss, my friend.

LOL.

My after market hobbie,

burglar · 27 May 2013

Trembling Hand said:
LOL.

Let me guess ... it feels sooo good when yah stop!!

beachlife · 1 July 2013

boofis said:
Alright, you win, everyones been wrong this whole time. None of us actually trade, or have traded for longer than you, it's actually really easy to make 1000% every year on a $500 account. Let us know how you go mate!

Sure mate,

End of day system, 8th Jan to 30th June

76% with 100% profits reinvested back into capital base.

(would be 71% if 100% profits withdrawn, ie fixed 4% risk per trade).

Win / loss 61%

New intra day FX system based on similar entry signals averaged around $200/day on live $5k test account in June, even with undiciplined 1st week. (I dont believe in testing on sim). Last 2 weeks around $300/day. No compounding yet, 4-8 trades per day. Now optimised and coded into MT4. Still just $5k for another month of testing MT4.

TheUnknown · 4 July 2013

trading forex is a disaster

zac · 17 September 2013

TheUnknown said:
trading forex is a disaster

I think theres a saying that goes along the lines of "Forex is the quickest way to the poor house"

Personally I think the disaster isn't Forex so much its in anything where you don't understand it well enough. The amount of leverage used in Forex catches people off guard. Ive heard some rather sad stories.
However ive heard some real good stories too.
I've known of people who on Forex on just one trade (yes one) have set their whole life up.

Not to say that they were probably stupid and over committed on that one trade. Even reading the forums, so many people went short the Japan Yen.

Smurf1976 · 17 September 2013

beachlife said:
That's why I asked for % not $$, once proven small it can to scaled to whatever I want - within the limits of liquidity.

Mathematically maybe, but human psychology often becomes a limiting factor once the actual $ amounts become significant.

You risk $1000 - no problem, you won't lose much sleep over that.

You risk $1,000,000 - that's a lot of money for most people and fear can very easily take over.

It's the same with everything. If I put a steel beam on the ground then any able bodied person can walk along it quite easily without falling off. Now suspend the same steel beam between two high rise buildings and attempt to walk along it. Nothing has changed with the task, you just put one foot in front of the other and walk, but the consequences of failure have gone from nothing to total loss and most will be terrified at the thought of taking such a huge risk. Psychology takes over.

freebird54 · 19 November 2013

Covered calls work on 3% a month
Other option plays higher return, less capital required but higher risk
I have been in stocks for 40 years, options for 15 years

I have just started on Bonds and index trading so learning all over again.

beachlife said:
Hi Guys
I wonder if any active derivatives traders are willing to share their average rate of return to give me something to aim for. I know those with an investment mindset are happy to just out perform the index. I am more interested in actively trading for cash flow as opposed to investing for long term growth.

For me out performing the index is not enough to live on. I see examples of traders that have turned $10k into $110k in 12 months. Daryl Guppy's newletter sample portfolio averages around 90%pa.

I currently trade CFD's long and short on asx top 200, commodities, spi, aud/usd on a daily time frame, not intra day. If all of my stops were hit today my return on capital would be 18% since Jan. If I took my open profits today it would be 40%. Trade durations are 10 to 20 days, win loss ratio is 58% wins. But it's early days yet.

What are those that trade for a living consistently making? I need a realistic target.

Thanks.

freebird54 · 19 November 2013

Covered calls work on 3% a month
Other option plays higher return, less capital required but higher risk
I have been in stocks for 40 years, options for 15 years

I have just started on Bonds and index trading so learning all over again.

beachlife said:
Hi Guys
I wonder if any active derivatives traders are willing to share their average rate of return to give me something to aim for. I know those with an investment mindset are happy to just out perform the index. I am more interested in actively trading for cash flow as opposed to investing for long term growth.

For me out performing the index is not enough to live on. I see examples of traders that have turned $10k into $110k in 12 months. Daryl Guppy's newletter sample portfolio averages around 90%pa.

I currently trade CFD's long and short on asx top 200, commodities, spi, aud/usd on a daily time frame, not intra day. If all of my stops were hit today my return on capital would be 18% since Jan. If I took my open profits today it would be 40%. Trade durations are 10 to 20 days, win loss ratio is 58% wins. But it's early days yet.

What are those that trade for a living consistently making? I need a realistic target.

Thanks.

Value Collector · 16 January 2014

beachlife said:
.

What are those that trade for a living consistently making? I need a realistic target.

Thanks.

I think for the sake of conservative forward planning, you should consider yourself ready to be a full time investor / trader when you have large enough working capital base that you could live the way you like from based on it earning 8% for you.

They way I personally prefer is to do the following.

1, Own your own home debt free. (no rent or mortgage payment will allow you to sleep soundly)

2, Have 3 years living expenses in a high interest bank account. ( Having this gives you a great buffer against down turns)

3, Then have your working capital deployed in a way that suits your knowledge and talent, the returns will be lumpy, so when you have years with solid returns top up your 3 years expenses bank account.

beachlife · 17 January 2014

Thanks but I would expect a lot better than 8% pa for a derivatives trader.

I have found the answer I was looking for here

http://www.worldcupchampionships.com/live-stats-3

and here

http://www.guppytraders.com/gup15.shtml

Value Collector · 17 January 2014

beachlife said:
Thanks but I would expect a lot better than 8% pa for a derivatives trader.

I have found the answer I was looking for here

http://www.worldcupchampionships.com/live-stats-3

and here

http://www.guppytraders.com/gup15.shtml

As I 8% is a figure I chose for conservative planning. You are free to earn higher rates if you can, But remember not every year will be a killer year.If you don't have a decent buffer of saved monthly expenses, and and you only have a small capital base because you planned on earning 30% a year every year, you will quickly eat through you capital, and be in the embarrassing position of having to tell friends and family you failed and have to rejoin the work force.

If you can earn those large returns, then it shouldn't take you long to get to that large capital base through compounding, where you could live of 8% with a 3 year buffer set aside and a paid for house.

Value Collector · 17 January 2014

beachlife said:
Thanks but I would expect a lot better than 8% pa for a derivatives trader.

]

Another thing to keep in mind is that those high returns are coming at the expense of other peoples losses, and If you are new to the game, then you have a great chance of becoming the guy that helps fund those high returns for the experts,

Realistic Rate of Return?

peter2

beachlife

Trembling Hand

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beachlife

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boofis

skc

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TheUnknown

zac

Smurf1976

freebird54

freebird54

Value Collector

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beachlife

Value Collector

Have courage, and be kind.

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