What is a realistic average daily return for a day trader?

[beamstas]

Stupid quesiton here, is the no. of trading days just 365 minus all weekends and public holidays?

Shaun.

Yep..
It can change year to year
But generally around 252

 

[jono1887]

Yep..
It can change year to year
But generally around 252

365/7 x 5 = 255 - at least 9 public hols = 246ish +/- 2

 

[Mr J]

How long is a piece of string? As others have mentioned, what could be considered a realistic daily average will vary greatly from trader to trader. There is no standard answer.

I will say that 60%+ winrate is actually quite easy. It's not the winrate that matters, but the average profit per trade, and the amount of exposure. One could easily manufacture an 80% winrate, but that certainly doesn't mean it's profitable, as the occassional losses may outweigh the many wins. Profitable winrates vary as greatly as daily averages. Some may only need a 40% winrate, others may need 70%.

365/7 x 5 = 255 - at least 9 public hols = 246ish +/- 2

And throw in plenty of untradable days.

 

[Trembling Hand]

I'd suggest it doesn't matter anyway. I don't see how the results of others are relevant. It won't change our own performance, so all it really serves is to satisfy curiosity.

But it does show how completely new to the game the original poster is. I mean how long does it take to figure out this question

You only have to do a couple of days trading and if you cannot see the opportunity in a realistic way then you are truly lost.

So unless this guy is about 2 days into the trading adventure his arithmetic is about as good as most people business skills on this site. :

 

[alwaysLearning]

Lahde Quits Hedge Funds, Thanks `Idiots' for Success

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLmRPHKZLYmY&refer=home

This is an amusing article but this guy's hedge fund earned itself 870% in one year.

 

[nulla nulla]

Its incredibly hard to determine, day traders can make 1000%s in a highly volatile market as it was back in March-April... It depends on so many factors like how the market is moving, how skilled the trader is ect ect.

I think being able to consistently earn 5% a day is not impossible but I doubt many day traders achieve this consistently...

jeez if you can make 5% guaranteed a day for me, I'll give you my dough to work with and you should have doubled my capital for me within a month.

 

[beamstas]

jeez if you can make 5% guaranteed a day for me, I'll give you my dough to work with and you should have doubled my capital for me within a month.

5% a day
You'll double your capital in 14 days, Triple it in 23 and quadruple it in 28

After 250 days you'll have 198,300 times your initial capital

5% a day realistic for anyone? No.

Larry Williams made 1000% in a year.

 

[skc]

One way to put it in perspective is to look at the market overall. The average market return for the last 10 years was ~12% (before the downturn), so that is the total pot for all market participants. 12% annual return is less than 0.05% per day (no compunding).

Before anyone jump the gun and says you can profit with short sell or extract more than 12% from the market by buying multiple up legs etc, I am simply referring to the fact that the overall market is a zero sum game, and your short sell profit is someone else's loss.

So this truely is nothing more than a "how long is a piece of string" question. There is no answer like "the average lawyer 5 years out should make 100K".

But of course, like all weight loss treatment ads, individual results will vary.

So to me there is only the answer that "The average market participant can make 0.05% per day. How much you make depnds on how good you are".

Any other number being thrown around are pointless.

 

[beamstas]

I am simply referring to the fact that the overall market is a zero sum game, and your short sell profit is someone else's loss.

I'd really like to discuss this, especially with someone who thinks the market is infact zero sum.

Lets simplify zero sum

Company A has 2 shares and they are priced at $1.00 each.
Person X and person Y both hold 1 share

Company A posts a massive profit and people are willing to buy for $30.00 each

Person X likes Company A and decides to hold
Person Y decides to sell for $30.00 to person Z

Person Y realises a profit of $29.00

Who lost $29.00?

The obvious candidate is person Z. But he can now sell for $30.00 and realise no loss at all.

Im not saying im right
I just can't comprehend how it can be zero sum

 

[cutz]

I think you may need to keep following the money to come to an obvious conclusion, at some stage someone is going to take a hit.

 

[Trembling Hand]

Im not saying im right
I just can't comprehend how it can be zero sum

That's because you haven't finished the equation.

Its a zero sum game after initial listing, divs, brokerage & capital raising.

Its just a big game of pass the parcel. Investors = traders

 

[nomore4s]

I think the OP is going about this the wrong way.

-First you need to identify how much money you want to take out of the markets to make a living out of daytrading.
-Then you need to work out what markets you want to trade.
-Then you need to work out the average daily range or movement of that market.
-Then you need to work out what % you need to take from that range to meet your targets and if you can consistently take that % from the market, allowing for of course good days & bad days. If the market on average moves say 25 points and you need to take 20 points a day is that realistic?

There are of course other considerations like capital base, type of trading/trading plan, hours spent trading each day etc, etc. But this should give you an idea about whether what you want to earn from the markets is realistic.

I think FrankD explains it well in his book.

I will also add this - daytrading is not easy and while most new traders seem to aspire to it (I did at least), it isn't for everyone. I've tried daytrading at various times and to be honest don't enjoy it at all even though I love trading. Maybe it's because I'm no good at daytrading, lol.

 

[cutz]

Exactly, there’s only a small minority of profitable day traders, those that are successful have a special talent, something that can’t be taught I assume, anyway it’s something I haven’t got.

My short term vehicle of choice are options with positions going out to about 4/5 weeks so technically that excludes me from the OP’s request.

But I tell you what, it must be nice going to bed holding nil positions but still pulling profits.

 

[nomore4s]

Exactly, there’s only a small minority of profitable day traders, those that are successful have a special talent, something that can’t be taught I assume, anyway it’s something I haven’t got.

I actually think it can be taught. It is a skill and skills can be learnt, but it comes down to how much practice & effort one is willing to put in and the quality of that practice.

 

[Timmy]

"What is a realistic average daily return for a day trader?"

The average daily return for those calling themselves day traders is a negative $ figure. Is that realistic enough for you?

 

[skyQuake]

That's because you haven't finished the equation.

Its a zero sum game after initial listing, divs, brokerage & capital raising.

Its just a big game of pass the parcel. Investors = traders

Correct me if I'm wrong but I though futs = 0 sum, neg after brokerage.

and shares can be either? If markets are rallying its positive sum, if markets are tanking, its negative sum.

 

[mazzatelli1000]

In addition to nomore4s post, maybe self assess personality via tests like Myer Briggs (i.e. the ISFP etc descriptions).

When initially deciding what vehicle I wanted to trade I found I was of the "P" Perceiving function, the implication being I liked to keep my options open.

"P"s generally make poor traders and it may be advisable not to take up trading at all, as perceivers are not decisive and tend to be flexible with stops etc.

I found less sensitive delta trading utilising non linear derivatives much more fitted my personality.
I found I was an extremely crap daytrader
LOL

 

[cutz]

I actually think it can be taught. It is a skill and skills can be learnt, but it comes down to how much practice & effort one is willing to put in and the quality of that practice.

Nah,

I reckon it's like learning an instrument, most can learn to play, only the gifted will become virtuoso.

That's cool i agree to disagree on that one.

>>EDIT, Hi Mazza, just noticed your post, that also why I love options, a position can be manipulated on the hop rather than closing out, yet to master it but getting there. BTW nice picture.

 

[Timmy]

I reckon it's like learning an instrument, most can learn to play, only the gifted will become virtuoso.

Being gifted is not enough, and not even necessary.
Check out this thread.
Check out this article.

Most notable researcher in this field of expertise development is K. Anders Ericsson.

TH has posted extensively on this.

 

[cutz]

Thanks for the info Timmy, i'll check it out later on.