Does trading make any sense financially?

Hi, here’s my thought. S&P 500 makes annually 10% or more. So if you can make 10% with trading which most traders cannot, why bother when you can just buy ETFs. IMO trading makes sense if you can make at least 20% per year consistently.

Is trading just a hobby, what are your thoughts ?

Yeah, that’s a fair point. If someone can get 10% with minimal effort through ETF, it’s definitely a solid approach. But yeah, if can’t consistently outperform a simple ETF strategy, it does make you wonder if it’s worth the effort. :grinning:

Trading makes sense if you can consistently beat ETFs by a good margin. Otherwise, passive investing is smarter. For most, ETFs provide solid returns with less stress. But ultimately luck also matters!

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Trading can make sense if you really know what you’re doing and can handle the risks.

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You must think that most of the world’s hedge funds are wasting their time and shouldn’t exist, then? It’s certainly a point of view … :pensive:

Does trading make any sense financially?

Well, a simple answer from my side - YES!

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Retail Forex only exists to supply liquidity. It’s not designed as an investment vehicle bc of varying spreads, negativity skewed swap rates, a decentralized market, and unregulated trades.

The Forex market had a problem in the 90’s when international companies & bank transactions grew bigger without a counterparty to meet their size. Their solution was to open to retail traders and give high leverage so they could reduce to cost of the transactions and impact on the markets.

That being said, 1-2%/month return is very possible. Retail FX is gambling with a very low minimum bet and a very high maximum bet as it’ll be wagering on an unknown outcome with a known negative edge.

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For me it is like an challenge to beat the market. What’d you think bout that??

Hey Franca, how much most’s of the worlds hedge funds make?

I love a challenge. So how it’s going, any luck beating that MF?

Like most economic “facts,” I guess it depends who you ask? Our information is from the asset servicer Citco. Hedge funds, overall, have just had their best year out of the last 5 years, and averaged just over +15% on the year.

Actually more than I thought, but that was a particularly good year, and still well under 20%.

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If only it were that simple.

I believe the actual figure is around 7%, and that’s an average over 20+ years. 2024 would have been exceptional, but other years would be negative.

So, if you’re not making at least 8% per year (after a few years of experience) on average, then maybe you need to reconsider whether you should continue trading or move on to investing.

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Thx for the reply.
I wonder if clients of these hedge funds are satisfied with the returns.

Can you provide the source of your claim.
thx

If trading didn’t make sense financially, this forum wouldn’t even exist. People wouldn’t be spending time learning, sharing strategies, and improving their skills if there was no real potential.

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I’m not so sure about the logic of that. People also do all that with horse-race betting (and there are thousands of websites and books and systems and forums etc.) but nobody makes a living from it?

I have investments in my pension fund that have made over 20% per annum over the past 5 years on average, I can’t see any data from before that so not sure how sustainable these profits are.

But yeah, I would need to invest 300k at 10% to make enough to live on, I simply don’t have that kind of money but I can get that money in a funded trading account with hard work.

I think with knowledge/experience and discipline, you can beat 1% a month.

Oh you’d be surprised. You can scalp horse races and a few people do claim to make a living from it.

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As long as they’re scalping the races, rather than the horses themselves?

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Indeed! It’s crazy how people make ways to make (and lose) money. For this you basically trade the odds as they move.

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