Every trader dreams of taking a small amount of capital and becoming a millionaire off of it. While profits can accumulate and compound over time traders with small accounts often feel pressured to use large amounts of leverage or take on excessive risk in order to build up their accounts quickly. Not realizing that professional traders often make less than 10-15% per year.
Hmmm…
10 to 15% per year = Investor
If traders get this kind of returns, I think it’s better off for them to get a fix paid job.
If your bank earn only 15% a year, it’s not going to be enough for them to cover their operation cost and don’t talk about your annual interest.
If a “trader” tell you to set a goal to get 15% per year, it’s either their BS to tell you to be pathetically realistically conservative or they don’t even know what they are talking about because they just heard from others.
You are absolutely and utterly incorrect. Current barclays hedge fund index is 11.12% return for 2013 Link below for sourcing. So yes, large multibillion dollar hedge funds with full time analysis, quants, financial engineers, and career professional traders are producing that return.
how about setting a goal of not losing more than XX% of your account in a year ? That’s all you can actually control. If you have a good strategy and you control your losses, profits should come.
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Probably if you set the down limit of losses you will be focused on managing stakes, not trading analysis and entries. Sometimes it’s better to went out of frame and following a guide of your intuition, cuz trading is not about math calculations and expetancy.
Finally, someone with some sense. You mean all of these Joes sitting at home in their pajamas can’t produce 100% returns per year on their retail account?
By the way, the S&P 500 produced 32.3% returns over the same timeframe (2013). Oh, it also produced 16% returns in 2012 when your aggregate fund made 8.25%; 2.11% when the fund made -5.48% in 2011, and 15.06% when the fund made 10.88% in 2010. Now I’m sure we could keep going, but unfortunately that’s all the data they provided.
Funny how PhD’s in computational and quantum mathematics, financial engineering etc. from MIT, Yale, and other top-tier schools can’t even outperform the index. There’s a great lesson in here for the wannabe traders on this forum thinking they can turn their measly $10,000 account into a fortune in the Forex market. When the most professional level traders in the world (making mid-six-figure salaries) can’t even outperform the S&P 500, what hope do any of you have?
‘‘You ever wonder why fund managers can’t beat the S&P 500? Cos they’re sheep. And sheep get slaughtered.Most of these Harvard MBA types don’t add up to dog****.’’ i guess you know where this comes from 
I think there is hope…take Salem Abraham and see what performance he had when he was a one man shop and look how pitiful his performance is now when he’s surrounded himself by various PhDs. If you only look at averages, you’ll be an average.
Says who? You’re playing a negative expectation game. No amount of betting gimmicks will change that. No laughably low-dimensional stochastic model using technical indicators or “price action” will change that, when the market follows such a high-dimensional stochastic model. “Good strategies” look good in hindsight, and that’s about it.
You said it yourself: All you can control is the size of your losses. The size of your wins is completely dependent on luck.
Typical “trader” arrogance, but I guess that’s why you belong in the “wannabe trader” bin and not the “intelligent investor” bin. I hope you get a grip on reality before it is too late.
Continue hating on people far more successful than you will ever be. Continue dragging yourself through broken glass when millions of folks much smarter than yourself have treaded the same path and utterly failed. Don’t forget to come back and update us when you crash and burn, but I know you won’t.
For your information, that quote is from the movie Wall Street, so there’s no arrogance on my part. I gave you a FACT, that a CTA with documented 20+ years had a better performance when he was trading alone than he has now when he has a team of PhDs. My conclusion from that is that those PhDs don’t add value to the bottom line. If you disagree with that, please answer with facts. I don’t understand your answer, why are you talking about hate, I don’t hate anyone.
How can I answer with facts against someone who believes a sample size of [I]one[/I] to be statistically significant? You’re standing up straw men now. Who says his performance is documented?
Survivorship bias is a real thing. Traders tend to cling to the handful of examples of people who “made it” simply by effect of sheer dumb luck and statistical deviation, and then attribute their performance to skill.
I gave you one example that was readily accessible…there are many more in Trend Following book by Michael Covel. Their performance is on record with CFTC, NFA and other regulatory agencies. All these traders have several things in common, one thing being what I said before, they concentrate on keeping losses small on their trades. You can’t attribute their success to dumb luck…it’s a set of skills. Another group of people with skills are the ones Buffett called ‘the superinvestors of graham and doddsville.’
Oh, so that’s why they all switch to [B]investing[/B] after making a name for themselves by [B]trading[/B], right?
You can attribute their success to dumb luck, because that’s exactly what it is. Just like at the casino - for every 1,000 people that lose their cash one person is bound to make it big. It’s just normal, expected deviation. The difference with equity markets is that once you have your lucky streak, then you’re in the Good Old Boys Club of insider information and you can keep the train rolling.
Warren Buffett has no “special skills.” He’s just a reasonably intelligent guy who happened to be in the right place at the right time, had a lot of luck, and made connections. That’s all there is to it.
Mr Yummy Burger,
Pointless to argue with people who already got brainwashed by the sharks. They think the big boys are going to be so transparent to show the public how much they actually earning.
Lots of people just hoping their luck is good because they are lazy to use their brain and always thinking the rich got rich by luck.
jadd,
Your earlier posts on here especially this one, simply highlights your naivety & ignorance.
Like the vast majority of non-industry trained newbies who congregate on these boards, you were totally ill-prepared both psychologically & financially for this type of endeavour. The bright minds you referred to in your comments are also ‘fishes-out-of-water’ when it comes to making money in the markets, but their insipid performance results are down to very different reasons.
Count yourself fortunate you didn’t blow a whole stack of dough on your rather clumsy & clunky foray into the market.
At least your frustration & embarrassment will gradually evaporate with time.
He doesn’t appear to be embarrassed about that 5% per week. In fact, I would say he is proud of it!
If you believe that you’ll believe anything.
Read more of his contributions & you’ll discover he barely made it out the exit door with his original stake intact.
The truth is - the best results in the market you get by ‘‘buy and hold’’ strategies for RANDOMLY selected stock portfolio.
People are ignorant. And they just can’t accept the randomness in our lives.
Don’t know why I am replying to this post, its difficult to have a conversation regarding subjects like this because if the recipient does not have the exposure of similar information, it can be hard for them to digest.
Your knowledge on the market is only going to extend as far as your exposure. Comparing retail, institutional and hegefunds is not easy as they can all have a different objective.
If your a retail trader aiming for anything from 5% - 10% a month is reasonable, and should be your conservative objective if you trading full time. You primary objective is control risk, and the returns will come.
If you have plans of being a money manager sticking to 5% and keeping drawdowns to a minimum will attracts funds to you, there is no need to achieve a higher rate from your perspective. As additional funds will increase your income with adding to risk.
Looking at hedgefunds and large institutional traders, sure some only make 15% a year. But what you don’t understand is the fund is making a considerable amount of money from the transaction costs they earn. Big money plays it safe, they don’t wants excessive returns. Which from a fund perspective is ideal as they can churn transactions and make a fortune. Just remember, at the most basic. These guys act as the broker and the clients, feeding the trades though banks. So dont need a high return to make money, its that simple.
You could say well if the 10k retailer can make 20% a month, why cant he do in in a hedgefund. First their is no requirement for it as stated above, and when thinking about placing large orders into the market that would allow those returns, liquidity comes into play as well. Another point is the barclayhedge site, is just that another website that has a few traders on it. Its not affiliated with Barlclays or any large institutions.
But non of this is important, when you have your edge and trade it with discipline. You’ll soon understand what can be achieved.