Is Consistent 20 Percent Profit/Mo Pos

[cowcool 10]

Hi Folks, it's me again Thank you for your previous advices, greatly appreciated. Next question:

 

Is consistent 20 or even up to 50 percent profit/Mo possible?.

 

Some people claim that they can earn 20-50 pct/Mo profit consistently through intraday trading..From my newbie perspective , I find it hard to believe because if you can achieve that, you will be a very rich person in not too long time, even most veteran money manager are not able to achieve this.

 

 

But I might be wrong, comments please.

[bakrob99 11]

Here is the BEST CASE SCENARIO:

 

Let's say you risk 2% of account size max per trade, and you have 10 trades per day. (In my opinion, any more and you are risking overtrading... unless you are using an ultra-scalping strategy). Assume 70% win-loss rate, with 20% scratch trades, 30% losers, and 70% days profitable. And here's the key and biggest number of all, the Avg Winner vs Avg Loser. Assume your average winner is 1.5 x bigger. Also, assume you will stop trading after 3 losses in any day (3 out of 10).

 

On your best days you would achieve a winning percentage of 8% of account size,

Worst days you would be -7% of account size.

Average day somewhere in the middle , say 2-3%.

 

So Monthly I think it would work out to a winning percentage of 30% per month net.

 

THIS IS THE BEST CASE SCENARIO.

-------------------------------------------------------------------------------

Now the WORST CASE SCENARIO.

 

Change the stats to a winning percentage of 60% and an Avg Winner vs Avg Loser of .75 The numbers dramatically change. Your best days would be about 2-3% of account equity and the worst days would remain at -7%.

 

So your monthly gain would be near breakeven.

 

My experience suggests that the more scratch trades I take while trying to hold on to runners for a large gain IMPROVES my Avg Win vs Avg Loss ratio and ultimately improves my monthly results. For me, the key is to do whatever you can to hold onto winning trades until there is an "obvious" place to exit or a significant gain R:R over 2x has been achieved. An added advantage to holding onto runners is it keeps you out of making trades while in the position which often can be losers (unless you are adding to it).

[brownsfan019 17]

The easy way to look at it is whether or not your gains are rolled over.

 

Example 1

: You start with $10k and at end of month you withdraw enough to bring the account back to $10k. Very possible to make 20% on this monthly, b/c that is $2000.

 

Example 2

: You never pull your gains out and let it build every month. Eventually, you will not be able to earn 20% but the $$$ amount will increase dramatically.

 

It's very possible to make 20%/mo on accounts below $100k IMO. Once you get above $100k, then you might not be able to necessarily pull in 20%, BUT you can make more dollars than a $10k account could.

[PogiPL 10]

I think the best way to look at this situation, is not to look at it in % but in $ you need to set yourself a realistic $ amount for the day, week, and month and try to hit that.

 

Like brownsfan said once your account gets to big its going to be harder to pull in the % you want but the money will come in easier with bigger positions.

[Tams 20]

  cowcool said:

Hi Folks, it's me again Thank you for your previous advices, greatly appreciated. Next question:

 

Is consistent 20 or even up to 50 percent profit/Mo possible?.

 

Some people claim that they can earn 20-50 pct/Mo profit consistently through intraday trading..From my newbie perspective , I find it hard to believe because if you can achieve that, you will be a very rich person in not too long time, even most veteran money manager are not able to achieve this.

 

 

But I might be wrong, comments please.

 

 

is 20% return possible?

 

the short answer is YES.

 

 

 

 

 

 

 

now let's get to the newbie part...

 

for a person starting out, the more practical question is:

 

is it possible to breakeven by year 2?

 

 

 

 

 

 

not that it is impossible to make money right off the bat.

ask any newbie, they will tell you they made lots of money in the first 3 months.

the problem is... the market has a way of "training" a winner to be a loser.

It will slowly change your winning method into a losing one, and turn you against yourself.

Your challenge is no longer the market, but yourself.

Edited May 1, 2009 by Tams

[vinson 10]

  Tams said:

is 20% return possible?

 

the short answer is YES.

 

 

 

 

 

 

 

now let's get to the newbie part...

 

for a person starting out, the more practical question is:

 

is it possible to breakeven by year 2?

 

 

 

 

 

 

not that it is impossible to make money right off the bat.

ask any newbie, they will tell you they made lots of money in the first 3 months.

the problem is... the market has a way of "training" a winner to be a loser.

It will slowly change your winning method into a losing one, and turn you against yourself.

Your challenge is no longer the market, but yourself.

 

 

Truth so pure, unfortunately live trading I did not have my 'make lots of money' in the beginning.

 

Made lots on the simulators, you get great fills on them, and can 'cheat' at your trading ideas! :rofl:

 

No better teacher than live trading losin real money.

[Tams 20]

some simple thoughts on simulation:

 

 

1. simulation is not the real thing. accept the fact before you begin.

 

2. there are different levels of simulator.

 

this is a simulator:

 

 

so is this one:

 

 

3. If your system can make money on a sim, it doesn't mean it will make money live.

 

4. If your system can't make money on a sim, it sure won't make money live.

 

5. Practicing bad habits on a simulator will reinforce the bad habit.

 

6. Different people use simulator for different purposes; if it doesn't suite you, don't use it.

 

 

 

.

[thalestrader 14]

I think the best way to organize your thoughts so that this question no longer affects you is to understand the difference between trading profits and ROI, between trading capital with leverage and investments made using savings deposited into a brokerage account. Don Bright of Bright Trading explained it this way:

 

"We don't really think of trading profits as "ROI." Or even in terms of return at all.

 

For example, our people might put up $20K, and make $5k per week...but they are using our capital to trade with. We consider the money that is being used as simply another tool, just like a computer or trading method. An investor looks for ROI.

 

FWIW,

 

Don"

 

Traders trade for profits, while investors seek ROI. I have a colleague who starts each month with a balance in his futures account that most would find a ridiculously small capital with which to trade, let alone to trade for all of one's livlihood. He trades only the TF (formerly the ER2) He routinely nets two - three times his starting capital in the form of profits month after month. He never thinks in terms of having made a 200-300% return in a month. He simply knows he needs X thousand dollars in order to trade his way, and that is what he does. On the last day of the month, he draws out his profits for the month, and leaves his small starting capital to do it all over again.

 

Now, as to the question as to when a new trader can expect to be breakeven or profitable, well, that depends entirely on that trader's psyche. In the end, the only thing standing between any trader and either incredible income and wealth generation or terrible financial ruin is whether he or she is able to cut losers quickly while not cutting profits short too. If you can master your emotions, the rest if a piece of cake. Some may be successful right away. Others may forever be net losers. Near the beginning of Wyckoff's Studies in Tape Reading, he compares two traders, both of whom started out together in the same brokerage office watching the same ticker machine trading 10 share lots. Years later, one of these traders was still trading 10 lots while the other, in addition to having amassed a great fortune, was now trading an account equity of 100K. Some have it, and others never will.

 

So, in regard to the first question, think profits not ROI. You are a trader, not a money manager. If you understand yourself as seeking "a reasonable return on investment," you will never achieve what it is possible to achieve as a trader. Such thinking will limit you. It will leave you susceptible to others limiting you.

 

The answer to the second question is going to be unique to each individual, and can range on a scale of immediately profitable to perpetually unprofitable.

 

Best Wishes,

 

Thales

[Bear Mtn. 10]

  Tams said:

the problem is... the market has a way of "training" a winner to be a loser.

It will slowly change your winning method into a losing one, and turn you against yourself.

 

...cheerful stuff Unfortunately I think you about summed it up..