Hey guys, I was on Quora I believe, and two guys were going back and forth about how with a small account you can make anywhere between %10-40 a month in trading. Everything I've ever read has said this practically can't be done, unless you are using an insane amount of leverage, and taking on to much risk. Is it true that small accounts can produce such returns, with reasonable risk control, or is that a bunch of BS? Thanks Guys.
If you're trading with a small account... and leverage it up.... it's a THOUSAND times more likely that you lose it all rather than turn it into a fortune.
Define what you mean by "small account" and are you considering return on leveraged capital or cash on cash?
Most who seek very high returns are inexperienced and have small money to invest. Like, $2000-$5000 or so... or even $25,000... want to turn it into something big. Not likely. I don't understand "cash on cash" (??).
Cash on cash means without leverage. The question and the issue of "small" are inquiries as whether the OP knows what he or she is actually asking. An sensible answer requires a more definitive question...way too vague. In addition, is the hypothetical trader an experienced profitable trader or a beginner or something in between?
OP, please also define the terms "two guys", "reasonable", "risk", and "BS". Jokes aside, the answer is, no, it can't be done consistently. Consistency is what makes it possible to qualify your trading as success.
A given but he asked a hypothetical question, not whether HE could do it or whether it is possible. In any event the question is too vague.
Yes, you can do it. I've had two 40% + months this year, and two more better than 15%. I did that with a 100% cash backed account (I've used leverage to close positions, and it's options, but never been exposed more than 100% in absolute terms) The problem is doing it consistently, because I'm certainly not still sitting on all those winnings. The good months are great, and the bad months are worse. If you're seeking these returns, you're likely to lose it all as others have said. Managing the risk on a high risk strategy should be your goal, not targeting returns. Then cut risk wherever you can.
Me neither. Whether you are using leveraged instruments or using margin/borrowed funds (that cost you) it always ends up as some Return on your Capital. OP asks hypothetical questions and IMO the answer is yes, it is possible. Consider trading ES with $10k account, trading 2 lots at a time a shooting for 10-12pts a month (!), taking only best setups. There is your 10% return. Notice many here "shoot for" 3-4pt a day and it seems like every other guy on ET tries to catch 2-3 swings a day 4-5pt each, go figure...