100-300% Yearly Returns Discussion

neke · Sep 15, 2016

JoshM said:
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Likewise, let's be honest. A 10% annual return on two contracts and their underlying value (same as if you had 200k in s&p mutual funds) is $20,000. With a 20k account and proper risk management that would be a 100% return. That is by no means "dreaming." I'm not saying it's easy, but it's funny how many people will act like it's impossible. In my opinion though, if one can't navigate the markets enough to get at least a 5-10% annual return consistently of the underlying assets they trade, you shouldn't be a trader and should just invest in mutual funds....
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What you are missing in your analysis is the effect of VOLATILITY on LEVERAGE - seems it is hard for you to understand. You are not getting a cushy 5-10% on asset value in a straight line. Get some data. The S&P over the last 5 years has returned like 11% per year (compounded). Get the daily closes, and simulate how you would have fared with a 20:1 leverage and say 2% stop with 4% target (no stop/target of course until EOD). try some other leverage and stop %, and see. No need to theorize. I once did that over a 14 year SPY data, and it wasn't pretty!

garachen · Sep 16, 2016

JoshM said:
Am I the only one that thinks that people who sometimes harp about 100-300% yearly returns as "nearly impossible" are sometimes just a tad ignorant or pessimistic?

Yes, don't get me wrong it's pretty difficult to do with a huge account, but when thinking about the assets being traded it really doesn't seem impossible to do consistently when you think about relative returns.

Let's say you have a $5000 account and you trade on average 2 contracts in the emini s&p. Considering those assets are valued in the market at roughly $200,000 and the markets have averaged a 10% return each year since existence, one could potentially expect a return of $20,000 annually for that amount (which is a 400% return on a $5000 account).

Yes, 400% sounds crazy and makes people think your a scam artist when you say it's possible but isn't it really just a 10% return on what your trading?

Likewise, trading 10 contracts with a $30,000 account represents a million dollars in assets and thus a 10% return would be 100k (which is a bit more than a 300% return).

Obviously, everything gets more difficult as you scale up since it is harder to find liquidity.

I don't know, I'm curious what you guys think I just find it funny that so many people think a 400% return is like the sun exploding when in reality it is just a 10% return on the assets your trading. (And let's be honest, when is a 7-10% return too much to ask for on an annual basis in the markets).

Anyways, the point of this post is not to say it's easy but just to draw attention to the fact that a 200-300% return annually isn't like the sun exploding. Maybe I missed something, but I'm curious what you guys think.
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Except under very specific circumstances traders don't talk in terms of return. The reason is that until you have lots of capital, $100M or so, your capital and risk are very disconnected.

I've never ever had a trader discuss their profitability in terms of return. It would be a huge tip off that they are hiding something.

OddTrader · Sep 16, 2016

" 100-300% Yearly Returns Discussion "

The common threshold is 500% for ETers on this board to be interested in starting this kind of discussion.

You're very lucky one!

southall · Sep 16, 2016

JoshM said:
You make good points. Consecutive losses even while having positive expectancy would certainly hurt someone using levered assets. However, using proper risk management can certainly help to mitigate that, especially if you only take trades within certain risk parameters and are very disciplined about targets, etc.
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>only take trades within certain risk parameters

In reality even the best looking trade setups can lose money very easily.
Losses will whittle your big theoretical returns down to a much smaller net profit.
There is no way around those pesky losses! Otherwise we would all be rich already.

i960 · Sep 16, 2016

JoshM said:
You make good points. Consecutive losses even while having positive expectancy would certainly hurt someone using levered assets. However, using proper risk management can certainly help to mitigate that, especially if you only take trades within certain risk parameters and are very disciplined about targets, etc.
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Well yeah if you're a perfect trader taking perfect trades disrupted by all manner of random left-field moves than everything is great, but in reality there's this thing called volatility drag and it's a real issue.

Zestilio · Sep 16, 2016

Possible, has been proven too many times. But you need to have something most don't to succeed. It can either be information, or contacts, or experience...

Xela · Sep 16, 2016

Zestilio said:
you need to have something most don't to succeed.
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Exactly so.

As opposed to "believing" that you have that, or (even worse) just "hoping" that you do.

comagnum · Sep 16, 2016

Jim Rogers and George Soros returned a mind boggling 4200% over the span of 10 years on thier 'Quantum' fund. I have never heard of anyone to have toped that.

southall · Sep 16, 2016

comagnum said:
Jim Rogers and George Soros returned a mind boggling 4200% over the span of 10 years on thier 'Quantum' fund. I have never heard of anyone to have toped that.
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That is 'just' 45% compounded.
I think other traders in the 70s did better. Big trends in those days.
Although not sure how big the 'Quantum' fund grew relative to other funds.

lawrence-lugar · Sep 16, 2016

comagnum said:
Jim Rogers and George Soros returned a mind boggling 4200% over the span of 10 years on thier 'Quantum' fund
I have never heard of anyone to have toped that
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southall said:
That is 'just' 45% compounded
I think other traders in the 70s did better. Big trends in those days
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I'm sure some traders in the 90's topped those growth rates -- even today, in modern times, I'm sure there are traders who have performed just as stellar