Quality of life is also critical. I had the big house before all my friends, the cars, and other assorted fun stuff--- but my life was nothing but stress. I would get depressed and sleep for days at a time, then get excited about some idea and go into a manic phase where i would work for 36 hours plus straight. My core trading & business ran almost by itself, so i only needed to work on it a few hours a week. Once I was so depressed when i had to work on the biz, i hired a driver and instructed him what to do while laying in across the back seat. I dont think i would have survived had a had a regular job or biz that required regular effort. Now I have drastically downscaled to a small place on the beach, new wife, new baby-- Havent been depressed or manic since 2010 Peace. Surf
For me, win rate is the most useless metric of them all. In fact if it gets over 80% them I'm highly suspicious of the system. The dip buyers pre 2008 had very high win rates, sometimes close to 90%, only to completely come apart in 2008. That matters is the Profit Factor over a meaningful number of trades (that means you don't count the one-off 50% returns over 100 trades in the sample period). Personally I've found the 60-70% mark to be the most realistic win rate as 20-30% means you'd most probably have long periods without closed profit. 50% win rate with a Profit Factor of 1.5 is already very good.
To have a very good idea about the performance of a system you need: Number winning trades and number of losing trades What is the average win and what is the average loss per trade How much is my drawdown And maybe how much from my total profits do I give back in losing trades Believe me, high profitable rates are possible, combined with good returns and without going broke. I traded through the Irak war, the 2000 bubble and the 2008 crisis without any problem. Should mention that it was daytrading, which can make a big difference with buy and hold. I know a few "expert traders" who did buy between 1995 and 2000 and made profits because if they received a margin call they just added money. But around 2000 the continuous climb was finished and they got wiped out very hard when their margin calls became huge and the market did not go higher anymore. These margin calls made them marginal people.
Growing up I caddied at a country club. We had a member who was very wealthy, a horrible golfer (which he knew) but as nice a guy as you'd ever want to meet. And he tipped well since he knew his shots were all over the course. But in his late 50's he got cancer and passed away rather fast. All his $$$ couldn't help ... but upon his death much of it went to start a cancer research facility in that city.
That's fine but for me, it's still useless. Running so many backtests in a day that my sight is going but I almost never look at the win rate; Profit Factor, drawdown (both max and average) and the curve itself/Sharpe speak volumes.
i second this. I used to do all you mentioned except average win/loss, but after added avg win/loss, I improved my system
Actually, if your edge is in the shorter time frames 50% is pretty much on the low side. In my experience, 100-300% is more common among traders in the intraday frequencies although those guys don't concern themselves with % returns but rather profit and risk ratios. But of course most guys on ET who can't look past forex, ES or CL will come in here and tell you that such a thing is not possible and that if it were you'd be a billionaire. As for the original question, yes, such traders exist but the irony is that the only people who believe in their existence are the very same traders who are doing it or have done so in the past. The rest are better off telling themselves that it isn't possible so they can move on to other things. Which is fine, unless you actually have an edge that can be quantified then you really shouldnt be wasting your time trading especially for a living. In my opinion day trading should be approached as a get rich stepping stone and not a steady grind that yields a paycheck. As such you should not be afraid of using leverage but rather embrace it and push it to its limits. These claims always amaze me. This really means one of two things. One, you either disqualify many successful traders simply because they are not flat at the close even though they have many intraday offsets or two, you cater to the average poster on ET who should have no business trading real money to begin with. Care to share what FCM you work for that has had zero successful daytraders over the last 20 years?:eek:
I started Trading in January 2005 when I was 18 and I can assure you all that Clubber Lang is telling the truth. I am happy I caught the tail end of the lead up and then crash of 2008, but since the infestation of algos and bots and the hybrid market, it really is literally impossible to move any big size anymore without taking a big gamble. To put things in perspective, in one month of 2007 my total trading volume was about 80 million shares. Now I am lucky if I trade over a million a month. On a positive note, there is still money to be made and new strategies emerging, but it is NOT the same as pre '08, it is very different. I just always wish I was born 10 years earlier to get some of that decimal money. gc
You absolutely nailed it there. I have always marveled at people who claim to be making a living from trading, but have stuck to say a trading balance of 50K, and are happy to make 50K a year for a decade. To me, if you have an edge to make 100% (on starting balance) each year for ten years, it will be a monumental tragedy if you are still struggling to pay your bills, and probably no closer to escaping the subsistence level of living. Trading is not a job with a guaranteed pension. You hit it while you have the edge. After 10 years of the edge mentioned above, the person should be made for life (even if the edge disappears, or you are drawn to other pursuits). It is like a professional sportsperson. You are at the peak for 5-15 years in most sports. But over that time, you should be made for life.