Average with +9% per month. WOW!! I actually just touched on this subject in the video I have on my journal this morning. http://www.position4profit.com/Feb16curves.html You do realize that most of the people in Market Wizards do around 40% or so yearly? Brandon
If one needs 10K a month for living expenses....there are many less expensive places to live. I live quite nicely on roughly 2k monthly. Selfemployed and no house payment. Make 'em pretty, Chris
I do not diagree with the idea at all. At times I have returned 100% intraday on my futures account capital , but that is not on the true amount that was in the trade, only on the cost of margin. On stocks it is very hard to do and even harder to do consistently.
As I said, it was a pre-tax figure, and obviously requires some adjustment for the real world. However, the math is correct, using the geometric mean to determine the time value of money. I am not going to teach you the math, but you can verify it for yourself. Start with $25,000 at the first of January of Year 1. Now, add 10% to reflect the month's return and you have an additional $2,500 for a total account value of $27,500 at the end of January. Add another 10% of that increased balance determine the value of the account at the end of February. Now you have $30,250. That's compounding. Do that 60 times, reflecting 60 months (5 years) and you get the figure I showed you earlier. As for the math, the equation is simple enough: Based on monthly compounded return of 10%: ((1.10^60)-1)*25,000 = $7,587,040.99 Note: the return of 214% which I mentioned in my earlier post (more accurately 213.84%) simply represents the annualized compound rate of 10% per month using the same concept. People underestimate the value of compounding, especially at such exorbitant rates of return. And again, I know that the concept of continuous compounding can only be applied so far to the world of trading. But it is still a compelling argument.
A lot of people here don't seem to appreciate that. There appear to be so many UberWizards among us who have mastered the trading universe but who have not yet discovered the simple concept of the compounding value of money. Vexing, isn't it?
Hey guys, Here is a post I just placed in the lounge area to a guy who was wanting to hire someone to trade for him, I thought it might fit here as well. ...Rennick To the author of this thread, and any one else, I've been trading since the 70's. I've seen alot of trading schemes and fads come and go. And I have seen most people who try to trade get wiped out. I've gone through all these things myself and have learned the most important Market lesson of all. That lesson is that it's not about how to win, it's about how to lose. A novice concerns himself with winning, hitting that homerun, making some quick easy money by trading with excessive risk. The pro on the other hand knows that the wins will come, the term homerun isn't in his trading vocabulary. Instead he limits his risk by never staying in the Market longer than he has to, and always automatically cuts his losses after a set amount. Every pro has some edge, some high percentage trading technique that they keep repeating trade after trade. In the end the pro is judged not by the size of his wins, but by the consistancy of his wins. But more importantly it's the smallness of his losses on a consistant basis that makes all the difference. To the author of the thread my advice is to get you a fishing pole and learn how to fish, don't expect someone to hand you the fish. I'm not by any means saying to go at it alone, there are some very good advisors and a few excellent websites that can help you in certain aspects of your trading. I use one myself , the key is make sure they have a proven track record, and that they aren't going to cost you an arm and a leg. My Market timing guy per month costs less than a single commision and has me pointing in the right direction on almost every trade, this is my Market edge. The point is though, I'm catching all the fish myself with my own pole. I just have my own weather man telling me when it's the right time to go fishing. So my final advice is be your man, don't let someone else trade for you . Get some sound advice from a reliable source, just like I do, everyday. Oh yea, and practice by papertrading until you feel confident that you can consistantly make money with your trades. ...Rennick out
You're right. I'm wrong. Why would anyone want to compound at such rates? Never mind that wealth is essentially accumulated via compounding. Who cares when you can spend it all now, eh? Why fly when you can tread water instead, by spending all of your earnings? I'm sure that's the goal of all traders, especially the successful ones. The trading gods (10%+ per month) now number 29 out of 89 respondents, which is still about one-third. I hope I did not upset them terribly. Here's the deal, Arrow. I know that you can't just compound into infinity. However, anyone who is smart enough to generate those kinds of returns is likely building his account beyond the subsistence level. And at that rate, it build fairly quickly. Somehow, I doubt that there are so many UberWizards among us as suggested by the poll results. THAT was my only point. I'm just trying to peel back that thick layer of bullshit by shining a bit of light on it. Sorry if that offends you.