Imagine you have a trading account of size 1M. As a daytrader how much % do you think you can make of it in a year?
Hard to predict a years gain (or loss), but, id be content if I made ~20%.....anything extra is gravy. Not huge percentage gain, but, $ wise thats more than liveable for me.
The important question is not how much can you make but how much you are willing to risk. Once you determine your risk parameters, all you have to do is trade within that limits and take what the market gives you. Many people would just quit trading if they have 1M Others will try to double it but they will have to be ready to stomach losses of up to $200,000. Now I guess you wouldn't want to throw that much money away Once again I don't think that it is reasonable to set goals in trading. You'd better define your risk tolerance and if you are good the risks you take will translate into profits, if not - you will have to suffer the corresponding losses.
Say, the initial 1M money is that of a prop firm (or a fund to manage). Only the best trader/manager who demonstrates how to make the highest profit will say get a 5 yr contract with very good conditions for a top job at the prop firm. The task is profit maximizing and risk minimizing by using the best method which seems to work over a longer timeframe. How much does the best result of not biased, realistic, backtests give for an initial capital of 1M? You have to take care for comission (say $0.0015 per share), slippage, bad data/spikes etc. Choose the best daytrading method which seems to work. Positions must not become greater than than 5% of the avg daily volume (say of the past x days; x about 9 to 30). No position can be held overnight. Chose any market you wish. You don't need to go 1 year back but at least 2 month's data should be used for the testing, and this then annualized in a realistic way (ie. multiplied).
This would mean a DD of about 10 to 20%, right? Isn't that usually typical for long term trading? Wouldn't active daytrading (ie. holding no positions overnight) help cut this down to say just 1/3 or 1/4 of that?
I don't know. To answer this question you must separate a trader's capital in two equal accounts - one for day trading and the other for swing and position trades. Then compare the equity curves. But to (consistently) achieve 100% annual return with just 5% drawdown... probably only ten out of one million traders can do that
"Positions must not become greater than than 5% of the avg daily volume (say of the past x days; x about 9 to 30). No position can be held overnight. " ass backwards, but good luck. grimer11
The point is not to get some fairy land $1m to trade with but to trade your way up to $1m and beyond. You need to learn how to grow whatever you've got into a much bigger sum .. that is the name of the game, period. I can tell you that making the dough is damn sight more satisfying than spending it or getting it from some fairy land delivery. But each to his own.