I think 100-200% per year is an optimistic scenario for standard swing trading with standard margin (in a smallish account). Let's say you get 150% after taxes: EOY1: 12.5k EOY2: 31.25k EOY3: 78.13k That would be a little over 3 years. All of this is making a lot of assumptions of course...
Realistically speaking, if u have a very well defined edge which has undergone massive backtesting and tweaking plus u have been trading the edge for the past 1 year is it possible to turn $5000 into $100,000 in 1-2 years? To make $100,000 trading 3 contracts on the ES in 2 years u'll need to make $1390 a month per contract. Or, 27.8 ES pts a month per contract. Would an experienced trader with a good system be able to make $1390 per contract per month? Or an I overestimating the rewards of successful daytrading?
Well if you break that down further an assume that you trade 18 days per month that's an average profit of 1.54 points per day. Assume that you execute an average of 2 trades per day and the commission on that is 0.2 points (i.e. 0.1 point commission on each trade) then you need to gross 1.74 points per day which is 7 ticks. If your strategy had a win/loss ratio of 50% and you made 4 points for each win and lost 2 points for each loss...
So someone skilled in pattern recognition would be a naturally good trader then? What other profession cultivates the skill of pattern recognition? And has anyone measured the success of people moving from that industry to trading? For example - muscians - are they good at pattern recognition? Who else?
Guy2, if you make 1.74 points net profit a day, you will have 184 250$ profit after 100 days of trading, including the reinvestment of the profit up to a position of maximum 50 contracts per trade. The first 100 000 $ will be reached after 83 tradingdays. If you make 1 point a day for 2 years as specified by you and with a max of 50 contracts a trade, you will have 312 984 $ of profit. Profits are generated by 2 factors: the profit per trade and the frequency of trading. Most people underestimate the power of the combination of these two factors.
Very true. The law of large numbers says that if you had an unfair coin then by betting on the side with the unfair advantage will have you winning and it's just a numbers game after that.
I give you a simple example : if you play heads and tails, and get 5 heads in a row, is your probability of getting a 'tail' increasing or is it still 50/50 ?
50/50 .... because the coin doesn't 'know' there has been 5 heads before. But what do I know!? Best wishes Morty