Maybe you could use the Tradingview paper trading contest as an indicator of what is possible. There have been three one-month long contests each with thousands of competitors. The first winner was an outlier at 87%. The next two winners came in around 11% for the month. 11% x 12 months = 132% annual non-compounded. You could aim for 100% per year if you stayed within the top 5% of traders? But that's non-compounded and also not leveraged. With leverage you could calculate each risk to be anywhere from 1%-3% depending on what kind of drawdown you could stomach. Most prop traders , such as those trading for The5%ers, typically risk an average .35% (a third of a percent) to stay within a 5% drawdown. But that risk level is also enough to gain 5% x 12 months = 40 - 60% per year? Extrapolating further, risking 1%-3% you might expect 30% - 50% drawdowns depending on your profit factor, or what others measure as Sharpe Ratio. With that drawdown potential, you would probably want to have a profit factor of at least 2 and above to stay well away from risk of ruin. Then, depending on your frequency of trade, that 100% might as well be 1000%...or more. You would want to prove this is possible, through live trading, before quitting a day job. Any % that replaces your regular income is good. 20% more than your current day job is even better. If you need to build capital then you would have to find a way to trade the frequency you need to trade, while maintaining your day job. With not much capital, you may need to find a way to automate the process in order to maintain concentration on day job. You maximize capital potential through serious data mining. Once you feel you've exhausted your intellectual creativity by data mining through algorithmic improvements, now you know how much capital you need to replace your day job...and how much time will be needed to save that much.
Different time scales / groups of investors scaling in and out? If so that's like the coastline problem to me. Luckily there are ways to trade on volatility and more neutral on direction for people like myself who would get direction wrong more than chance... I will say though there's something special about the weekly to monthly time frame where things start to 'add up' but I'm pretty sure it's a personal trading style / blindness. A lot of BS? Yeah most trading videos. If they knew how to trade they wouldn't need / want to make videos so that means the advice is probably even worse - exactly the wrong advice. Best advice I have learned from trading is whatever the 'obvious' opinion is, probably a good time to go against the current.
That risk is the balance. Once you go over 5% drawdown you are baking in serious permenant asymmetrical losses. There's no leveraging up that wouldn't hurt you long term compounded unless you have some incredible edge with very low chance of failure (unlikely) On a side note... Does anyone know why prop firms are all futures based and not options?
I can write VBA Excel codes but not Python. I should take another look at Python? Trust me sir, I took many peaks outside the box, got off the beaten paths, for the past decade and a half trying to find something better than buy and hold SPY or QQQ. I tried day trading, swing trading, position trade, options... I read Hull, McMillan, Bennett, Taleb... So far the only thing that works for me is options but I am not making >50% a year CAGR. Not even close.
With a 100%-1000% CAGR, there must be a lot of billionaire traders out there. You can tell I am skeptical because I haven't seen one and I am not one that make >100% a year. One year here one year there yes, but year in year out?
It's possible in theory, just compound 6% a month for 12 months and you double your money but as Yogi said "In theory there is no difference between theory and practice - in practice there is" (Yogi Berra)
What kind of option strategy you are talking about ? And you have I guess less than 15% max. drawdown to get your returns or ? I mean it is all risk based. Anyone aiming for 1000% per year needs to risk nearly everything. That can be suitable for low amounts like 5k. But if you have 100k that would be too much risk, risking the whole amount. Then I would say it is better to aim for lower returns but also less drawdowns.
if something is obviously going up, that is the high probability trade. so wait for market to do the obvious and THEN fade it because if probability is high then reward is small so it will do the obvious but the move will be relatively small