With day trading the % return can be less meaningful since it can depend on account size a lot. For example, if you're just trading $10,000 at a time you can pretty consistently average 5% per day (that's just $500), and that would come out to a 1250% return per year. To generalize, that's not as easily to duplicate with a $100,000 or $1 million dollar account though due to increased slippage and not being able to trade stocks that aren't extremely liquid.
Totally and completely deluded. It goes even for those managing small sums of money. The numbers and ratings don't lie.
To summarize, most good day traders make a ton more than 20% per year (unless they are trading a very large account). A 4% monthly return from day trading is very achievable and likely not an exaggeration at all.
@m22au: Buffet also gets exclusive pricing and deals, has more information then you or I, and many advantages. I'm not at all convinced that would be able to return more with less capital. In fact, his biggest wins come from "exclusive" brokered deals that are only possible because he has tremendous amounts of capital. He gets deals you and I can't. The big thing that I realized is that most of these hedge fund managers returns are absolutely not fractal. They aren't day trading and they can't just return more at the push of a button. Honestly, more I think about it the more I realize that if Buffet had a small/tiny account of 10k to 100k and no extra funds that I'm pretty 100% sure he wouldn't able to beat the market. @Dalmation: Exactly. @Falcon, reality is good chance you will lose money. Why does he even want your money if he returns so much? I've already told you that the day trader who can break even after expenses is doing better then most. Some traders do need capital (like myself) but that's because we have small accounts. If he is doing this for 5 years for a living then not sure why he wants to deal with anyone. Trust me, I don't even have enough capital to trade (barely) and I don't even like to ask for money (but I will do things I don't like). If I had a lot of money then you can be 100% sure that I wouldn't let anyone join my trading accounts. Anyway, so let me be straight a great trader like myself (and there are others) might well do that and more: sure. But as I said such a great trader may also lose a lot too. You don't seem to have that concept down: big winning traders often have big fat losses. Do your due diligence - check his records closely -- and then if you are okay with both the known and unknown risks of loss then commit some capital and see how it goes. No risk, no gain! One more note, very active trading tends to have higher risk then more less active trading because of primary 2 costs: leverage and increased costs. The trader placing many trades per day can sure multiply his earnings faster but an also multiply the losses faster.
So falcon short and sweet. If you don't do the homework to understand the advice given in this thread, then don't invest. Instead take your money and bet one time on red or black in a casino. You almost certainly have better odds. Just my opinion.
Exactly! Some members here have had little success daytrading yet they seem to think that their failure is universal. I guess it helps ease their bruised egos
LOL, sorry you feel that way....maybe you need to associate yourself with more accomplished short term traders?
This is a really good question, on several levels. I have been telling my traders over the last 30 years to focus on making consistent profits until they make their first $5million or so, then they can focus on "ROI" - with a slight smile, LOL. In fact I may even submit this to Stocks and Commodities magazine for my monthly question and answer column (I won't use your name, LOL). First off, let's sort out the phrase "..how much should I expect to make..." - we all know that we cannot "expect" to make anything. However, none of would ever get involved in this business if we didn't plan on making money, why would we? There really is no "norm" involved in trading, regardless of product, time frame, or capital considerations. Let's take a look at a couple of quick scenarios...the first one would be the average "Pattern Day Trader" at home, with a retail trading account. That trader would have an account size of about $25,000 (minimum for PDT treatment), and would be eligible for up to 4 times that capital in margin. The $100,000 margin may seem like a lot to some people, and it certainly can be very risky for some to use that much. But, also realize that buying 1,000 shares of IBM, for example, would cost over $150,000. Now, if you were treating this money as simple investment, then you would hope that IBM would go up 10% or so, so that you could net 5% after paying interest on the borrowed money. The interest might be paid for the entire year, quite costly. Perhaps $1500, minus $750 in interest, leaving $750 before taxes. This is the basic "ROI" for an investor. Sometimes it works, sometimes, well...you know what can happen. Let's take scenario number two. A pattern day trader who can use the same $100,000, might buy 500 shares of IBM, and try to make 50 cents in the same day, or a couple of day "swing trade." This would result in making about $250 with only a few day's of interest money. So, $250 minus about $30 for interest, leaving about $220 before taxes. Many do this trade multiple times per day...many also lose money attempting to day trade. These two examples speak to the average, retail investor/trader. Let's go one step further. In the next step, we make the minor leap to professional trading. The serious trader can put up that same amount of capital with a trading firm (disclosure, Bright Trading is one such firm). With this same amount of capital, the trader can "use" (not "abuse") $500k or even a $million or more....for good, working strategies, not for strictly "gambling" type trading. I can explain what many of our traders do with this access to capital. Note: realize that these are licensed professionals, not a big hurdle, but does require some homework, etc. For example, you can check past columns for our "opening only" strategy. To summarize this, we understand that overnight, there are many stocks that have large buy orders (or sell orders, we'll use buy for this example)....and the NYSE specialist must complete these "opening only" (meaning the opening price of the stock, after a night "off" so to speak) orders at the opening bell....the opening price. Many of our traders will put in, say, 2000 shares to buy and 2000 shares to sell short of maybe 30 or more stocks...utilizing $millions in doing so. They know full well that they are not risking this much capital since only a small percentage (we try for 10 percent or so) will actually be completed. When these gap open at higher prices, many will retreat by 20 - 40 cents or so, causing an immediate profit of $1,000 or so. And they are out of the positions. Now, this is where you must consider how you are using capital, how much, and what you "expect" to make. These traders are using our Firm's money to make that $1,000 or so (of course not everyone can do this, and some lose of course, but this strategy has worked well over the years, and is a good example of using capital properly). So, even though they have a $25,000 sub account with us, they may be able to generate these earnings by using our capital and access to the markets. This is the difference between a trader making money (say $250,000 with a $25,00 sub account), and having a "ROI." Our traders want to make money, not just get ROI. However, if I were to say that our people make 10000% on their money or something, that would be ridiculous...they are working hard and using capital....they work for their money. Not casual ROI. I hope this helps somewhat with your questions. Don
Hmmm, I don't seem to find any among the wealthy. Do they live under bridges or something like leprechauns? These accomplished folks run and hide when asked to do something simple like post trades for 30 days on elite before the fact.... or maybe just maybe, they aint as succesful as their alias pretends to be? Listen to DOn Bright if you dont want to listen to me-- he has seen everything and calls what you do gambling---( directional trading) his edges work with massive capital access, however.