Percentage Returns and the Lotto Ticket

Discussion in 'Trading' started by Bogwaluth, Aug 22, 2006.

  1. I keep reading about people wanting to turn $1000k into $1 million in 30 days. Also, there is the often noted statistics of 30%/year being in the top 0.01% of traders. I've been thinking about this alot.

    Lotto Tickets- Is it possible to turn $1k into $1m? Yep. Is it probable? Nope. It's simply a matter of expectancy, luck and maximizing your risk/trade. You can even turn $1 into 2.2 million playing roulette in 5 spins (but the odds are 1:2.3m-ish) I enjoy the lotto trading systems, I make em up all the time and I even risk a tiny, tiny amount each year on them. I get the entertainment and I get the CHANCE of riches. Luck hasn't been with me. Boo.

    Since I have been trying to daytrade equities, I have been trying to wrap my brain around the numbers. Seems like it works out to a 50% return on your buying power for the good traders. Again, expectancy times volume (high volume seems to reduce luck-high number of trials?) $2000 a day on $1million BP is 0.2% return a day and about $400,000 a year. Looks like 40% to me. Though compounding this would seem impossible due to scale.

    Sometimes I view trading like a casino game where you determine the rules and the payouts based on a set of probabilities of patterns.

    But really at the end of the day it's all about expectancy times volume and low costs.

    And yes, I am not good at this daytrading game. Today 1400 shares, net $11. Chop days give me a bit of a hard time, but usually end up net; trend days, well that's a different story.

    I am still trying to learn how to read the tape. I can see stuff, but I have a problem with my losers being huge and winners small. Man when you are wrong the specialist loves to hurt you :)

    Love this topic. I would say that 500% in a year can be done, with some help from luck-consistently 20% a year seems about right.

  2. rwk


    I agree that trading successfully long term is a numbers game ruled by probabilities.

    Depending on starting capital, 20% could be a little high or low. I am currently shooting for 25% with just my own capital.

    Good luck!
  3. Like you said, averaging 20-to-30% per year over atleast a 20-year period will put you in the Pantheon of all investors. The "big problem" is overcoming the inexperience, undercapitalization and overconfidence that everybody has in the beginning. You'll probably have to generate triple-digit returns early on if your pockets are shallow.............just a little something to think about.