Realistic consistent daily profit goals

Discussion in 'Trading' started by Teycir, Apr 20, 2011.

  1. Teycir


    I was wondering that wheter is it realistic or not to gain an average of 0.5% of profit (after slippage and commission) scalping stocks daily.
    What should a stock scalper set a realistic goal of % steady daily gain after slippage and commisions?
  2. Pauly


    Short answer: been doing this for years and .5% a week is my norm, not .5% per day. It's unlikely you're 5 times better than me. Possible, but unlikely.

    Most important for you is to avoid losses. The gains are easy to come by. Avoiding losses is the key to victory.

    Long answer: Do your homework and figure it out for yourself.
    Write out your system and back test it. If it seems promising, then test it daily and then you'll know what a realistic target is for you. Try to test it LIVE, not looking at charts after the day's session. It's always much easier to look at charts after the fact, and much easier to "paper trade" than it is to do this for live with real money.

    The .5% per week isn't the only way I make money. There are lots of ways. You have a lot to learn. Expect to spend a lot of hours and a lot of money as your "tuition" as you develop your system. There is no short cut. Success likely to come only to you if this becomes a passion that you do constantly, not just a way to make money.

    Good luck.
  3. rwk


    A half percent per day works out to about 250% per year with compounding. That's a nice return if you can get it.

    What's a good return depends on what you want it for. If you're looking to raise capital, it matters how sophisticated your investors are. If they're any good, they will want to see some measure of return/risk, and they know you can't do 250% on a sizable capital base without a lot of risk.

    If you just want to know for your own account what's reasonable, I suggest picking a number that you consider acceptable, and looking for a way to achieve that. I personally would consider a steady 20% per year to be almost superhuman, but most ETers would scoff at that.
  4. I'm always surprised how little this is discussed. Having realistic expectations is critical for anyone considering investing a lot of time and effort into trading. I have often heard day traders say 1 to 2% per day is reasonable, but I think they are really referring to their good days, because if that were an average that is annualized returns > 1000%. Clearly very few will ever actually achieve such returns over any length of time. I have averaged .79%/week since 2008. That is swing trading, not day trading, and also long/short so my results are not simply the results of a bull market (but it helps).

    This topic has been discussed (briefly) before:

    Here is a summary of a study on the topic:

    Based on above, transaction costs can be assumed to be at least 31 basis points so the best traders made 0.31% per day on average.
  5. The average ET poster claims about 10% a week in profit. Allowing for exaggeration and rounding errors, I figure its more like 8%.
  6. Roark


    I think the average is less than zero. Most are losers.
  7. Just curious, when figuring out the profit percentage do you use your account equity or your day trading buying power?
  8. Pauly


    All my figures do not involve day trading buying power. I keep my analysis using real numbers that are in my account that I could pull out to pay the mortgage, etc. As day trading buying power can't pay my mortgage, I don't use those figures.
  9. Pauly


    I think it's important to keep in mind that paper profits aren't real profits.

    I had a day a few weeks ago where I was up $10K by lunch and told a friend about it over the phone. Shortly thereafter the market went against me and I spent all day "hoping" I'd get it back. I wound up selling with a gain of $1K for the day. That big gain that I had already logged in my head turned out to not even exist at all because it was all paper profits, not real profits.
  10. Pauly


    Real profit percentages are effected by many things:

    Trading Asia, Europe, the US Market... or 2 of the three. Or three of the three.

    Trading for 4 hours a day. 8 hours a day. And which part of the day.

    Trading equities or futures.

    Wins vs Loss ratios.

    Win sizes vs Loss sizes.

    These are just some things off the top of my head: A person who trades from 9 to noon eastern time who can consistently make .5% per week, 2% per month, trading a 100K account makes $24,000 per year. Very nice pay for 3 hours a day.

    Another person could trade 18 hours a day, participate in all three major world markets, and make 10% a week; then lose 10% the next week, over and over. At the end of the year they'll have a profit of zero.

    Part of this is personality driver - people who are driven by the excitement of trading, who have a gambler's need, they will trade often and likely have large ups and large down days.

    Others may have wins on 8 out of 10 trades, scratching out small profits over and over and over.

    Of the people I've met over the years I think most beginners trade too much and too often. We all want to be millionaires, and we all want that million dollars ASAP.

    For me, I "blew up" my account 5 times as I was establishing myself. I was trying too hard to achieve success because I wanted my trading money to be used for bills, etc. I finally achieved long term success by changing my expectations. I began limiting myself to my three best set ups. Only those three. If it isn't one of those three I don't make a trade. It's boring, but I consistently make money. It was a psychological answer I needed to achieve consistent profits - not better set ups.

    My account is growing, and I know before long I will have a large enough account to walk away from my job and my trading if I choose to.
    #10     Apr 27, 2011