Hello John9999, I believe this is a challenging question to ask or know because to me it depends on the type of trading a trader is doing. A trader may makes 20 trades per day and $5000 day on average. I believing thinking in terms of % return on investment as a trader is sort of not needed. I rather think in $$$. For example, I want to make between $1000 to $3000 per month trading. I am not concerned with ROI or what some other trader ROI, I don't meet my $$ goals per month, then no eating or bills paid or finical goals met. The goal of trading is to make alot of money every month with respect to your trading planning or scheme or strategy.
You can make that amount in a Day. -- and you don't need a huge million dollar, or $100,000, initial trading account size. (...i can sense you, and alot of other people on ET, salivating~ right now,)
My first expectation was not to lose, and practice without having to deposit every month. And that is not a reasonable expectation for a beginner.
Sell premium. Collect theta. Figure you'll keep around 25% of your daily theta. Boom! Create your own expectations!
You need to look at how much risk you are taking, on many different variables. Not just the volatility of your P&L but also how much of your net worth is at stake? If you have a toy account with 1mth salary in it, it's probably closer to gambling and you'd want / expect high returns. If you have no job and you are renting your own flat with all your money in a trading account, you should be content targeting single digits with low drawdowns.
Its easy to work out if you know your win rate, your r:r and the frequency of your trades. e.g. win rate = 60% r: = 1:1.5 frequency = 1 trade/day (assume 240 trades/yr) Wins = 144 Losses = 96 Gross gained = +216 Gross lost = -96 Net gained = +120 Net % return = +50% (without compounding) I think we'd all agree these win rates, r:r and trade frequency are achievable. What is not achievable long-term is a 50% return on an investment.
You should add: for the majority. There are people who can do that, mostly smaller accounts,or daytraders, but it can be done. Especially the "not eternal compounding and never richest in the world" traders have a higher probability to achieve this. I have no clue about math, so I don't understand how you get to the 50% return. IMHO You are missing information to calculate the return on investment. Can you explain in simple words what I am missing? To calculate the return on investment you need the invested capital I think. But as that is not mentioned how can you calculate your 50%?
No, I mean a single investment held long-term cannot match short-term trading. I don't know that any long-term asset classes consistently give double digits per year.