Something to Think about - 2003

Discussion in 'Trading' started by misctrader, Jun 2, 2004.

  1. I know the vast majority of us here are short term traders/daytraders. But I was just looking over some of last year's charts. 2003 was one amazing year. No matter how you cut it. Many major markets went up 45% or more. And many stocks went up triple digits.

    Now, the nagging question I had in the back of my head was this. How come my return wasn't 55%? With leverage over 100%?!

    It's sad to think about that right? Daytrading is great, but if we had all just bought and hold throughout much of 2003 , we would have done pretty well. I guess it's also a function of your account size. If you have a small account size, 55% return isn't impressive. You gotta generate cash flow from that account.

    But with futures and correct pyramiding and going in and out, I think most of us could have achieved over 100% return.

    The irony of it all. Just when you gained more experience and knowledge about markets, some idiot who just held the entire time made more $ than most knowledgeable players.

    In fact, many hfs didn't do so well. They were flat even.

    just a thought...
     
  2. VOLUME

    VOLUME

    "some idiot who just held the entire time made more $ than most knowledgeable players."


    Most of those same idiots are still holding from 1999-2000.
     
  3. You can't talk about returns without considering the risk you had to take to acheive it.

    Consistency wins over the long run, and short-term or daytrading allows you to control your risk much more tightly than just buy and hold. If things turn down sharply, the buy and holders are out of the game, but the daytrader is still in business.
     
  4. Sure, I know all about the benefits of risk control and going in and out. You are preaching to the choir here. ;)

    But when I looked at my commissions and my returns for 2003, I wondered if it wasn't better if I just swing traded instead of daytraded last year. Probably made more and had less stress.

    Perhaps some years are better for daytrading. Others are better for holding the big rallies. Or the big selloffs if you were short.

    Everything looks easy with hindsight.
     
  5. Gotcha. I can't argue with you there. Daytrading is going to be subject to the whims of the market, some times better than others.

    Swing trading = bigger returns with less stress, I agree 100%, provided you are adequately capitalized.
     
  6. Yeah. I guess I feel bad for not even holding at least ONE thing for the long run last year. Just one big mover. Instead I daytraded away.

    Oh well.
     
  7. It's called INFLATION in the face of a dying USD.

    IF you price the SPX in terms of Euros, the move up was not nearly as pronounced.
     
  8. does it really matter that it's inflationary or not?

    you just want to ride it on the way up.
    making $ is the only bottomline in trading.
     
  9. lindq

    lindq

    It is difficult for any strategy, even a good swing strategy, to beat a net gain of 45% with no trading costs or associated hassles.

    I think that instead of looking back at sour grapes, the bigger question is, WHAT HAVE YOU DONE THIS YEAR SINCE 1.1.04?

    The market has run overall flat thus far this year, with decent volatility, and that's an excellent test of you and your system. And IMO, if you haven't made good money this year, you should feel worse about that than not clocking 45% in 2003!
     
  10. You only need a long-run CAGR of 30% and you can become very wealthy if you use leverage appropriately...
     
    #10     Jun 2, 2004