Yearly return... What should amateurs aim for?

+1

 

as others have said, wrong question.

should be:

1) do you have either good risk/reward or high winning % with good money management?
2) are your trades good?

those are better things for amateurs to aim for.

 

Yes, exactly.

Paul Tudor Jones is said to aim for a return of three times max drawdown.

 

This question is about setting goals.

Some goals I have found useful:

Profitable every month
A risk/reward of 1:1 or better
A return of 30% or better

However, I must add that goal of 30% return is somewhat not rewarding if you have a tiny account. Also, provided you can keep reloading it then you can trade at 100% capital. I.e if you make money. I can see myself 2x-3x-4xing my account.

The goal of "not losing capital" makes sense if you have a large/moderate account. but, it must be balanced with "using all available capital possible".

Return by itself is not a good indicator of future performance. More important is to develop a style of trading that has an edge.

Out of 100 people, the returns of 99 will be random. It means nothing unless you are the one

 

+1% above inflation over the long term.

 

What's your definition of a large/moderate size account?

 

Yep. At the moment that is good even for a professional.

 

I don't understand where "account size" comes into it. Unless you're really running into scalability issues (and 99.9999% of the retail customers out there aren't)... your returns have nothing to do with the size of your account.

Someone with $500k in their brokerage account would work just as hard for a 50% return as someone with $5k in their brokerage account. In fact, you might argue they'd work harder. In any case, the probability of consistently generating 30%+ return is probably the same for both investors (slim).

If you're saying its "boring" or meaningless to get 30% on a $5k account... I think you're completely right. And that's in fact exactly the lesson retail investors should really keep in mind. If you're looking for excitement, try craps. If you're looking for quick riches, try lottery tickets.

My own thought on this is: if you have less than $100k in your trading account, work on improving or building your career outside of trading... statistically speaking, that's where your greatest value would be. If you have more than $100k in your trading account, then you can work on your trading.