What sort of returns are people really making?

I've seen countless sites and systems offering returns of say £2500 per week, or 100%+ etc. but are these really achievable? They never say how much they lose when it goes wrong?

An if so, how much money do you need to say make £2500/week? An if you did make this much, wouldn't you reinvest this £2500 and make more?

I just want to find out what sort of returns people who trade from home really make. It's what I'd like to do but I'm not sure if it's really feasible. It all sounds too good.

About 66.666666% of what i "should" be making in terms of total pip count, which isn't perfect, but it isn't terrible either.

rdellery said:

I've seen countless sites and systems offering returns of say £2500 per week, or 100%+ etc. but are these really achievable? They never say how much they lose when it goes wrong?

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Logic demands that such returns from commercially available systems are not achievable.

How much do they want for their system? I have no idea but for example, perhaps $5000? Why would a vendor make the effort to try to sell the system when it can be implemented and will make that money in 2 weeks anyway?

Of course you would argue that it could be sold multiple times. But any serious purchaser would not be interested unless there were cast iron guarantees that the system will be limited to e.g. 100 sales. That's 250,000.

Yet with compounding the system could easily make that much and much more besides.

Why am I answering this question? Because I'm scanning the forum looking for ideas for my TA system and I'm not finding anything. It's difficult. Once you find something that works, you don't sell it. You trade it. Or if you hate trading, you get someone else to trade it for a share of the profits.

So what do I make? Currently Zero, because I don't have a trading system that works yet - meaning something that has a risk - reward ratio I'm happy with. Currently I've rejected systems that showed between 2% and 250% pa over 10 years of backtesting. I haven't found the magic consistency of returns yet.

rdellery said:

I've seen countless sites and systems offering returns of say £2500 per week, or 100%+ etc. but are these really achievable? They never say how much they lose when it goes wrong?

An if so, how much money do you need to say make £2500/week? An if you did make this much, wouldn't you reinvest this £2500 and make more?

I just want to find out what sort of returns people who trade from home really make. It's what I'd like to do but I'm not sure if it's really feasible. It all sounds too good.

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It would really depend on how good a trader they are, and how good a strategy and money management techniques they are using.

Figures could, in theory range from -£50,000 per day to +£50,000 per day. Perhaps more. Trading forex for example, a £5 million position which most brokers allow is = £500 per pip. Make 100 pips in a day/week/month (whatever) and thats £50k profit. Lose 100 pips and thats a £50k loss...........

To be able to trade a £5000,000 forex position, would require margin (cleared funds in your account) of typically £50,0000-£100,000 (1%-2%). So you have to build your way their!

Thanks for the replies.

I agree with the logic of consistent returns over "supposed" massive returns - it's all well and good seeing a system that gives fantastic returns but it's no good if it's not consistent or the risk:reward ratio isn't good enough. I'll keep building up slowly...

Anyone else got comments on what sort of returns they are typically achieving?

Thanks lucky. Yeah I know that my questions were pretty vague and that there are numerous factors involved in trading successfully. Factors that don't get discussed on websites that sell systems!!! Not surprising really - it would probably scare too many of their customers off.

It's good to know that a decent income is achievable though. I appreciate your response.

rdellery said:

I agree with the logic of consistent returns over "supposed" massive returns

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Quick story, JAN08 on my Daytrading (Eminis) system I was having a GREAT month, because it was trending, and I profited $18k. Now my average monthly return for my DT system IS NO WHERE NEAR THAT. So I of course was pleasantly surprised!!! The minute I closed the books on the month, I Immediately Rebalanced (DT-eminis, MT-OptionsStrategies, LT-65ema/260sma & FrontRunners) evenly across my strategies. And it was a good thing too. Because that same strategy gave it all back over the next 2 months. But because I rebalanced Im still sitting pretty and happy for the Massive unexpected returns.

To give an idea. I worked for a B/D supporting a forex trading desk. Best P/L I ever saw the 10 of them make in one day was around 50K. And that's with almost limitless leverage and trade flow coming right in from customer orders. So hopefully that'll give some idea of how hard it is to make real money.

What sort of Return are people making : Answer trial

According to official figures :

• - Top Hedge fund managers, paid million dollars/year, ROI: +/- 30% /year (before taxation)
• - Genius Traders working for private funds (such as tom basso) : +/-50%/year

It is to be understood that ROI is not the main concern in trading. Other parameters have to be taken into account. Here are some of them :

1. ROI : Return On Investment : amount of money made/period (month or year most of the time)
2. Global Gamma : Total amount of money you may lose on all your trades.
3. Gamma : Maximum amount you may lose per trade.
4. Maximum Drawback : Maximum drawback allowed on your account


Conclusion : Most firms and clients are looking for consequent traders not gamblers.
A trader with 20% ROI, Global Gamma : 5% is considered a solid trader whereas
one with 150% ROI, Global Gamma : 165 is seen as nothing but a gambler.

Using Risky Strategies will earn you huge profits. unforunately it will all be gone by the end of the trading period.

WizardAA said:

According to official figures :

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What official figures?

im aiming to make 1% a day on a $30k starting bank.

Am i out of my depth?, or is this perfectly viable. I feel 1% a day is realistic, thats $300 a day.

what do you guys think?

Trying to specify amounts in pounds/dollars/Euros is quite difficult and hard to quantify.
Lets look at it another way.How many pips can you make a day. With good money management there are several methods on this site that show you how to make30/50 pips a day, if you are patient and disciplined making $300 a day on a 30k account is very achievable, if you are willing to put in the effort and have the patience and discipline.

jayjay121 said:

im aiming to make 1% a day on a $30k starting bank.

Am i out of my depth?, or is this perfectly viable. I feel 1% a day is realistic, thats $300 a day.

what do you guys think?

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Well, if you risk 1% of your account per trade, then you need to average an amount equal to your maximum loss per trade. So if you set a stop loss at 10 ticks, you need to average 10 ticks a day to make 1%.

Whether this is realistic is something you need to determine by looking at your own testing of your strategy - trying to set a target first is a bit of a cart-before-horse situation, and is liable to cause a number of negative effects - frustration when you don't meet it (meaning you will overtrade when you are trading badly), excessive risk-aversion when you do (leading to undertrading when you are doing well).

yes i think its do-able when we say 1% per day, but when you think about it if i could do it thats turning a starting bank of $30k into $70k bank within year one, more if you compound the profits which is making over 100% per year so when i look at this way it seems very unrealistic to me. what do you think , i mean not many are making those sort of returns are they

It's important not to place too much emphasis on getting a certain profit each day - otherwise if you are having a poor day you will be placing more trades to try and meet your target - thus trading more on days when the market doesn't suit your trading.

It should really be the other way round - if you are having a good day - trade more because market conditions suit you at the time - that gives you the leeway to take the day off if you suffer a bad start.

jayjay,

Here are my monthly returns for the past year for a style of trading that holds positions overnight (which is quite capital intensive):

Oct07: +15.5%
Nov07: -9.0%
Dec07: +13.7%
Jan08: -5.5%
Feb08: +9.3%
Mar08: +7.9%
Apr08: +1.4%
May08: -10.9%
Jun08: +19.4%
Jul08: +20.5%
Aug08: +10.1%
Sep08: -7.9%

Average Monthly Return: +5.4%

The first thing that is noticeable to earn a paltry 5% is that there are several >10% months. So you've got to be able to perform a lot better than 1% a day in order to average 1%.

The second noticeable thing is that there are some shockers in there - and I'm nowhere near averaging 1% a day.

A better approach is to use something like the Sharpe ratio:

Sharpe = (average x 12) - risk free return
---------------------------------------
stdev x sqrt(12)

which for those monthly results and a risk free return of 6% over the last year =

(64.5 - 6) / 39.4 = 1.5

Typically Sharpe ratios are judged as follows:

1= average
2 = good
3 = very good

So, for nothing exceptional (between average and good) I got 5% a month.

Daytrading is a lot tougher but less demanding on your capital, so you can see what kind of returns may be achievable in that arena.

Joey

but to make 1% a day just on average would make me the best performing trader on this bb, which is unlikely but 1% a day sounds very achievable. To be honest i will be swinging a bit and daytrading but if i cannot make 1% a day on average over a year, is it really worth my time???

Joey25 said:

......

So you've got to be able to perform a lot better than 1% a day in order to average 1%.
.......

Joey

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absolutely. key point.
if you aim to average 50 pips a day, or 1%, you realistically need to go gunning for 70-80 a day, or 1.5%, as some bad days will reduce your averages.

Joey25 said:

you're taking the p1ss, right?

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no sorry, im probably confused.

im just talking from the view that the average hege funder will earn 30% a year on their capital.........If i make 1% a day on average over the course of a year, that would make me perform better than most wouldn't it and my yearly gain would be way above 30%.


please clarify as im truely confused even more now.....thanks