--- 2% Per Month Compounded Realistic ? ---

[*JDR*]

Is 24% a year, more importantly 2% a month compounded achievable?

I am getting a little ahead of myself as I need to work on my system/plan still, but if I wanted to achieve that sort of return can it be done?

Does the portfolio size matter ?

I will be position trading and will be working full time. Still possible or do i need to be full time to achieve good returns?

I am hoping to "retire" in 5 years and continue to trade for a living afterwards.

Please give examples of your realistic returns please.

Thanks.

 

[TWI]

I think you are very optimistic.
The answer is that this is achievable yes. Whether you can achieve it is impossible to know.
If you do get there and are able to increase your bet size fast enough to retire in 5 years then I think you will be in the tiny minority of exceptional money managers who also have exceptionally large gonads.

 

[pirx]

It is achievable, but if you will manage to be consistend over many years to come, you will be placed among the biggest investing legends of our time

 

[dbphoenix]

It's achievable, but with a trading plan and replay, you needn't take anyone's word for it, for or against. Without the plan, forget it.

 

[damianoakley]

Hi JDR,

24% per annum return from position trading is definitely possible.

I am a position trader of U.S. Stocks and have personally achieved greater than this return each year for the past 5 years.

I'm not blowing my own trumpet, but you did ask!

As for being able to retire in 5 years time, that depends on how much capital you are starting with and on you having the discipline to find and follow a sound strategy day in, day out.

If you start with £10,000 and can make 50% per annum, then you will build an account worth well over £500,000 after 10 years. Trading to achieve these figures is more than realistic IF you have the self-discipline to find and follow a sound strategy. I have a number of clients who are well on their way toward this goal.

Good Luck - and feel free to send me a personal mail if you would like to discuss your trading situation.


Damian

 

[henry766]

George Soros, I believe for most of his trading career made 100% per annum , ( not recently as he's old now) , but i think he managed nearly 20years of this .Actually I don't think 24% is much , some traders achieve a few years of this relying on nothing more than lady luck !!! I don't think Warren Buffet would be far behind (24% per annum), and unlike George Soros, his strategy is a lot closer to position trading , and has written a fair bit on his strategy , which if i remember correctly is to buy and hold stocks he understands and not trade them ( unless your certain you can beat the spread and cost, which most can't) this is very wise ), P.S. don't email Damian , like Mr Buffet says , BUY stocks YOU understand .

 

[damianoakley]

Hi Henry,

I agree with you completely that no-one should be buying stocks that they don't understand.

I can assure you (and everyone else on Trade2Win) that my clients ONLY buy stocks that they understand.


Good Luck JDR.


Thanks

Damian

 

[Jack o'Clubs]

Yep, Buffet has averaged 22% (compound) for 40 years. If you reckon you're as good as Buffet go for it, and you too could be the world's second richest man

 

[damianoakley]

Buffett's strategy is to buy into an investment and hold it long-term.

His return is absolutely phenominal for a buy-and-hold strategy.

However, there are many active traders who use different strategies to achieve greater percentage annual returns than Buffett.



Thanks


Damian

 

[TWI]

Most successful hedge fund manager is Jim Simons of Renaissance Technologies he has averaged 35% pa since 1989.
check
http://en.wikipedia.org/wiki/James_Harris_Simons#Renaissance_Technologies

 

[damianoakley]

This is an excellent return for a hedge fund when you consider the amount of money they have under management and the number of investors/clients they have to keep happy.


Damian

 

[The General]

Is it just me or is it overly obvious that with 10k, you can reasonably expect to make POTENTIALLY larger returns than if you were investing 100 Mio. The answer is extremely obvious, if you start with 10k, then you're making 50% per annum is good. Trying to make 20% per annum on 100 Mio is the real game. Once agin is it just me or do some people need a reality check ?

 

[damianoakley]

Hi TheGeneral,

I think that there would come a point when trading a certain account size must become restrictive.

If you're trading stocks with an account size of £100m then you're not going to be able to invest as easily in some of the smaller stocks that have slightly lower trading volumes.

Since this is rarely an issue when you're trading with 10k or even 100k, you would find that with a £100m account there would be slightly fewer daily opportunities to trade than with a 10k account, so whereas you made 50% with your 10k account, you might only make 30% with your £100m account. You might also take less risk with your £100m account if you're trading client money, which in turn might mean lower returns.

Dealing with a £100m account would be a nice problem to have if it was all your own money you were trading with and not client money!


Thanks

Damian

 

[henry766]

Hi damien , you stated "However, there are many active traders who use different strategies to achieve greater percentage annual returns than Buffett."I put it to you there are far more that achieve far lower returns !!

 

[anley]

Vey sad, that Simon's fella has lost 2 of his 5 children. I bet he'd trade all of his money/success in a heartbeat to get them back.

Money is no way as important as good health and family...........

 

[henry766]

We all would trade financial success for ones family and health , but being poor wouldn't have helped his health or family , and being very poor can hurt your health and family .

 

[Charlton]

Determine the steps to arrive at your own realistic target

Is 24% a year, more importantly 2% a month compounded achievable?

I am getting a little ahead of myself as I need to work on my system/plan still, but if I wanted to achieve that sort of return can it be done?

Does the portfolio size matter ?

I will be position trading and will be working full time. Still possible or do i need to be full time to achieve good returns?

I am hoping to "retire" in 5 years and continue to trade for a living afterwards.

Please give examples of your realistic returns please.

Thanks.

JDR

So far you have had several replies which indicate what may or may not be achievable in other peoples' experience.

I think you need to approach this from both ends. Clearly you have some target % in mind.

I would suggest now that you peform an analysis to determine what can be achieved realistically given both the worst case and best case scenarios. So assuming you have some particular trading instrument in mind consider:

(a) For a minimum lot size, what are the costs involved in trading that instrument, including both buy and sell:
- commissions
- fees
- spread
and so forth

(b) Consider the effect of increasing lot size and how this affects potential profit or loss percentage, bearing in mind the thresholds at which fee % rates vary

(c) Look back at the history of the instrument to determine the range of potential profit/loss you could make and over what time period for best and worst case scenarios over the past x periods

(d) Now determine the ratio of winning trades to losing trades to break even, make a 2% profit etc

(e) Consider the opportunity cost of using the funds eleswhere - the bank, property etc

I could go on, but by breaking it down into the steps required for a trading plan and taking into account all the costs and reasonable win/loss ratios you should start to work towards a realistic percentage, rather than be dictated by the % in the first place.

Furthermore this % return will be based on your own personal evaluation of what you think you can achieve. This will enable you to measure yourself against your own personal target rather than someone else's or some pie-in-the-sky % and will also enable you to better control and develop your strategy.

There are plenty of postings on this site that discuss the calculation of these ratios and money management in general to help you piece all of this together

Charlton

 

[sandpiper]

Most successful hedge fund manager is Jim Simons of Renaissance Technologies he has averaged 35% pa since 1989.
check
http://en.wikipedia.org/wiki/James_Harris_Simons#Renaissance_Technologies

Nice....

Most successful UK based manager is Anthony Bolton. Only averaged 20% over the same period (last 25 years), but with a UK only special situations fund and 6 billion currently under management I think the 20% is respectable.... .

Made a point of watching the guy on working lunch the other week since he doesn't 'get out' much. Good job the guy is retiring. If ever anyone looked as if they needed a holiday..

 

[damianoakley]

Hi damien , you stated "However, there are many active traders who use different strategies to achieve greater percentage annual returns than Buffett."I put it to you there are far more that achieve far lower returns !!

Obviously there will be far more that achieve far lower returns. This is a well-known fact. I'm just making the point that Buffett's returns are superb for the strategy that he uses. For other traders out there trading a different style (eg - intraday) then 22% per year would be considered quite low for someone who was trading 6 hours a day mon-fri. I'm just highlighting the point that different trading styles will produce a broad range of different percentage returns.

In any business sector you choose, most companies' performance will be low to average. Then there will be the handful of 2/3 top performers.

It's the same with trading. We all know that 90% of traders will produce losing or break-even results, only the top 10% will be profiting.


Thanks

Damian

 

[Jack o'Clubs]

There's also the small question of leverage. If I have £1000 and trade forex at 100x gearing I'd be pretty disappointed if I hadn't made £240 in the year. Lets say I double my money and make a grand. However, my return on total capital employed is only 1%! I'd need to be turning my £1000 into £24k each year to be delivering similar performance to Buffet, Bolton, et al on a similar basis of capital employed. These guys generally invest in stocks, and while they do use gearing, it's in the form of formal bank loans, and very rarely takes them above 2x. Most of the investment trusts I own gear up to about 1.5X when they're feeling bullish.

Therefore to answer the question you also need to consider what you'll be trading and the leverage you will take on board. I agree, 24% trading forex or futures should be pretty easily achievable, but it puts into context what an amazing achievement the likes of the Buffet and the other big boys have pulled off.