Can you honestly make 10-15% per annum???

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fastnet

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Hi All –

This post is about as general as they come but I would be very grateful for a reply from someone ‘’out there doing it ‘’ before I can continue. . . . .

Basically I have been trading using SB company for two years. At first I was so keen and eager - but of course completely ignorant. I then read ‘’Market Wizards’’ for general confidence while also reading any other books for general hints and advise on how to get ahead.

I jumped from one system or philosophy to the next . . . . . .I bought systems, tried them and lost, back-tested them and found that I still would have lost - got angry, went back to the books etc etc.

Now, two years on, I have lost quite a stack of cash with very little upside. I have read so many books and given so many hours to study that I somehow feel cheated to have lost so much.

I have now mentally written this cash off. I have promised myself one last chance – I know this makes me sound like a hopeless gambler and maybe I am but this is the only place where I stand a chance of being properly understood.

So, back to the title of the post. . . . . I have seen advertised, and bought, so many course that promise 100%, 400% + returns in a year. Save it for the uninitiated. My wants are now very modest but maybe no more realistic. I am looking for a system that will allow me to finish the year up 10-15% without massive draw-downs. Ideally there would be few negative months although this might be unrealistic. The only other requirement is that I can study charts at night and place trades for the following day - I’m not talking day-trading here.

Now. . . . . and this is the important part. . . . is this REALLY possible? Come on, let’s be totally honest with each other. . . PLEASE don’t reply for an ego boost or because you want to convince yourself. Please only reply if you have concrete, back test-able evidence that this is possible in today’s market.

Please don’t reply if you have bought a system that promises better gains than these and that you BELIEVE can give these returns after a backtest by eye. . . .

I have not sent this email lightly and have stopped myself from doing so many times in the past. It’s just too negative. However, I have to. I can’t help feeling that there is such a massive industry built entirely on the hopes of people like me . . . they fan the flames and feed us with success stories. The final straw came today when the chap that runs ‘’Common Sense Commodities’’ in the US sent an email informing all the past buyers of his course that he was setting up a brokerage!!!! – Sure there were many reasons why he was doing this instead of putting his own material to good use but come on. . . .
. .. . COME ON!!!!!

I can not apologise enough if this email makes anyone angry - that honestly is not the intent. . . I just want an impartial, no b-s, reply from someone out there making above ‘’deposit account’’ rates of return.

I don’t want your system . . . . I just want to know that it’s possible.

Please be as honest with me as I have been with you.

Good luck to all and have a crackin’ weekend whatever you’re up to. . .

Cheers
 
Fastnet,

I hesitated to answer this but I will throw in my 2p worth. The short answer is yes, it is possible.

However, I say that not because I've got a working trading system that produces that (in the sense that anyone here would recognise) but because I've returned over 30% on an annualised basis on my capital for the past 4 years. I doubt many would regard how I've done it as trading though! The bits that have made money (most of my capital) have been invested on a longish term (generally months and years basis) purchases of UK stocks largely on the basis of fundamentals. However, as would apply to most following this sort of route I can only say I have an approach not a system, and so backtesting is out of the question.

To move onto areas closer to home, I have been trading index futures on a very much shorter term basis, generally minutes, in a small way over the past year, and here I most definitely do not have a system that will verifiably return 10-15%. However, I'm fairly happy from what I've seen that it's possible to achieve this, and probably considerably more. I'm also pretty clear that achieving that is not a trivial undertaking, and you've got to be prepared to make some fairly substantial investments of time money and humble pie to get there. However, there are many others here much better able to advise on that than I am.

As a final point on back testing, and its application, I do have a system for trading shares on a 6 monthly basis that produces excellent results on backtesting if you include enough data prior to 2000. When I started it, in late 1999, the backtested returns, over 7 years, stood at 40-50% per year. It probably doesn't require a great deal of imagination, or understanding of the stock market to guess, correctly, that the returns since then have been considerably less than sparkling :cheesy: Backtesting is very useful, but it ain't everything.
 
Hi Greying Surfer and thanks for your reply.

I take your point about backtesting although there must have been many ''systems'' that would have been very successful during 96-2000 including buy and hold anything!!

Backtesting is important. Also ''annualised'' is a poor expression. I am sure that in your case this means a good stock picking strategy that proved worthwhile during the year but it could also so easy mean a one off punt that happened to come up trumps.

Skill vs Luck. Which is it. In science you would use some technique such as regression analysis to scratch away the randomness, the chance and the luck and see the truth - am I really an excellent trader or was I lucky?

Also a good 'position/short-term' trading system should not be concerned by the overall market too much. Volatility is a bigger factor that whether its a bull or bear market.

No system will work forever - or for very long. I don't agree this is because everyone starts using it so the market adapts. I view the market as the ocean and myself as a tiny blow-up dingy (do I?) - anyway, the market couldn't give a monkeys what I'm up to but it does chance and evolve. This might enhance but more likely detract from the success of my system.

I would in fact settle for a system that doesn't work now but did do in the past 4-5 years for a significant period of time - maybe a year or so. . .

Sorry if all this is bringing anyone down - but we should all be mature enough to remove the rose-tinted and see if there's anything left. . .

Cheers
 
My input is irrelevant as I daytrade, however, my Father uses EOD and buys or sells on a longer term. To explain further, he is a retired Doctor, who had never used a PC until two years ago, when at the age of 73 he decided this shares thing looked interesting. He started off learning how a PC works, and then how to analyse and finally how to start spreadbetting. He sticks to major FTSE 100 stocks and can usually come up with a couple of good ones each week. For example, recently he has traded RBS over a few days, and last week took 177 points over three days. So, the simple answer is, yes, you can do well but you have to narrow down what you look at, and learn these stocks well.
 
Hi,

If anyone here is serious about finding a system that will get them good returns, they should get the book: "Trade Your Way to Financial Freedom."

The fact this that everyone is looking for the system that they can earn a good income from - and what everyone doesn't realise is that THIS SYSTEM IS DIFFERENT FOR EVERYONE. Read that again if you're not sure what that means!

It means that to be really successful in the markets, it's no use buying or copying someone else's system because that system might not suit your personality. I have a system that I've developed myself to suit my personality and it works.....for me.

Now sure, I could show you every detail of that system - but would you trade it? Or, when it hit a losing run (as ALL strategies do now and then) would you lose faith in it and abondon it?

One man's meat is another man's poison. I hope you can see my point.

Everyone is looking for the system that give's them 90% winning trades. It's a proven fact that some of the most successful systems only have a 30% to 40% winning strike rate. But most people can't handle being wrong 60% to 70% of the time, so they write these systems off.

I hope I've given everyone something to think about and look forward to some replies.

Cheers,

Damian
 
Very true Damian and Catsdad. In my opinion the hardest part of learning to trade is all the hard work you need to put in to come up with the system which fits you like a glove. And believe me, I've been down a lot of cul-de-sacs in my search. And there are no short cuts, you have to do it yourself in your own way at your own pace. The determined ones hack it, the others fall by the wayside. Just don't give up, and keep paper trading or betting tiny amounts until one day you wake up and it just 'clicks'.

The system I now use is unique to me, because it addresses all my little foibles (hahaha). But it took me a couple of years to find out what my foibles (what a lovely word that is) were, and then knowing that I could work round them.

By the way, Catsdad - would I be right in thinking that your father's nick on here would have to be Catsgrandad? :cheesy:
 
Thanks v much for yr replies - and I agree that each persons system is likely to be personal to them.

However, and with respect, I didn't ask for anyone's system for exactly that reason.

Apart from luck chance and randomness there is one other large factor that must be stripped away before you can view results in a clear light . I am sure this will strike a chord with most of us whether we admit it or not.

Someone a lot cleverer than me once said that ''you always get what you want out of the market'' - now this is of significance on many levels that I can't recall (try Market Wizards) - BUT part of the theory was that actually playing the markets, being involved and ''doing it'' was actually a form of reward or return in itself. Examples were:

i) sense of Independence/ not following the herd
ii) boost of ego when things went well
iii) excitement
iv) feeling part of a group on chatboards like these - a select and unusual club . . .
etc etc

In fact you could include as a ''non-financial'' rewards all the reasons why other folk pursue the hobby of their choice.

What I'm really getting at is that when people claim that ''it is worth it'' or that ''of course its possible'' - how many of these rewards are actually financial and how many are other intangible rewards of the type described above.

Now, of course, few would admit to themselves never mind others that these rewards are part of making it all worthwhile. The reasons announced externally for the hours of study and pouring over charts are always ''to achieve a superior return over the buy and hold sheep'' or those that ''passively hand over their cash to fundmanagers''. But do we really, honestly, achieve more in clear and absolute financial terms without taking on significant additional risk??

The brings me back to the top - is there a viable alternative?

As mentioned in the first post of this thread the replies I'd hoped for would have been from people who have been running their own small account for a number of years with their own system and making a regular 10-15% or more. This would be part time (ie EOD data) and with low drawdowns. There are hundreds of systems that will return much more than 50% if you use high risk . . .there is a continuum: at one end lies the true ''trader'' with a severe risk management system (probably 2% total cap risk on each trade) - the ''trader'' runs his account like a business and has forecasts and plans.

At the other end lies the gambler whose medium of choice is the shares/futures/options/spreadbetting markets. . . . he has no plan (although he might think he does) or risk management strategy. He finds the idea of 10-15% gains in todays market thoroughly boring and uninspired. He doesn't understand even basic finance theory including Sharpe ratio or risk/return trade-off. He is a gambler and his reward is sometimes financial but always emotional.

Okay - I'll bring this to a close now - if anyone's still with me then I thank you for your patience.

My request stands - are there any ''traders'' as defined above out there ?? If you are - if you REALLY are - then I salute you and will be inspired to continue.

Best regards
 
fastnet - yes it is annoying when people don't read your post fully and tell you things you already know or didn't ask to know.

I'm making a living from my trading, but I'm like catsdad's father (presumably catsgrandad) in that I'm taking a much longer term, investing holding my contracts for anything from 10 minutes to 10 months. I'm waiting for a year or two though before publishing the book!

The impression that I get from reading the boards are that most of us are losers, just playing the game and there are a few "gods" who are making pots of cash and from time to time share some of their wisdom with the rest of us. There are a few disciples out there who are talking the talk and want to be one of the gods - but they are still losing money.

It all makes interesting reading, but the big questions still remains - how can one hit the big time? It is obviously worth the effort if you do make it, but what are the chances of putting in all the effort and not making it!

Personally speaking I think it is too much to risk an all out attack. Spending thousands on courses and books. Investing in an expensive platform and so on. Just as some people have made it and it seems easy and obvious to them - its no guarantee that you will make it. There is no replacement from a long and patient apprenticeship. Lots of tiny trading, lots of t2w and lots of mistakes.

Of course it would be interesting to know what ones chances are but trying to find out how succesful traders are is as easy as finding out what is a normal amount of times to have *** in a week. The losers are two ashamed to tell you the truth and the gods are either too modest or too busy doing something else.

Good luck,

John.
 
Hey sharky, I like the auto rude word blanker outer. If anybody wants to know what I was trying to say it was the amount of times we have ***** ****** in a week.

John.
 
Dear Fastnet

I think your downfall is the way you trade ie swing, I would like to know more about what you do and when you place your trades.
I think you are playing at it, spread betting is a serious business and needs to be treated as such in order to make money. It IS possible to make 5000% profit in four weeks I can show you statements) never mind p.a. I remember my old boss saying "set your targets low enough and you will achieve them"

Yes there is a lot of mis-information out there, it is much easier than you think, if you are losing money with what you are doing now just STOP and try a different method.
 
Hi Juanbyte-

Thanks for your email.

You have made an incredible claim . . . . .I am not saying that I don't believe you but I think we are comparing apples and pears.

When I say 10-15% I am talking about making this on my entire trading capital over a year. My method would limit my drawdown to no more than 10% of my entire capital at any given time and hopefully not have more than two consecutive losing months.

I would use EOD data and go for 2-5 day moves. My opinion is that day-trading with a spreadbetting firm is suicidal – it has to be. Cut away the hype and the fancy little pictures of City dealing rooms and you’ll see a bookies just like the ones in the high street. They want you wired and excited – they want you to trade big and often - always shooting for the big win that makes you feel good and so that you can tell your work-mates/friends/wife how clever you are and that you are now having the last laugh.

It’s gambling. Simple. There’s a place for it but don’t confuse it with trading.

However – move to 2-5 days system or longer and the odds shorten on a quick kill by the SB company. The odds are obviously still in their favour but you are no longer playing the game they would prefer.

So – when you talk about 5000% in 4 days please specify what you mean? The critical point here is risk/return not just return. Any lucky punter can put 10 quid on a horse at 25/1 and go home with 260 quid. Is this 2500%?? Can you multiply this by 365 for an annualised return?

NO - and again NO. This is gambling. There is a chance of winning big if you bet the house on a daily DOW but there’s also a chance of losing at least as much.

A proper (trading) system must limit downside risk. It must be well defined and when back-tested over a reasonable period it must produce a net positive result.

I am sorry to be so deliberate in my language. I am not intentionally being patronising and apologise if I come across this way.

Let’s be objective about this. Did you read the Sunday Times yesterday. There was a ‘’Britain’s 100 Fastest Growing Companies’’ supplement. Now – If it was easy to consistently achieve double digit returns on capital why would these people work so hard to achieve 20-30% GROSS margin profit?? Are we really so egotistical to believe that we have got it so right and they have got it so wrong??

Unfortunately there are still hundreds of folk who are new to spreadbetting/trading that do believe the hype that’s pushed through their door. They don’t wonder why high street banks with all their power/capital and resource still lend to retail consumers at 8-10% when they could be making 5000% in 4 days after attending one weekend seminar. . . . .

Now – at the risk of repeating myself - I certainly don’t believe that triple or quadrouple(!!) digit returns p/a with limited downside risk are possible. It simply aint so. If you think it is then I wish you good luck but keep you bets small and don’t bet the ranch.

However, I started this thread because I was looking for some support for the idea that with time, study and patience it might be possible to make 10-15% on capital per year pretty consistently.

If you do the sums at 10-15% p/a you will find that through compounding, and constantly adding to his capital (say 500 - 700quid a month) a thirty year old today could retire at 55 a VERY wealthy individual.

It's this though that keeps driving me towards my so called modest and unambitious ideal. . . . . . .
 
Hi Fastnet and all,

An interesting thread indeed and one into which I feel compelled to jump.

If you take a look here (don't worry I'm NOT selling a system, in fact you will find I hardly use one in the conventional sense of the word. More of an "approach" as a previous poster aptly said...)

http://www.fillyaboots.com/?mount=/forum/default.asp
then click on Spreadbetting Forum
then Current Open Positions
you will see eleven pages representing my spreadbet trades over the past few months. I intend to keep this "journal" up for a year as I find the discipline of posting my trades in the public eye very useful - as well as forcing me to look properly through my charts and justify every position with as much evidence as possible, any obviously stupid impulsive trades will be posted for all to deride! (You will see I made a recent mistake on gold with a classic revenge trade and subsequent nasty loss - d'oh!) I can promise you that these pages are entirely honest, as it is an exercise purely for my own benefit and I am not interested in cheating myself in the slightest.
Obviously I don't mind if my ideas are copied, but as skimbleshanks has so crucially pointed out the hardest, most time consuming part of this business is to find out what sort of approach suits your personality, goals, nature, foibles (idiosyncrasies also pleasing IMO!) etc. so I am not a believer in off the shelf trading systems at all as the chance of one fitting your unique style is tiny IMHO. And they're invariably expensive, which suggests to me often sold by failed traders who need an income.

Anyway, I digress. Forgive me if I have skimmed your posts a little swiftly (always busy, and watching Wal-Mart!) but I think we are trying to achieve much the same thing, i.e. 1 to 5 day positions with small drawdowns, wee stakes, max losses a tiny percentage of capital and an attractive risk/reward ratio. I am looking to make about 20% a year, which I feel is entirely possible to achieve with minimal risk, especially when you consider the benefits of margin. i.e if I have a £25k account I am looking to make £5000 a year. But with £25k I can effectively use this as £250k of capital, meaning I only need to make 2% a year if I use the margin to my advantage (and extremely carefully of course!)

So far my plan seems to be on track.

[It's worth noting that if you are bored enough to plough through all the pages (which would be extremely flattering) you will see I once included some gold stock purchases (which have subsequently fallen savagely!) which was a mistake as I was mixing up my long term portfolio with my spread betting account and the results do NOT reflect these premature purchases. Just wanted to get that in the open in case anyone accuses me of fiddling the results! They'll soar by 2004...famous last words....but I won't add them in then either I promise!]

My approach is very simple, visual, end of day and low risk. I do not pay for any charts, price feeds, newsletters etc. except for $20 a month to hahnscorner.com which I find useful. Let us know what you think. I hope my rambling journal may be of some use to you and good luck! What you want to achieve is possible I am almost certain...skimble said it suddenly clicks and I know just what she means. Trading is easy, but we silly humans make it so hard. IMHO. Gotta rush there's a huge American beast of a hypermarket on the up...time to beat it down brutally with a gargantuan £1 a point bet!

Best regards,

frugi
 
fastnet,

You make some good points, but I think it is a lot easier for an individual to make a return of 10% on his or her capital, than it is for a FTSE 100 company to make a return of 10%.

There is a heck of a lot of money out there and a lot of it is being controlled by people a lot less intelligent than you. There are plenty of "methods" out there for making cash - not just day trading but, currency dealing, arbitrage, property, the list goes on and on. It does not take too much effort to become good enough at one thing to be able to profit from all the other people trying to do the same thing but for one reason or another are not as smart, not as flexible or not as patient as you are.

It is a game and you just need to find a way of making some money that is enjoyable and profitable.

And it is definitely possible to earn silly money once you have found something you are succesful at. We are not all limited to 15% a year. Think of George Soros busting the bank of England.
Things like this, albeit of a different nature, happen all the time.

The billions that were wiped off the stock market since 2000 did not disappear. The majority of joe public knows very little about investing. Look how popular ISAs were in 2000 compared to this year. The public is almost 180 degrees out of sync. This is because they are scared/uneducated and so rely on IFAs who know very little more. It is our job to use our extra brain cells, experience and effort to take a slice of this cash.

I've found my little niche, frugi has found is and catsdad's dad has found his. It is not egotistical it is fact. Knowledge is the key. I think it is rich dad poor dad who keeps banging on about how the most important step is to invest in your financial knowledge. Read, think, read some more and eventually it happens.

Just my 2p. Remember I'm not saying it is easy - but be prepared to believe that there are people who are doing it and are doing it big.

John.
 
fastnet,
How much time and effort are you able or willing to put into your trading/investing?
If you are looking for a "system" that does the work for you and actually works LONG term in all markets, don't waste your time, it doesn't exist. Any methodology must adapt to the market environment you are operating in.
If you are able to apply the thought and application you've exhibited in your posts on this thread to trading the US markets
for three hours a day, you'll make 10%-15% per month, not per year.
 
Thanks to all who replied to my original post – I did hope that the title would cause a bit of a stir - after all I, like most I’m sure, trade to achieve a rate of return on my capital greater than that achievable by leaving it in a bank account. The post was not targeted at anyone who, consciously or sub-consciously trade for other reasons (see my 12th April reply above for examples) although I’m sure there are those who do.

I agree with jls483 to the extent that we all have to find our niche that we enjoy and can, with patience and hard work, eventually excel at. I don’t necessarily agree that it is easier for an individual to make a greater return on capital than a FTSE 100 company or a fund-manager? It might well be but it is not a fact that can be taken for granted . This is another subject entirely (regulatory constraints on managers of certain types of funds etc) so should probably be left as it doesn’t really add much to the thread. I also agree with jls483 that ‘’joe public’’ act like sheep lead by inadequately informed ‘’sales-people’’ hungry for the commission irrespective of the subsequent return. This single fact forms the basis of planned mass reform of the whole personal investment and financial planning industry.

The replies left me plenty to think about including the vicious cycle of my own doubts leading me to spend less time that I might otherwise do in developing my own system or style which leads to unsuccessful trades which confirms doubts further and so on . . . . . . . pathetic eh?

So – in short, I was motivated to continue developing a position trading system/style that allows me to:

i) Minimise risk and drawdown
ii) Place trades on EOD data for next day (so I can keep my day job and a roof above. .. )
iii) Minimise % spent on greedy spread-firms - they hate infrequent considered traders

Thanks for your comments Mr Charts – your posts to this site demonstrate what is possible but also the amount of dedication and attention required to actually make a decent return rather than talk/dream about it. Much as I long for the day when I can sit at home and tap a steady and relatively predictable income stream from the markets I’m certainly not in a position to day-trade just yet. . . . (much to Finspreads disappointment I’m sure!!)

Thanks again to all that replied –

Cheers

PS - Frugi - I've just finished wading through your trading history - it was genuinely worth every minute - separte post to your adopted area of ''Fillyaboots'' on it's way!!!
 
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