Would you be happy with 15% a year?

[tomorton]

I categorically disagree with this post.

Traders should instead reject the fantasy that you can consistently double/triple/quadruple your capital base over short periods of time (months/years) through trading performance alone. It's simply a myth that distorts what's possible and encourages traders to take on far too much risk in search of a golden unicorn.

If you are right, ask yourself, why do so many people fail to generate such astronomical returns consistently? Where are these people? Why is the wash out rate so high in retail trading?

Forum wisdom will have you believe that your average retail trader is simply not good enough, doesn't have the right strategy, the right broker, the right indicator, the right psychology. Very rarely do people consider that extremely unrealistic expectations on returns are what cause people to take unnecessarily high risks in the form of massive position sizes relative to their available capital which ultimately ends in disaster.

Yes, the average retail trader is simply not good enough. That is why they don't generate very high annual returns. But they wouldn't succeed even with realistic expectations, even very low expectations

 

[evertontrader]

I think this is subjective to the individual. To me, the opposite is true.

Jesse Livermoore explains this well in one of the greatest books on speculation ever written, Reminiscences Of a Stock Operator. If you haven't read it yet, I'd strongly recommend it.

Here is a quote from the book:

It was the change in my own attitude toward the game that was of supreme importance to me. It taught me, little by little, the essential difference between betting on fluctuations and anticipating inevitable advances and declines, between gambling and speculating. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.

And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market.

You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it.

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
– Jesse Livermore

Just an observation from my experience. More profit can be obtained trading intraday than longer term trading. Maybe this is just an outcome of my method and perhaps it doesn't hold true with other methods. I just find being able to catch 5-6 intraday moves a week yields 200+% more profit than my longer term trades. Admittedly i only take about 1 longer term trade a month.

 

[evertontrader]

I don't agree with this.

I think the problem is not the average retail trader but instead it's the myriad of misleading educational resources aspiring traders are exposed to, obfuscating the subject, effectively leading them down a blind alley.

Yes, the average retail trader is simply not good enough. That is why they don't generate very high annual returns. But they wouldn't succeed even with realistic expectations, even very low expectations

 

[Cubed]

I think this is subjective to the individual. To me, the opposite is true.

Jesse Livermoore explains this well in one of the greatest books on speculation ever written, Reminiscences Of a Stock Operator. If you haven't read it yet, I'd strongly recommend it.

Here is a quote from the book:

It was the change in my own attitude toward the game that was of supreme importance to me. It taught me, little by little, the essential difference between betting on fluctuations and anticipating inevitable advances and declines, between gambling and speculating. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.

And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market.

You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it.

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
– Jesse Livermore

i haven't read it but i can see where he (and you) are coming from. Perhaps stocks are very different to FX on which i base my experience. It also could be a function of how the trader interprets trades.

in my opinion,
Intraday requires stricter rules than trading on daily or weekly because you can't afford to enter a wide stop to absorb the noise. You have to either have a very accurate entry method or a reasonable one with rewards 3x or more than the risk. everything is tighter, faster, slippage matters, news events matter, time of day matters, spread matter, broker fees matter. Its tougher to trade but the rewards can be far better. just my 2 pennies on the subject and on a different market so we might be comparing apples to pears.

 

[evertontrader]

It's a great book, definitely worth a couple of reads.

I originally started out trading short term time frames, mostly FX and indices. Although profitable, I found it too time consuming personally and when considering factors like currency overlay, I started to question the long term reliability of short term strategies. I have friends who trade short term, mostly news traders with the odd latency arb practitioner... and it works for them.

I actually found trading over longer time frames more difficult than short term in my own experience. The discipline to hold a position over weeks & months, watching the market oscillate up and down in reaction to each weeks fundamentals and at the same time preventing myself from "cashing in" when my unrealised P/L was showing a healthy profit... all took time to master.

I won't say either approach is better, I'd only say that I fully believe everyone has to find their own method which best suits them, for me it was long term trend trading.

i haven't read it but i can see where he (and you) are coming from. Perhaps stocks are very different to FX on which i base my experience. It also could be a function of how the trader interprets trades.

in my opinion,
Intraday requires stricter rules than trading on daily or weekly because you can't afford to enter a wide stop to absorb the noise. You have to either have a very accurate entry method or a reasonable one with rewards 3x or more than the risk. everything is tighter, faster, slippage matters, news events matter, time of day matters, spread matter, broker fees matter. Its tougher to trade but the rewards can be far better. just my 2 pennies on the subject and on a different market so we might be comparing apples to pears.

 

[Jack o'Clubs]

But the risk in trading is what counts, and what drives the acceptable ROI. In order to accept the level of risk inherent in trading we absolutely cannot accept a 15%pa return. After all, we are risking the total loss of the capital 'invested', not something that crops up when considering many other investments. And its not like 100% losses are a once in a lifetime exceptional market events - statistically, many traders, maybe the majority, will empty their account more than once while trading.

Not only that, but trading usually brings the possibility of losing more than your original capital. Traders have to reject a 15%pa return as not worth the risk (let alone the considerable time and effort).

Since risk and return are correlated, all you are doing by insisting on greater returns is increasing the chance of the blow up you fear. The trader content with 15% returns is more likely to be the one that survives. Tortoise and hare and all that.

 

[Forexmospherian]

your post make sense in a way that traders need to know about themselves and their limits and taking trades should not bring any anxiety for consistent profits.

but when you got to your threshold did you try to settle there for a while and then increase your stake to a minimum, in a manner that did not have an effect on your mind?

Hi Fugazsy

I suppose I can only give you my own experience - and now after approx 13 yrs in retail FX trading - I have met and talked with many traders over the years and have shared many of our own findings.

What I never realised - and nobody really discusses this subject - but you own money value perception is important.

When I first started - in the early 2000's - everything was on the up - I have sold out a couple of businesses ( one with a £5 million T/O ) and was semi retired and life was good.

I was under no money pressures - my house at that time was rising on value about £5k every month - and I had 3 pensions to look forward to - with 2 I had been paying into for over 20 years.

I could afford a good size account and the idea of losing £1k on a FX intraday trade was of no great worry - as I had the means and was used to dealing with large sums of money

If I had been say in my late 20's with say 3 children and not a good job and money behind me - I dont think I would have approached trading the same - I think I would not want to lose £100 on a trade never mind a £1000 +.

As my account grew - I had been lucky - my method worked - but i had never had 7 consecutive losses - in fact with real money I don't think I had at that time more than a bad run of 4 losses in a row.

I was treating my live account like a demo - I had confidence and was not stressed.

This all changed over 1 week when i peaked at 25 lots had 2 bad days and 7 consecutive losses and saw over £10k + wiped off my trading account.

Suddenly - I had doubts - the financial world was changing and it was just pre world recession stage. My method was no longer as good as I thought it was - I had probably not taken over 1000 live trades at that time - so I did not have 2 or 3 years of back statement history etc to make me look at the situation totally rational.

I carried on - but just at 15 lots and had some winning trades again - but i was no longer relaxed - i was getting sweaty fingers and anxiety etc etc.

Suddenly - things over just a few months changed - and with the world news saying Banks were in trouble many of my professional friends were questioning what I was doing etc etc.

I had never been a gambler - yes £50 / £100 at Ascot etc - and in casino's on holidays but no other betting accounts etc.

At that time - I realised i could not carry on at that level.

In the end - I fine tuned my method - went back down to 5 lots and worked back up to 12 lots but still was not comfortable.

Over the next year i stayed within my own limitations.

I decided to not try and compound to over 25 lots + again and realised - under 10 lots per pip I just did not have the same stress and worry.

At that time my daily pip target was 25 pips and i increased it to 30 pips a day.

I had to tell myself even at 5 lots a pip and if I could do over 100 pips a week - then its was still $5k a week - hardly peanuts. Nowadays my weekly target is 250 pips and as you know I am already up over 1500 pips in just February.

I really need to explain to everton trader where he is going wrong - but then if he's not full time he cannot do it my way .

We then had the slump and the recession - I lost money abroad in the Lehmans Bros collapse in 2009 and knew i had to carry on FX trading full time - with 2 kids in private school and an expensive life style.

I have never looked back. At my age I dont want to have palpitations and worries of leaving trades on overnight with large stakes on them . I have found my own limit - I can make very good monies ( more than I earned as a Director of a large corporation ) and in the last 3 years - i have actually got better - more chart time - more trading knowledge etc etc.

Find your comfortable limit with your own style Fugazsy and keep improving until you feel you can up your stakes and then dont do it how I did it do it just a 1 lot a time

Hope that helps

Regards


F

 

[timsk]

. . . Forum wisdom will have you believe that your average retail trader is simply not good enough, doesn't have the right strategy, the right broker, the right indicator, the right psychology. Very rarely do people consider that extremely unrealistic expectations on returns are what cause people to take unnecessarily high risks in the form of massive position sizes relative to their available capital which ultimately ends in disaster.

Hi evertontrader,
I think this is absolutely spot on. It's far better to come away with a 'mere' 15% year on year than it is to blow one's account in year one by taking huge risks in pursuit of much larger returns.

Doubtless, all of us would like larger returns and that for some of us - perhaps Tom - the thought of 15% is too little reward for the time, effort and risk required to achieve it. I would say to any novice trader that the starting point is simply to get to the end of year one without having blown up their account. In year two, aim to equal or better the best interest rate offered by the banks and building societies. In year three, double it. Obviously, once a trader gets to a point of achieving a 100% p/a return - or more - consistently year on year, then a return of only 15% becomes very disappointing. To those who are yet to get to the end of a year without blowing up or suffering massive drawdowns, then 15% remains a lofty goal and one worthy of considerable praise once it's achieved.
Tim.

 

[Forexmospherian]

I'm yet to hit the metaphorical wall as you describe it but I will agree that moving into larger positions does have it's own psychological pressures. These nerves ease (or at least did with me) as you become used to entries at such levels. I ignore unrealised P/L mainly due to having multiple broker accounts, each accounts P/L doesn't mean a great deal indivdually, it's the overall that I spend more time watching.

We have very different approaches, I trade weekly charts across stocks/indices/commodities/FX pyramiding positions over time following the prevailing trend, this happens over weeks and months so my position sizes are smaller than yours but aim to capture far more points (or pips if it's an fx entry). Due to this, execution problems like slippage and delays don't impact me as much.

To give an example of an existing position, I've been short EURGBP for the last 5 weeks, entered at 0.76268 and then recently pyramided at 0.74012. EURGBP at pixel time is trading at 0.73661 via LMAX so the combined gain is around 290 pips at current. To me, this represents a 2% profit but to you with your lot sizes, I suspect it would represent significantly more.

Hi evertontrader

With great respect - I really think you have an awful lot to learn about retail FX trading.

I appreciate if you are part time - its a different ball game - but its a waste of time copying commercial methods with any account under $100 or $200k.

You have gave me an example of one of your trades and from the info you have gave me - I can now make you look at it from a completely different angle - ie proper thinking out the box.

First of all with regards to Jessie Livermore. Yes read the book and enjoyed the story - but felt sorry for the guy and he made loads of money and lost loads of money and in the end committed suicide. You are like trying to compare today with decades ago - like comparing a Model Ford T with a Bugatti veyron or a the latest hybrid Ferrari - they are all cars - but just totally different in about everyway

Jessie was forward thinking for his time - if he had been around today - he would have been trading HFT - not the way he did 60 + years ago.

Lets get a few other things straight before I go onto your trading method

Hedge Funds etc - are all suffering if they are not HFT. Yes they had it good 10 years ago and then after the recession - they have all been caught out by change.

Please do NOT think these guys are top traders.

They are all clever etc etc - but they have lied and have been deceitful and in my book I rate them like East end second hand car dealers - a bit like other bankers as well.

First of all - you cannot believe anything they say or tell you.

They are the cause of ripping of all the retail traders - purely by their methods and deceit. Forget their results - they have probably all been tampered with - just like every other "fix" they get up to.

Remember - they caused the World wide recession - just with their greed - and they are still getting away with it. Don't even look at them being the top of the pile - they are no longer there - most have been sacked or will end up in prison.

Now back to your trade.

5 weeks and 290 pips and 2% gain on your account. The only good point is its a profit. Other than that everything else is so below par.

Let me speculate that you have a £50k account. Lets then assume you place only 0 5% per trade - so a 290 pip gain is 2% then 0 5% is approx 72 pips - so lets say your stop was anything from 60 to 80 pips on that size stop.

If it was larger than that then you might added to the trade as it went on.

You have probably not wanted to take more trades - because you are part time and do not want to have more than 1% exposed at any one time - did you ever move your stop into profit and then took more trades over the 5 weeks.

I dont think your RR would have been more than 6 maximum - maybe only 3 or 4

I am used to having winning trades with RR's of 3 or 4 in 15 or 30 mins.

That's the first difference .

With regards to RR's on a winning trade of over 6 - I will have a few every week - in fact in this month I have had 2 with RR's over 30 on part stake size.

On £50k - 2% ie £1000 - not bad for say a few hours work - BUT If your account is only say £10 k then 2% is £200 and really if you spent 2 hrs a week checking it out then its just £20 per hour - with you doing the work and taking the risk.

Its just not enough.

290 pips to me would be minimum 17% increase on account size up to 35 -40% on 1 % stake size.

So if you are happy with your 15 % per year - suddenly you can see why I can make 150 - 300% per annum

Is 1% stake size too risky - even on a 5 pip stop.

It would be on a multi million pound capital account - but on a retail account its well in order - I just know I am not going to have 15 or 20 consecutive losses - so even if i did - it would not ruin my account.

I want to go on and explain all the reasons investment or long term trading is so inefficient - but going to have my tea and come back later

to be continued

Regards


F

 

[evertontrader]

Hi Fugazsy

I really need to explain to everton trader where he is going wrong - but then if he's not full time he cannot do it my way .

Please don't be so arrogant as to assume anyone needs your explanation.

I've come across many people like you over the years on trading forums. Assuming to be some type of teacher offering unwanted wisdom, usually very subjective with obvious holes. The common pattern of incessantly rambling on about your colourful trading history to justify your statements. Very little evidence is shown to back up the grand claims but still some follow optimistically in the hope that you have the answer. If you are the real deal, then good luck to you but please refrain from any more patronising comments. You're speaking to experienced people now so either join in and contribute or sit back and allow others the chance to debate and answer the original question.

 

[evertontrader]

You are a victim of conjecture. Stop making so many assumptions.

My risk per trade for your benefit is 2%. I have numerous position running concurrently as do most position traders. Don't worry, you don't need to show your concern, I do well enough thank you.

I trade around my job because I make a very good living doing something I enjoy, or at least for now. I also work in a finance environment which lets me see first hand how it really works... unlike some who make it up to suit their own narrative.

I don't want to enter into a pissing contest with you so let's leave it here. You obviously have a different view and that's okay... unless you persist on replying with small novels in each response destroying the thread entirely. I'd appreciate it if you didn't.

Hi evertontrader

With great respect - I really think you have an awful lot to learn about retail FX trading.

I appreciate if you are part time - its a different ball game - but its a waste of time copying commercial methods with any account under $100 or $200k.

You have gave me an example of one of your trades and from the info you have gave me - I can now make you look at it from a completely different angle - ie proper thinking out the box.

First of all with regards to Jessie Livermore. Yes read the book and enjoyed the story - but felt sorry for the guy and he made loads of money and lost loads of money and in the end committed suicide. You are like trying to compare today with decades ago - like comparing a Model Ford T with a Bugatti veyron or a the latest hybrid Ferrari - they are all cars - but just totally different in about everyway

Jessie was forward thinking for his time - if he had been around today - he would have been trading HFT - not the way he did 60 + years ago.

Lets get a few other things straight before I go onto your trading method

Hedge Funds etc - are all suffering if they are not HFT. Yes they had it good 10 years ago and then after the recession - they have all been caught out by change.

Please do NOT think these guys are top traders.

They are all clever etc etc - but they have lied and have been deceitful and in my book I rate them like East end second hand car dealers - a bit like other bankers as well.

First of all - you cannot believe anything they say or tell you.

They are the cause of ripping of all the retail traders - purely by their methods and deceit. Forget their results - they have probably all been tampered with - just like every other "fix" they get up to.

Remember - they caused the World wide recession - just with their greed - and they are still getting away with it. Don't even look at them being the top of the pile - they are no longer there - most have been sacked or will end up in prison.

Now back to your trade.

5 weeks and 290 pips and 2% gain on your account. The only good point is its a profit. Other than that everything else is so below par.

Let me speculate that you have a £50k account. Lets then assume you place only 0 5% per trade - so a 290 pip gain is 2% then 0 5% is approx 72 pips - so lets say your stop was anything from 60 to 80 pips on that size stop.

If it was larger than that then you might added to the trade as it went on.

You have probably not wanted to take more trades - because you are part time and do not want to have more than 1% exposed at any one time - did you ever move your stop into profit and then took more trades over the 5 weeks.

I dont think your RR would have been more than 6 maximum - maybe only 3 or 4

I am used to having winning trades with RR's of 3 or 4 in 15 or 30 mins.

That's the first difference .

With regards to RR's on a winning trade of over 6 - I will have a few every week - in fact in this month I have had 2 with RR's over 30 on part stake size.

On £50k - 2% ie £1000 - not bad for say a few hours work - BUT If your account is only say £10 k then 2% is £200 and really if you spent 2 hrs a week checking it out then its just £20 per hour - with you doing the work and taking the risk.

Its just not enough.

290 pips to me would be minimum 17% increase on account size up to 35 -40% on 1 % stake size.

So if you are happy with your 15 % per year - suddenly you can see why I can make 150 - 300% per annum

Is 1% stake size too risky - even on a 5 pip stop.

It would be on a multi million pound capital account - but on a retail account its well in order - I just know I am not going to have 15 or 20 consecutive losses - so even if i did - it would not ruin my account.

I want to go on and explain all the reasons investment or long term trading is so inefficient - but going to have my tea and come back later

to be continued

Regards


F

 

[evertontrader]

I would say to any novice trader that the starting point is simply to get to the end of year one without having blown up their account. In year two, aim to equal or better the best interest rate offered by the banks and building societies. In year three, double it.
Tim.

+1

As with any other pursuit in life, you have to learn to walk before you run.. why would trading be any different?

 

[Forexmospherian]

Please don't be so arrogant as to assume anyone needs your explanation.

I've come across many people like you over the years on trading forums. Assuming to be some type of teacher offering unwanted wisdom, usually very subjective with obvious holes. The common pattern of incessantly rambling on about your colourful trading history to justify your statements. Very little evidence is shown to back up the grand claims but still some follow optimistically in the hope that you have the answer. If you are the real deal, then good luck to you but please refrain from any more patronising comments. You're speaking to experienced people now so either join in and contribute or sit back and allow others the chance to debate and answer the original question.

+1

As with any other pursuit in life, you have to learn to walk before you run.. why would trading be any different?

Hi evertontrader

You have lost me now.

You say I am speaking with experienced people now ??? not in retail trading from what I can see ?

Then you agree with Timsk - that you have to walk before you run - in any pursuit of life - which is of course TRUE

So which camp do fall in them - the experienced retail trader - or the beginner who is walking before he runs ??

I do not want to take this thread off topic and so will refrain from any more comments and i wish you good trading

Regards


F

 

[tomorton]

I don't agree with this.

I think the problem is not the average retail trader but instead it's the myriad of misleading educational resources aspiring traders are exposed to, obfuscating the subject, effectively leading them down a blind alley.

Yes, without a doubt, novice retail traders chasing 100% returns per year in their first year are easily misled. But that's supply and demand at work. I wouldn't condone the sale of defective trading strategies but if novices demand to purchase trading strategies that have at least not failed (e.g. MA golden crosses etc.), these suppliers are not wrong to respond. And just because they respond with a product does not mean that the buyers will fail whereas they would otherwise have succeeded - they would have found a a way to fail anyway.

 

[timsk]

. . . I do not want to take this thread off topic and so will refrain from any more comments and i wish you good trading.

Result!!!
:clap:

 

[tomorton]

Since risk and return are correlated, all you are doing by insisting on greater returns is increasing the chance of the blow up you fear. The trader content with 15% returns is more likely to be the one that survives. Tortoise and hare and all that.

But the very real risk of total loss (or more than if you see what I mean) in trading means that 15%pa cannot be an adequate reward. If the average newbe trader survives as long as 3 years before going broke, which most do, but manages only 15%pa in that period, the respective possible outcomes are either 100% loss or 52% gain: that's a rather poor r:r ratio right there.

My advice to traders - if, after the second year, your trading brings a steady 15% annual return, get out of trading - you are much more likely to experience a 100% loss than a 100% gain and it ain't worth it.

 

[Jack o'Clubs]

But the very real risk of total loss (or more than if you see what I mean) in trading means that 15%pa cannot be an adequate reward. If the average newbe trader survives as long as 3 years before going broke, which most do, but manages only 15%pa in that period, the respective possible outcomes are either 100% loss or 52% gain: that's a rather poor r:r ratio right there.

My advice to traders - if, after the second year, your trading brings a steady 15% annual return, get out of trading - you are much more likely to experience a 100% loss than a 100% gain and it ain't worth it.

That's only true if you are trading in a world where you are risking 100% to make 15%. I agree, that's a very poor proposition on the face of it. But I don't recognise that world. I'm uncomfortable with - actually more strongly than that, would not tolerate - a scenario where I face 100% loss of capital whatever the potential upside, that's red/black in a casino to me. I trade in a world where my downside is limited and known, and my upside maybe constrained but is consistent with the risk parameters I have set. I'd be very pleased with a steady 15% return under the risk limits I set myself. I don't know really why you'd want to do more: a friend runs a fund at a fundamental equity l/s hedgie. He targets 10-15% annual returns for his investors (ungeared, net of fees). He has a remarkably consistent long term track record for achieving this. There are two consequences: he closed to new money years ago as investors realised he really was generating extraordinary returns, he was swamped with inflows, and the fund wasn't scaleable above $5bn, and second, he is as rich as Croesus.

 

[Fugazsy]

I think this is subjective to the individual. To me, the opposite is true.

Jesse Livermoore explains this well in one of the greatest books on speculation ever written, Reminiscences Of a Stock Operator. If you haven't read it yet, I'd strongly recommend it.

Here is a quote from the book:

It was the change in my own attitude toward the game that was of supreme importance to me. It taught me, little by little, the essential difference between betting on fluctuations and anticipating inevitable advances and declines, between gambling and speculating. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.

And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market.

You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it.

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
– Jesse Livermore

yes great book, read it al least a couple of times, his stake were heavy, 15 % were his stake not his annual return and he was adding more when the tape was telling him he was right........

the market today has changes, still it is possible to trade the way he did but less likely for a retail trader with a small account...

today trading compared is more psychological one, more difficult if you are not stronger in that department. I am not sure but I doubt he would have made in today's markets.......when they changed the rules he was unable to make it...

 

[malaguti]

But the risk in trading is what counts, and what drives the acceptable ROI. In order to accept the level of risk inherent in trading we absolutely cannot accept a 15%pa return. After all, we are risking the total loss of the capital 'invested', not something that crops up when considering many other investments. And its not like 100% losses are a once in a lifetime exceptional market events - statistically, many traders, maybe the majority, will empty their account more than once while trading.

Not only that, but trading usually brings the possibility of losing more than your original capital. Traders have to reject a 15%pa return as not worth the risk (let alone the considerable time and effort).

I see your point, and its a fair argument. Its been said by only a couple of others but I'll add that the total loss in which you mention assumes I've risked my whole account. The original post doesn't talk about money/portfolio management so there are obvious qualifications.
There's another view i have though, which is more pragmatic. What are our alternatives? We all want to make our money work for us. So do you stick it in a bank for a meager few percent if you're lucky? If a trader has only managed 15% a year he should give up? really? and do what instead?
you double your money in 5 years and you would say no to that? you would never invest again as the risk didn't justify it? I'm not sure i could agree.
So what out alternatives, if 15% isn't good enough? Not even a swiss bank account is safe anymore, high street banks aren't safe and quite frankly not even your job is safe.
everything where money is concerned is a risk and few of us are as talented as the great fomo to be able to go into anything with the certainty of 100% returns.

 

[evertontrader]

A consistent theme is starting to appear across the responses that question whether 15% is an attractive annual return, specifically that it won't generate enough in real terms to justify the risk or effort involved. To these people, consider the possibility that a higher return in real terms does not mean you have to increase your rate of return. I can appreciate that this may not make sense right away but consider the below.

To get more from 15%, you don't have to increase it... instead you can increase your capital base through disciplined financial planning (http://en.wikipedia.org/wiki/Financial_plan) which will then increase your overall returns much faster than relying on trading results alone.

Look at the difference adding £1000 a month in regular savings makes to the £10,000 grub stake from the the threads initial post. Below are the updated results after trading the account for over a period of five years.

Starting balance: £10,000
Monthly Savings: £1,000
Annual Compounded Return: 15%
Year Deposits Balance
1 - £12,000.00 £24,454.19
2 - £12,000.00 £41,076.50
3 - £12,000.00 £60,192.17
4 - £12,000.00 £82,175.18
5 - £12,000.00 £107,455.65

This represents an overall account increase of nearly 1000% in five years...that's ten times your original capital base...turning your grub stake into a serious stake.

Quite impressive from a "measly" 15% a year.