What is the Annual Rate of return we can expect trading?
- Thread starter suri112000
- Start date
Risk adjusted rate of return is the way. 3-4 times worst drawdown should make you rich.
I ve read 3-4 times risk reward per trade but generally such systems have 40% hit ratio in longer run.
Worse drawdown assuming is loosing all trades in an interval.
Best drawup and worst drawdown are they common? we generally have in betweens . Lets say we have worse drawdown once in 4 intervals. A good :bad interval of 1:1. Where the winning interval gives twice worse drawdown interval should be good enough??
Eg Lets say in 4 intervals we have 1 worst drawdon of 10%
Interval 1: win 20%
Interval 2: break even -1%
Interval 3: Win 20%
Interval 4 : worse drawdown -10%.
By the end of 4 intervals we still have good money coming in?? This is twice the worst drawdown.
I ve read 3-4 times risk reward per trade but generally such systems have 40% hit ratio in longer run.
Worse drawdown assuming is loosing all trades in an interval.
Best drawup and worst drawdown are they common? we generally have in betweens . Lets say we have worse drawdown once in 4 intervals. A good :bad interval of 1:1. Where the winning interval gives twice worse drawdown interval should be good enough??
Eg Lets say in 4 intervals we have 1 worst drawdon of 10%
Interval 1: win 20%
Interval 2: break even -1%
Interval 3: Win 20%
Interval 4 : worse drawdown -10%.
By the end of 4 intervals we still have good money coming in?? This is twice the worst drawdown.
If a return of 24 - 50% pa is made consistently for a prolonged period of 5 years or more, then I presume it is the yardstick for consideration.
In my experience, I have made a return of 70% in a month and I have kept struggling to retain it for rest of the year. Finally ended with 24% profit for the whole year. It is not called consistency. Had I made 2% per month, then it could have been called so.
When it comes to consistency, a quarterly return is the right time period to consider especially for swing or day traders. There are good chances of bouncing back in one month even if other two months are negative. Even if we can make 6 to 10% on quarterly basis, that is good.
Even if we consider, yearly domestic expenses plugged at Rs.3,60,000, we need a capital of atleast Rs.20 lakhs to breakeven and survive here provided we make atleast 6% on quarterly basis. IMO, if any trader makes 6% per quarter on a capital of Rs.20 lakhs or above really needs a pat and he is consistent and successful trader.
Less capital makes you to do heroic trades to earn big and ultimately loose your capital and your financial survival becomes a question.
In my experience, I have made a return of 70% in a month and I have kept struggling to retain it for rest of the year. Finally ended with 24% profit for the whole year. It is not called consistency. Had I made 2% per month, then it could have been called so.
When it comes to consistency, a quarterly return is the right time period to consider especially for swing or day traders. There are good chances of bouncing back in one month even if other two months are negative. Even if we can make 6 to 10% on quarterly basis, that is good.
Even if we consider, yearly domestic expenses plugged at Rs.3,60,000, we need a capital of atleast Rs.20 lakhs to breakeven and survive here provided we make atleast 6% on quarterly basis. IMO, if any trader makes 6% per quarter on a capital of Rs.20 lakhs or above really needs a pat and he is consistent and successful trader.
Less capital makes you to do heroic trades to earn big and ultimately loose your capital and your financial survival becomes a question.
Sir, please clarify the following...
Let me take your trades as example
With basic theory of MM , you want to risk 2 % in your single Trade, so being 10 points SL, we assume you can Trade 40 lots of crude..
Now you says 24% annualized return is great things for trader...
To achieve 24%, that's 4.8 lacs, you just need 120 points in a year time.. Is that so difficult ??
Or I am misunderstood anything here???
Let me take your trades as example
With basic theory of MM , you want to risk 2 % in your single Trade, so being 10 points SL, we assume you can Trade 40 lots of crude..
Now you says 24% annualized return is great things for trader...
To achieve 24%, that's 4.8 lacs, you just need 120 points in a year time.. Is that so difficult ??
Or I am misunderstood anything here???
Yes...you are missing one important aspect of trading ie consistency.
Considering your own example, to make 24% of profits in a year which is net of profits and losses. You need to make a minimum profit of 2 times your basic risk ie net every month consistently. If the trade is of 1:1.5 RR you will need to win 2 trades net in a month considering brokerage and taxes. Looks damn simple, right?
Considering your own example, to make 24% of profits in a year which is net of profits and losses. You need to make a minimum profit of 2 times your basic risk ie net every month consistently. If the trade is of 1:1.5 RR you will need to win 2 trades net in a month considering brokerage and taxes. Looks damn simple, right?
a. Agar consistency nahi hai to jitna bhi money management karo... koi faida nahi. U'll loose it all in the long run...
b Agar system main risk reward jada hai... U'll win in the long run.. just don't take big risk at single trade..
c. All good traders win jackpots trades few times in the year, as their system let profit run..they win big in good steady trend...Actually fixed target don't work in real life trading, but fixed sl works.. IMO...
---------
My Annual Rate of return over 220% in last 5 yrs... but I keep 80% profit out of table for back up and domestic expenses..,
Keeping all profit in the table and increasing trading capital very fast.... is the sure shot formulae to loose..,,
b Agar system main risk reward jada hai... U'll win in the long run.. just don't take big risk at single trade..
c. All good traders win jackpots trades few times in the year, as their system let profit run..they win big in good steady trend...Actually fixed target don't work in real life trading, but fixed sl works.. IMO...
---------
My Annual Rate of return over 220% in last 5 yrs... but I keep 80% profit out of table for back up and domestic expenses..,
Keeping all profit in the table and increasing trading capital very fast.... is the sure shot formulae to loose..,,
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