What is good ? | Forex Factory

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What is good ?

  • Poll

  • What is realistic results per month in the long run ( mini : 4yr )
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  • #1
  • First Post: Aug 15, 2008 5:58am Aug 15, 2008 5:58am
Hi,

When you and I read FF and other forex sites we can read.
"My system do 35% per month.... " (35% is an example ) Very nice for him/her.

I personally do not think it is realistic that you can make 35% / month.

I'm happy if I can get an average of 5-8% per month in the long run.

So what is good for you and what can you make in the long run ( mini : 4yr) ? :
- 5%/month
-10%/month ....
  • #2
  • Aug 15, 2008 12:27pm Aug 15, 2008 12:27pm
300% or more per year
  • #3
  • Aug 15, 2008 2:32pm Aug 15, 2008 2:32pm
1-3% is a realistic goal, especially in the beginning. If you achieve that goal, you will most like strive to obtain more. After that, you will probably go back to having a goal of 1-3% :-)

The most important thing is not losing your capital, especially that part that you earned through grit, grime, and gumption. If you see someone earning 35% a month, then they have most likely overleveraged their account and put their investment capital in undue risk. If a trader chooses to "swing for the fences," that's fine, but don't be drawn into the illusion that those kind of returns are realistic for the long term.
Visit my journal here.
  • #4
  • Aug 15, 2008 2:35pm Aug 15, 2008 2:35pm
Why not take what you can get?
Won't be getting anymore anyway....
Never got the point of such threads...*sigh*
  • #5
  • Aug 15, 2008 2:42pm Aug 15, 2008 2:42pm
Generally speaking, leverage plays a huge factor in what your return is.

If I had a one account at 500:1 leverage and another account at 1:1 leverage.

Let's say each account has a leveraged value of 100,000.

At 500:1 leverage, my personal margin is 200.
At 1:1 leverage, my personal margin is 100,000.

If I gain 50 pips on 1 standard lot. I made $500. But what is my return?

500/200 = 250%.
500/100,000 = 1/2%

Leverage plays a huge factor.
  • #6
  • Aug 15, 2008 5:40pm Aug 15, 2008 5:40pm
Some months are winners and others losers (for most traders)

If you made more than you would have with a bank CD, you can't really complain can you? But then again, time is money.
  • #7
  • Aug 15, 2008 7:09pm Aug 15, 2008 7:09pm
Quote
Why not take what you can get?

Nod. Take what the market gives you. Some times that'll be more than others.

Quote
If you made more than you would have with a bank CD, you can't really complain can you? But then again, time is money.

IMO in order to be worth doing you have to beat more traditional investments. Mutual funds offer 10% per year, hedge funds offer 20% to 30% per year. If you can beat consistently that then you're doing very well.
  • #8
  • Aug 16, 2008 2:36pm Aug 16, 2008 2:36pm
Hi,

What will your % be after 1 year if you have 6% / month ?



M1 : 100*1.06 = 106
M2 : 106*1.06 = 112.36
M3 : 112.36*1.06 = 119.102 ( Nearly 20 % after 3 month)
M4 : 119.102 * 1.06 = 126.248
M5 : 126.248 * 1.06 = 133.822
M6 : 133.822 * 1.06 = 141.852
M7 : 141.852 * 1.06 = 150.363 ( Yes 50% after 7 month)
M8 : 150.363 * 1.06 = 159.363
M9 : 159.363 * 1.06 = 168.948
M10 : 168.948 * 1.06 = 179.084
M11 : 179.084 * 1.06 = 189.830
M12 : 189.830 * 1.06 = 201.219 ( 100% after 1 year)
  • #9
  • Aug 16, 2008 3:09pm Aug 16, 2008 3:09pm
Lets say most traders here want to make at least 19% return a month.
That means at the end of the year they could have 1.19^12 = 8.06 or 700% ROE.

700% per year. lol
  • #10
  • Aug 16, 2008 3:12pm Aug 16, 2008 3:12pm
well you are throwing out some very high numbers....

the higher the attempted return, the higher the risk of blowing the account...

let's make note of that in this discussion.

Quoting 300%mark
Lets say most traders here want to make at least 19% return a month.
That means at the end of the year they could have 1.19^12 = 8.06 or 700% ROE.

700% per year. lol
  • #11
  • Aug 16, 2008 3:22pm Aug 16, 2008 3:22pm
yup very true.

But you could also say this..
If you blow your account (let say -100% in 3 years) and you make 700% per year. You are doing pretty damn good, because of "the take your profit into your bank system".

I would rather like to blown my account in 3 years and make 700% per year than risk -10% for 100%.

At this moment my risk is -30% for at least 300% return per year.
  • #12
  • Aug 16, 2008 4:22pm Aug 16, 2008 4:22pm
Quote
If you blow your account (let say -100% in 3 years) and you make 700% per year. You are doing pretty damn good, because of "the take your profit into your bank system".

Yea but if you're withdrawing your money you have far less in your account to compound, so you have to continue making high percentages just to make decent money. In fact you'd probably have to withdrawl several times per year. If I make 50% per year, but my risk is much lower, and I compound the money over time it doesn't take long till my 50% overcomes your 700%.

Extrapolate that over the next 10 years, and the guy with lower risk and solid returns will beat the guy with huge risk and spotty returns. One will be sitting on a large reserve, the other will still just be working for their income.
  • #13
  • Edited 4:21pm Aug 18, 2008 3:12pm | Edited 4:21pm
Quoting Rabid
Yea but if you're withdrawing your money you have far less in your account to compound, so you have to continue making high percentages just to make decent money. In fact you'd probably have to withdrawl several times per year. If I make 50% per year, but my risk is much lower, and I compound the money over time it doesn't take long till my 50% overcomes your 700%.

Extrapolate that over the next 10 years, and the guy with lower risk and solid returns will beat the guy with huge risk and spotty returns. One will be sitting on a large reserve, the other will still just be working for their income.
Nope,

So funny...
But you are wrong. I don't think you understand the Financial Modeling at all. Lets go to the basic. There is always an expected loss of -100%. We all want to make money in trading don't we. Why not use the maximum advantage of trading than play safe?? Do you want to risk -100% to make 50%? What if you lost it all -100% in your 7 years trading?

Look at these trading models:

Lets say I have $3,000 starting capital. My possibility is 700% VS your 50% per year. Lets say I have lost 2 years in a row (-100%) and won 2 years in a row with an expected return of 700%. My system is Quantitative.

You won 50% per year and lost in the 3e year with -40%. In the 4e year you won 50%. Your trading system is Emotion TA

Trading Model Quantitative vs Model Emotion TA.

Trading Model Quantitative
Year 1: -3000
Year 2: -3000 (borrow money)
Year 3: 24000 Bank profit (60% = 14400) (borrow money)
Year 4: 76800 Bank profit (60% = 46080)

Total Income: 60480 in 4 years. I need to pay 7,500 including interest 9%

Now Model Emotion TA:
Year 1: 4500 (No bank profit, because return to low)
Year 2: 6750 (No bank profit, because return to low)
Year 3: 4050 (Lost 40% )
Year 4: 6075 (No bank profit, because return to low)

So your total income is 0. (wtf.. )

So trader, isnīt better that we use controlled risk (MM) to make huge returns like 700% with an expected drawdown of -100% than earn 50% with an expected drawdown of 40%?

And P.S.

U don't need to work full time to reach that high level.
  • #14
  • Last Post: Aug 18, 2008 5:08pm Aug 18, 2008 5:08pm
Quote
But you are wrong. I don't think you understand the Financial Modeling at all. Lets go to the basic. There is always an expected loss of -100%. We all want to make money in trading don't we. Why not use the maximum advantage of trading than play safe?? Do you want to risk -100% to make 50%? What if you lost it all -100% in your 7 years trading?

Uhm, no there isn't always an expected loss of -100% within 7 years, let alone 1 year (ie risking 100% for 50%). There's a lot of traders and funds that have not had complete draw down.

Your "model" is completely speculative.

With a 700% profit target you'll be losing 100% of your funds on a regular, probably yearly, basis. While someone risking a much lower percentage of their account each trade will have a much better equity curve, and probably not have a cataclysmic draw down within their lifetime. Instead of working thru it with hypotheticals, simulate it on your computer and see what happens. Or just rethink your math with a time frame of say, 100 years versus 1 year.

Now if you're just pulling the money out of your account and putting it into a separate reserve account, with the intention of refunding your account with that money, then you're really risking the same as everyone else (just moving it around for confusion's sake). Your results will be the same as ours over time. You could claim that "it's 700% ROI!" but in reality it's not, when you figure up returns based on the total sum of accounts. Which is what I suspect you're doing here.

Quote
So trader, isnīt better that we use controlled risk (MM) to make huge returns like 700% with an expected draw down of -100% than earn 50% with an expected draw down of 40%?

Complete speculative nonsense. 700% is fantasy, you won't obtain it over time. By over time I mean every year for, say, a 10 year period. But someone aiming for more controlled risks could feasibly earn 50% with a max draw down of 20%, consistently.
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