$100 to $100K in 1 year...

Good to have you back.

FXAnalytic,

Hope you are still around to continue what you have left behind as i am always waiting for your surprise.

Back in October I said "I'm back"... we see how that worked out. LOL... I'm hoping to pick back up with some of my work here as time allows!

I think my last meaningful post here was back on page one, well over a year ago… ugh. I promised the next installment would be “The Path to Full Time Trading”… Without further Ado let’s jump back in and check on our New Trader and see how he’s doing…

Huh, like a lot of the people who posted on the site over a year ago, New Trader is no where to be found. This is the devil in the detail: we never really understand the risks of trading until they have taken their toll. I’m a firm believer in nothing ventured, nothing gained, but I have a feeling if we could somehow really get people to understand that 80 to 90% of all traders really do fail, people would take a different approach to this; the problem, the numbers just don’t ring true for some reason. EVERYONE thinks they’re the EXPECTION to the RULE; but that doesn’t make sense does it. If everyone accepted or believed that they personally would be the ones who failed in spectacular fashion, then we would see a much more careful group of traders wouldn’t we?

So make this your new Mantra: I will fail on a monumental level. Say it 100 times a day until you find yourself having anxiety attacks when you even consider turning your monitor on… I will fail in such an outrageous fashion that even Jim Cramer will be speechless. Say it until the thought of trading with anything higher than 1:1 or God forbid, 2:1 leverage leaves you sweaty and clammy. Are you having a hot flash yet? No? Then you haven’t embraced the Mantra yet. Stay focused, you can do it.

So let’s do some quick review, when I wrote the initial article we were trying to set some reasonable expectations, for this we reviewed Barclays CTA index and briefly discussed the lack luster returns of the Currency Traders. At the end of 2007 they only managed to squeak out 2.29%. If retail trader could average this, which they don’t (not at 95% failure), in a $5000 account they would have earned $129.50 for their efforts. Of course they would have to pay tax on that amount and in most cases the short term capital gains tax of up to 35% would apply. They would be left with something around $84.18 for their efforts… But do not despair for 2008 is here and surely it will be better than double-ought seven. Well not by much; in 2008 our professional currency traders returned about 3.47% for their efforts. Now on a professional level this begins to raise all kind of questions; about hedge funds, computer models etc etc etc… Unfortunately what happens is, that discussion never seems to make it to our local Bus Driver, New Trader.

As soon as you begin to talk about what is happening on a professional level, you always have someone jump in and thump their copy of Elliot Wave on the pulpit and declare, “Our objectives are different”, “We have different goals” and so on. Yes I’m sure you do, but that doesn’t mean they are proper goals to have. Because you pick an objective doesn’t mean it’s achievable; thinking it doesn’t make is so and that is one of the great risks of retail traders. They put a lot of misguided thoughts into carefully developed plans that are flawed from the start. Put differently, if you’re not an engineer, an you have a great idea for building a four story house out of soda bottles and Elmer’s glue, chances are very, very high you’re going to fail… So stop sniffing glue.

So let’s review some more: what are you’re expectations for trading for 2009. Are they higher than 5 or 10 percent returns…? Yes? WHY? Don’t answer… They are higher, because returns that low don’t make this worth your time right? They don’t meet your needs or accomplish the goals you’ve attached to your trading efforts. So whose fault is it when it doesn’t work? Well if you ask New Trader when you get on the bus, he probably won’t say “It’s because my goals were too lofty”; no he’ll have a unique take on it. It was bad timing, a poor model, something that “with just a little more time” could be worked out. But it will never happen.

Trading is a business, and unless you deeply understand the business and the risks associated with it; you’ll never succeed. You might for a while, but not in the long run; eventually your risk profile will come back like a Mob Debt Collector looking for his money.

So, what do we do if we want to trade full time? You have three choices, you can strive to be one of the statistically improbable success stories who somehow manage to make a bazillion dollar trading, you can choose to be a careful responsible trader who tries to lesson their risk profile by allocating moneys (assuming you have some) to varying asset classes that you manage yourself, or you can trade professionally for other people.

If you’re any good at trading one of these makes more sense to me than any other, and we’ll look at it in detail the next time we meet. Hopefully that will be before 2010. I have to go get my bus ticket now…

Great thread! Hope you pop in for some more updates.

http://www.forexfactory.com/showpost...1&postcount=11

Not sure where the poster in the link got the data for a minimum of 30% returns to hedge the inherent risk in forex. I've never seen it - the data - and know of very few people who return 30% on an average basis.

The great thing about forums and the web is, everyone is entitled to their opinion and they can freely express it. The downside is, not all those opinions have the same amount of research backing them up. Unfortunately when someone hears or reads something that supports what they believe or are hoping fore they don't often take that point into consideration.

Real, long-term returns tend to be elusive and much harder to generate than many people realize. The key is, to keep your risk profile as small as possible until you really have endured several years of trading. Once you've been through a handful different economic cycles you'll have a better understanding of what the real risk of the market is and what kind of exposure you can maintain. Even that though won't prepare you for the Black Swans which most of know swoop in more often than statistics allow for.

When I saw the title of this thread, I thought, "What an idiot!". It had to be either a scam or some noob with unrealistic expectations. So, I figured I'd check it out (it never hurts to know who to stay away from). Then I started reading the posts and thought, "Cool. I could actually learn something here." About a third of the way through the thread, I started noticing the dates on the postings. So, I jumped to the last post to check its date, and wondered why the hell I keep doing this to myself.

I don't care how many of you assholes disappoint me by getting bored and leaving. I will learn the art of trading no matter how long it takes, and no matter how many accounts I have to blow through.