Reasonable monthly/ annual returns

Yes, it is what I am looking for. 5-10% is excellent returns .
Firstly I want to achieve this the way I want, not just any way. Then I would say I am ready to manage OPM. Still has work to do.

Dear Chikot,
I believe that my Tradingboy PAMM is what you are looking for.
You may check it here https://www.myfxbook.com/members/Alanfx1/tradingboy-pamm/59053
Cheers.

Tradingboy

Chikot posted:
    Yes, it is what I am looking for. 5-10% is excellent returns .
Firstly I want to achieve this the way I want, not just any way. Then I would say I am ready to manage OPM. Still has work to do.

I like ur thinking style

my goal is really to just beat whatever the broad market SP500 is doing.. If this month it did 3% and I returned 5% I'm very happy.. If the market is at -3% and I'm at +1% again I'm pretty happy.. Just so happens that at the moment I'm doing an average return of 11.32% return per month but I don't forsee that lasting forever. Good on you Chikot for a conservative and measured trading style, that's exactly what I'm trying to do as well..

drgoodvibe, thank you for encouragement and kind words.
I am like a boxer looking to find a right range and build a portfolio of methods to make sure that i am armed for all situation, make returns the way I want and thus ready to manage OPM funds. This is why all these up and downs on my accounts. cause I am always testing news things. I decided to use small one for testing and big one trade after I tested something on small.
I would be happy with 2-3% monthly but I doubt it would be very inciting for investors. Hence I am looking to get myself to the level when i can average 5-6% monthly consistently. The most important is to control risk. If risk is controlled the money is safe and is there when I am finally where I want to be.As I want to put it, I have deposited this money a year and a half ago and I still trade it. stopped losing but need to figure out consistent returns method, then we go.
I already have one for trending market. Need to figure out day trading method based on PA to be able to trade and make money when market is not trending at least on 4H.

11 posts drgoodvibe

drgoodvibe posted:
    my goal is really to just beat whatever the broad market SP500 is doing.. If this month it did 3% and I returned 5% I'm very happy.. If the market is at -3% and I'm at +1% again I'm pretty happy.. Just so happens that at the moment I'm doing an average return of 11.32% return per month but I don't forsee that lasting forever. Good on you Chikot for a conservative and measured trading style, that's exactly what I'm trying to do as well..

Agree with you completely Chikot.. Like you I'll be looking to manage OPM eventually as well -- Just keep in mind that you want to deal with professional investors and fact is, most professional investors don't expect a money manager to return 50% to 100% return a year. Sure it can happen in a really good year but expectations of doing that year over year or even month over month need to be tempered.

Some of the largest hedge funds in the world whom have some of the smartest people in the world working for them return 10% to 20% annually only. That should be your goal, I would even hesitate to say that a goal of 6% return a month is too high. I mentioned earlier that your goal really should be to beat what the broad market indexes are doing.

The returns of active trading an account (Hedge Fund style) versus passive trading (Investing in an Index fund or Index ETF) should be gauged based on returns and total volatility. To manage OPM I'm looking to prove that my active trading can beat any broad market index with the same or only slightly higher volatility.

Try creating a Sharpe ratio (a measure of returns that's risk adjusted) for your portfolio against the broad S&P500 index.

From when I started trading this particular account, Sept 13th -- the SP-500 index has returned 6.94% with a Sharpe ratio of 1.02 (higher is better) while my actively traded portfolio has returned 35.55% realized gains with a Sharpe ratio of 2.48 (Anything over 2 is excellent but anything over 5 is usually very suspicious). Though the difference between Sharpe ratios of 1.02 and 2.48 doesn't seem like a lot, it actually is a very large difference..

So what I'm trying to prove with the Sharpe ratio comparison is that I can return to investors far greater risk adjusted realized gains than investing in the broad market as that's better than comparing against some high watermark like 5-6% return for a month that was arbitrarily chosen. One last thing to ponder, what if the SP-500 does 10% return and you only made 5% return in a month? See what I mean? You've actually returned less to investors than had they invested in just a plain old SP-500 ETF like say (SPY).

I remember during the last crash over the last couple of years when the broad SP-500 was in -30% territory other Hedge Funds that had only lost -10% were being hailed as a success -- That's why your goals should be dynamic and chosen relative to what the broad market is doing.

Best of luck, I'll be rooting for you alongside my own methods.

Cheers
-drgoodvibe

i use a martingale like EA with a lot of precaution, it gave me 5% a month with a max drawdown of 25%, i don' t want to have a return more than 5% a month, because the max dd will not be acceptable
i don't find better (for me) 5% a month give me 80% a year; and x 10 in 4 years

We obviously have similar goals in mind. But although I have heard about Sharpe ratio I have no idea what it is. Is it some kind of mathematical representation of risk vs reward?
I understand perfectly well that high returns almost always means higher risk hence there must be some kind of reasonable goal.
By now I am still working on my trading approach. I want to have a couple of strategies to be able to trade when there is a strong trend according to my parameters to swing / trend follow it and to day trade when there is no trend.
I think when conducted properly both approaches can be lower risk and good returns. well, I will see how things will go.
How long have you been trading btw?

drgoodvibe posted:
    Agree with you completely Chikot.. Like you I'll be looking to manage OPM eventually as well -- Just keep in mind that you want to deal with professional investors and fact is, most professional investors don't expect a money manager to return 50% to 100% return a year. Sure it can happen in a really good year but expectations of doing that year over year or even month over month need to be tempered.

Some of the largest hedge funds in the world whom have some of the smartest people in the world working for them return 10% to 20% annually only. That should be your goal, I would even hesitate to say that a goal of 6% return a month is too high. I mentioned earlier that your goal really should be to beat what the broad market indexes are doing.

The returns of active trading an account (Hedge Fund style) versus passive trading (Investing in an Index fund or Index ETF) should be gauged based on returns and total volatility. To manage OPM I'm looking to prove that my active trading can beat any broad market index with the same or only slightly higher volatility.

Try creating a Sharpe ratio (a measure of returns that's risk adjusted) for your portfolio against the broad S&P500 index.

From when I started trading this particular account, Sept 13th -- the SP-500 index has returned 6.94% with a Sharpe ratio of 1.02 (higher is better) while my actively traded portfolio has returned 35.55% realized gains with a Sharpe ratio of 2.48 (Anything over 2 is excellent but anything over 5 is usually very suspicious). Though the difference between Sharpe ratios of 1.02 and 2.48 doesn't seem like a lot, it actually is a very large difference..

So what I'm trying to prove with the Sharpe ratio comparison is that I can return to investors far greater risk adjusted realized gains than investing in the broad market as that's better than comparing against some high watermark like 5-6% return for a month that was arbitrarily chosen. One last thing to ponder, what if the SP-500 does 10% return and you only made 5% return in a month? See what I mean? You've actually returned less to investors than had they invested in just a plain old SP-500 ETF like say (SPY).

I remember during the last crash over the last couple of years when the broad SP-500 was in -30% territory other Hedge Funds that had only lost -10% were being hailed as a success -- That's why your goals should be dynamic and chosen relative to what the broad market is doing.

Best of luck, I'll be rooting for you alongside my own methods.

Cheers
-drgoodvibe

I would not use martingale. I did not know what it is but I did use it in the very beginning of my trading. Losses can grow exponentially.

stef posted:
    i use a martingale like EA with a lot of precaution, it gave me 5% a month with a max drawdown of 25%, i don' t want to have a return more than 5% a month, because the max dd will not be acceptable
i don't find better (for me) 5% a month give me 80% a year; and x 10 in 4 years

I'm gonna try to keep this short and sweet... DO NOT trade for a % ROI. Thats per week, per month, per year or decade.... don't do it. period. Thats why people go broke, they chase losses, martingale position sizes, and the worst offense, they slowplay a great trade, like holding pocket aces and checking... If you want to attract serious investors, your chart has to have an exponential to slightly drawn curve... OVER TIME. How do you achieve this? consistency in accuracy.... you will here alot of people with alot of hooplah about strategies that 'lost 6 times, then won 12X on one trade'... you know what that tells me? That person is A)Utilizing too much risk.. B) Is inaccurate as hell C) Never gonna manage a cent of mine... If I were you, I would forget what an ROI is, I wouldnt even look at my P/L %.. I would look @ my % of correct trades vs incorrect trades... If you can achieve 65% correctness (accuracy).. over the span of 500 or so trades... you are now a GOD among men. then you can peek at your ROI and laugh all the way to the bank. Another thing... once you find your fundamental accuracy %... then using a little quantitative enginuity... you can figure out what kind of risk tolerance you can push for optimal returns. First find your personal accuracy... accuracy of your system or whatever.. I cannot stress this enough. Just my 22500000 cents worth of education through experience in chasing a % goal.

I totally agree that there should be no set in stone %ROI to realize on a monthly basis -- When a new trader is starting off consistency is key versus any set returns per week or per month. However I think one should keep a close eye on %ROI on a month over month basis as well. Here's why..

The SP-500 index has realized as of end of day today (EOD) 1.28% return. If you bought the index at the beginning of the month and held until EOD today you're gains would be +1.28%.. Guess what..l.. any idiot can go and do that.. The whole point of trading is to have outsized gains on a daily weekly basis that can beat that. It's about using your intellect, ingenuity etc to beat what the other guys are doing and have greater gains then what the broader market is doing. Otherwise an investor can just invest in a broad market index fund and be done with it! Why would any investor pay you 2% in fees and 20% of profits when you can't beat a standard buy and hold strategy on a broad market index like the SP500?

See what I mean? You have to compare your results against something that's relative.. Not some arbitrary chosen 5%/10% return per month. However though your main goal is to be consistent, your ROI should be used as a measure of your consistency as well as how many trades you win. You can trade a scalping system that has a high win ratio but what happens when 1 loss equates to 5 wins.. See what I mean?

A high win to loss ratio doesn't explain the entire picture. You're accuracy can be 98% but that 2% can drawdown your ROI considerably if you're not watching.

Last of all the Forex markets are not normally distributed. That means that socio-economic-political events cause huge amounts of volatility. Trading like I said before is about outsized gains. If North Korea decided to invade South Korea do you know how to take advantage of that event in a trade? Do you also know that the outsized gains you're going to make on that single trade is going to throw your whole idea of consistency in trading returns out the window?

I've said time and time again you're goals should be 50% of a move you're' assuming is going to happen. Not any particular Pip amount or dollar amount per week or per month but keep a close watch on %ROI because that's what your investors care about most. They want to see you beat a buy-and-hold strategy. Otherwise what's their incentive for letting you trade their money?

-----

Chikot, yes Sharpe ratio is a representation of risk adjusted returns. It's a measure of your returns versus a risk free rate and volatility. It's usually used relative to a broad market index like the SP-500 or the MSCI Index etc..

The sharpe ratio is an important factor in determining your risk model along with your margin to equity ratio.

 5-10% monthly is excellent but with what kind of risk?

When I first started trading, my first and last high net worth investor (Fund of Fund manager) asked what my monthly goal was and at the time it was 20%. He said that was too high and asked to only get him 6% monthly. I found it odd why he would turn down money like that but since he was the fund of fund manager, I listened. Ever since that initial conversation, I have noticed that 6% monthly seems to be the general consensus among QEP's. Compounded it is 100% annum, but when dealing with institutional investors 6% is ideal in order to reduce excess risk.

My trading models are set at 10% monthly. Sometimes I hit it but most of the time I hit it at just under 10.

Also, keep in mind Goldman Sachs biggest month was 14% this past year and that was unheard of for an institution of that magnitude.

Reasonable return actually depend on DD.... So it is about how much DD can you take...

Hello Chickot and others
Agree with all above. Oanda forums getting too weird.
Agree consistency is v important, more than return. One question, in myfxbook is the drawdown is for the entire account history, or if you customize a start date does it reset to zero. I think it doesn't. Can you tell from the orange line distance from red line what DD was?
Another question...why would anyone want to trade someone else's money? To take a cut of the top? Is that lucrative? Say you could take 1% a month, you'd need say $1MM invested to make it attractive. I'd be pretty scared of having responsibility for that much of other people's money...but that's me. Anyone doing that and doing well?

I think that 5-10% DD is a reasonable.
I used to risk 2-3% per trade but decided to forgo this kind of risk. I am only risking up to 1% per trade and have no more than 2 trades opened same time.
I think it will certainly protect me against kind of DD I had in November. I also was not taking profits in November despite having really good trades with up to 200 pips in profit at maximum. all ended as BE trades but took losses. so, I am taking reasonable profits now. 3% left to trade back by now. i am not going to push myslef these last 2 weeks of the year. probably will make a break in a week till the beginning of 2011.
My maximum was about 18% since the end of August and I am 14.5% up now.
I guess 5-6% monthly is not far fetched. It is actually what i am doing on average in the past 6 months. I see big progress in this regard and need to work on avoiding November kind of DD.

hi Chikot
as you've been patted on your shoulder for 4 pages I'll feel comfortable saying something a bit less encouraging.
Those people mentioned above make so little because they are handling millions. If you trade a 4-5 digits account I'm afraid you really need to make more than 5-6% monthly for people to consider you interesting professionally.

5 digits is only 10k to 99k - this is in fact very little money. Most methods will work fine until your orders hit 100 lots and above, then you will start getting issues even on a high liquidity network. I am not talking about little bucket shops of course. With 10-20 standard lots orders you won't move market even by a pip.

Hello Ghanima, thanks for comments, however i know I have my own opinion which is backed by the fact that 5-6% is really a good return and saying that if I trade smaller amount I must make more % means that you imply taking more risk, which is not good. 4-5 digit account can be ruined same way as can be a really big account and visa versa. If I can do it is small account I can do it with big if I trade small account same way i am going to trade a big one. which means risking 1% per trade. What is important how much you risk to make certain return. when you tarde like me without risk of blow out and make money you will be interesting to prospective investors.

    hi Chikot
as you've been patted on your shoulder for 4 pages I'll feel comfortable saying something a bit less encouraging.
Those people mentioned above make so little because they are handling millions. If you trade a 4-5 digits account I'm afraid you really need to make more than 5-6% monthly for people to consider you interesting professionally.
</quote>

I am not a greedy person. May be I am not looking to manage those kinds of money. I will be connect to trade with account which is big enough to have a good life from my trading results but not to have liquidity issues.
The fact is that not many make money in this business at all high returns almost always mean high risk.

mistificator posted:
    5 digits is only 10k to 99k - this is in fact very little money. Most methods will work fine until your orders hit 100 lots and above, then you will start getting issues even on a high liquidity network. I am not talking about little bucket shops of course. With 10-20 standard lots orders you won't move market even by a pip.