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Agreed - if a casual trader can only plug in 2 hours a day versus one who can trade 12 hours a day, by definition they have a 6x better chance of running into a good setup with an edge.
Also I am not denying 10% is possible, the consistency is the issue. A guy can go to the casino and earn 100% by hitting black but doesn't mean he can do it consistently - the fella above thinks he can earn 10% a month on average which implies consistency.
Can you help answer these questions from other members on NexusFi?
10% a month compounds to ~245% p.a. To put that into perspective Ed Seykota earned 200% p.a. with 50% drawdowns during his best period - search his FAQ - I believe that was posted in 2014 and relates to a question about him going bankrupt. Mark Minervini averaged 220% p.a. for a 5 year period. Another Market Wizard who potentially managed to return more than 200% p.a. is Richard Dennis, but his performance numbers are never quoted. Dan Zanger is not a Market Wizard, but his performance during 1999 is phenomenal. I may be missing some, but you get the idea - obtaining these numbers puts you in very elite company.
I know it seems like scalping is a low-risk way to grow the account, but in reality it never really works out that way. Based on conversations with some people on this forum, there may be some who accomplish this, but the odds are extremely low. The shorter your time-frame for trading, the less likely you are to make money - once you've traded a while, you may see why.
Most of the Market Wizards in the first two books started trading in the 70s. During that period interest rates got lowered and commodities started booming. Bill Gross recently published an article asking whether most traders of that period were just lucky, i.e. right place, right time. Reading about how things worked back then, I tend to agree - you can read Market Wizards and see how much of an advantage a professional trader had versus the dentist.
In the 80s, equities really took off and had exceptional growth until 99. IBD published a chart showing the growth in the average stock (not indexes), and growth has been flat after 99. A lot of the Stock Market Wizards are no longer around.
I used to track performance of the Market Wizards who still trade and run funds, and none of them gets over 40% p.a. The best may be in the 30% range. Most of this is due to size, but market conditions have also changed. Just look at the Turtle system that is no longer profitable. When I was tracking funds any fund averaging over 20% p.a. was exceptional and most likely started during a good period, i.e. long track record dating back to the 70s or 80s. There were exceptions, but few and far between.
I could not agree more with your comment that he should stop running numbers in his head - the market never gives the numbers I would like to achieve...
I would really like to see some documented proof of intraday traders averaging more than 10% per month. I have never seen Marty Scwhartz's numbers and perhaps he made more than that, but good luck trying to find any trader, never mind intraday, averaging 10% a month.
The best traders I have seen tend to be extremely selective, place very few trades and only trade when they deem conditions to be right. Trying to trade much more frequently generally does not lead to better results - usually the exact opposite happens. Traders who trade very frequently tend to lose money over the long term.
Not necessarily - I know of a trader who traded trend-following systems at OANDA using an Opening Range Breakout on the London open. He did extremely well - but needed to volatility that was present during that time. If the markets go nowhere, more screen time will not help at all.
Thank you - means a lot coming from you. I was lucky enough to get some good advice earlier in my life, but dumb enough not to listen to it. If those just starting out would seriously think about these posts (not just mine), then perhaps they may have a chance at making money out of the markets.
I should probably note that as my advice gets better my trading seems to suffer
(This is one of my problems over doing a TopStep Combine: I don't know if I can trade often enough to meet the targets, given reasonably safe position-sizes. Possibly doing a Continuous Combine is the answer to that, but even then the rules change, after passing one, for the "Funded Trader Preparation".)
which is why I emphasized the last point of my post. Assuming the same risk to reward and probability of winning, more trades is better. That's different to forcing trades and being impatient where you have negative expectancy per trade. Someone who puts one one really good trade per day will make less than someone who puts on 10 really good trades per day if the expectancy is the same. Which is why intraday traders way outperform fund managers. Their criteria for trade setups simply occur more frequently because they trade a shorter timeframe.
Understanding yourself is just as important as understanding markets.
I was hesitant, but since you mentioned this, my mentor is fairly consistent in averaging 10% per month. It sort of became my 5-year benchmark to beat.
@Big Mike was that with your automated strats, or manual? If the latter, that's amazing man!