I'd like to clarify something here.
I realize that there are a lot of threaders here who have joined in recent months, and may notbe aware of a few of my basic tenets. First of all, your calculation is absolutely correct. However, I do not reinvest my gain into the market. Nore should anyone. I remove all gains and put them into funds or other sources at the end of each month, and the reason for that is twofold. The first is of course risk management, for the exact reason you state. The second is that since the July start of Market Gems, I no longer trade on my personal account for legal reasons. I manage 5 $25k acounts, one for my father, one for one of my brohters, one for a friend and two for business associates - all of whom need the money. All of the gain (approx. $250k) from last year went to help my father pay for uncovered expenses for my brother's second kidney transplant. My personal accounts, although they are immaterial to this discussion now includes just long term holds and some commodity transactions - neither of which I post. The point I was making is that judicious risk management, a sound strategy, and the ability to move with the markets should allow one to make 60% a quarter. There is a huge risk in reapplying the gain to subsequent trading, and I don't kow anyone that does that. Of the 'professional' full time traders I know who do this for a living, and I know about 30, the average one brings in about $150k on a $25-$30k account. Now the math on that is fairly simple. The best trader I know annually clears about $750k on a $100k base, and he knows better ones.
And they do it by doing exactly what you said "IMHO the best way to make the highest returns over the LONG RUN, is to make a few very good gains from time to time, and to limit all losses to small ones", only their viewof the long run is a little closer to near term.
I do pretty good at this, but this isn't what I do for a living, nor would it be given the opportunity. I do it because I can and because the result of doing it well benefits a lot of people. I have posted solely on this site for over a year and a half, and regardless of the comments from some detractors, I have no ego about it. I have always tried to offer an opinion on a stock or method when asked and whatever tips and advice I felt was reasonable for the audience. I will continue to do so. And yes, I have had my share of mistakes and miscalls and absolute disasters. But I allow myself to make a mistake, just like I encourage even the novice trader to post his/her watch list. I have learned from my own mistakes and some very proficient traders. I will share what I can.
And here is the one thing I will say again. One should shoot for 60% a quarter, at minimum. With a $50k account one could live off the proceeds, or at least reinvest it in something with less risk.
lastshadow |
