Trading Expectations: Keep It Real



Unfortunately, the retail trading world is full of false promises.  No other industry has as many snake oil salesmen, promising to make traders rich for a fee. The more a newsletter writer or trading system seller tells you how easy trading is, the more cautious you should be.

Consistently profitable trading requires a winning system that fits a traders personality, and they must have the discipline to follow it Implicitly.

Here are a few things that a new trader needs to understand:

  1. No trader wins on every trade. The best traders in the world only have a 50%-80% success rate. 
  2. Trying to get rich quick requires so much risk, that the probabilities of ending up poor is far greater than your chances of becoming rich. 
  3. Consistent 15% – 20% annual returns are what world class traders and portfolio managers make.
  4. Some of the best traders’ best years were 50% – 100% annual returns, in specific market conditions, that were conducive to their strategy.
  5. Market conditions will have a huge impact on your returns each year, regardless of how you trade.
  6. The higher returns you aim for, the more risk will be required, and the larger draw down you will have getting those returns. 
  7. If you risk 5% t0 10% of your trading capital on every trade, your risk of ruin is 100% in the long term.
  8. If you think that the above percentages are just too small, then it is very likely that your trading account is too small to make those percentages meaningful.
  9. To trade for a living, you likely need a multiple six figure account, and a minimum of one years worth of living expenses to avoid the unrealistic expectations of small returns and the accompanying stress.
  10. Trading is a profession like any other, and requires the same level of discipline and dedication to be successful.
  11. All your profits comes from other trader’s losses. You must beat other traders to be profitable.
  12. Trading is the hardest easy money you will ever make.