The Truth About Annual Returns – Is the Fool at the Table YOU?

I want you to stop and think about something VERY important for YOUR trading.

If you earned a return on your trading account of half a percent per week (and compounded it) what would your annual return be?

Put another way, if your trading account size was $100,000 and you made half a percent per week which is $500 per week, what would your annual gain be?

Stop and think about it before reading on.

Okay, your annual return would be 29.61%.

In dollar terms on a $100,000 account this would be $29,610 trading profit for the year.

Disappointing?

Does this annual return seem disappointing to you? If so, you are what is know in trading circles as “the fool at the table”. This term is taken from gambling theory.

Why are you the fool at the table? Because you expect to do better than the best traders and investors the world has ever known.

And because this return is disappointing to you, you will chase higher returns by taking excess risk. Traders who take excess risk sooner or later give their money to the other players in the game.

The Best Ever

Okay who are the best ever and what are their returns?

Warren Buffett (Billionaire) - a 20.3% return since he purchased Berkshire Hathaway in 1965.

Louis Bacon (Billionaire) - a 31% return since 1990.

Paul Tudor Jones (Billionaire) - 24% return since 1980.

 

$100,000 in 30 years

So let’s say you start with $100,000 today and only return an average of half of one percent per week for the next 30 years.

At the end of 30 years, your net worth will be:  $239,362,626 ($239 MILION).

So what should you do?

Simply aim to earn 0.5% return per week.

If you only have a $10,000 account that is $50 per week.

If you have a $20,000 account that is $100 per week.

Most likely you are trying to make $500 per week on a $10,000 account. That is the best way to BLOW UP your trading account.

 

Position Size

Let me tell you my position size – $30,000 positions for every $100,000 in my trading account.

So if you have allocated $50,000 to you trading account your initial position size should be $15,000.

It is most likely you are taking $50,000 or $100,000 positions. Result? You are taking too much risk!

Remember you need only make half a percent per week to become rich beyond your wildest dreams!

Also your trading account is going to last a LONG, LONG time and you will be able to learn and grow, if you trade small.

If you take excess risk and blow up your account within three months, you are out of the game and you never have the chance to make real money.

 

It is simple: Trade SMALL and grow rich.

 

Oli Hille

Trader

www.TradingBook.net

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