Level of profit - realistic?

shyguy · 7 January 2015

so i was doing some sums and came up with the following:

if every month i purchase a total of 30k worth of shares and make a 10% profit on average, then after 10 months i stand to double my $30k.

is 10% every month realistically achievable? 10% isnt a huge amount but in shares it can be... could just as easily lose 10%. to aim for the 10% profit target every month, from my experiences so far, this is going to require time and dedication even for a skilled trader... correct?

to aim for that percentage surely you would need to be purchasing stocks between 10c and a dollar. as you grow that amount to trade on the monthly basis, surely you would hit a limit where the stock doesnt cater for buy and sells of a greater size... but then to move to stocks over a dollar the smaller shifts would limit the ability to reach the profit margins on a monthly basis?

i am trying to weigh up the time spent doing share trading to justify the potential gains... not looking at trading as just a hobby... where are the serious gains as a home trader?

tech/a · 7 January 2015

While not an impossibility ---- highly unlikely.

I'd investigate Index Futures.

McLovin · 7 January 2015

shyguy said:
is 10% every month realistically achievable??

That's 213%/year. Not really realistic unless you're a) very good and b) working with a small bank.

skc · 7 January 2015

shyguy said:
so i was doing some sums and came up with the following:

if every month i purchase a total of 30k worth of shares and make a 10% profit on average, then after 10 months i stand to double my $30k.

is 10% every month realistically achievable?

Realistically achievable for those who are very good. Put another way, $30k @ 10% per month is only $3k, or only ~$150 per trading day.

For someone who is consistently profitable that is certainly realistic as a daytrader... although I doubt anyone that good would be trading a $30k account.

I don't think you need to trade penny stocks to achieve that. $150 profit per day on $10-30k position size will only require movement of 1-2%. There are plenty of them everyday in the mid and large caps.

Having said all that, for the average person / beginner to become that "someone", it is going to take a lot of practice, hard work, experience and false starts.

Julia · 7 January 2015

shyguy said:
to aim for that percentage surely you would need to be purchasing stocks between 10c and a dollar.

Why? You are looking for a given % return on your capital. What difference does the actual cent/dollar amount per share make?

CBA is one of the highest prices shares on the ASX at present. Over a few days last month it went from $81 to $86.

Triathlete · 7 January 2015

to aim for that percentage surely you would need to be purchasing stocks between 10c and a dollar.

If you take a look at the top 20 stocks on the ASX the average move was 10% from their highs to there lows in Dec 2014.However it would be highly unlikely you would pick the exact tops and bottoms, but you do not need to be in penny stocks.

Wysiwyg · 7 January 2015

shyguy said:
to aim for that percentage surely you would need to be purchasing stocks between 10c and a dollar.

No, you have to purchase stocks that will move up soon after you purchase them. If you can do that consistently (and sell them at the right time) then you will be successful.

pixel · 7 January 2015

Julia said:
CBA is one of the highest prices shares on the ASX at present. Over a few days last month it went from $81 to $86.

That may be true, Julia,
... but ...
You'd have to know beforehand which those "few days" are. No use to buy at $81 when it drops back to $80 on the next day...

As an additional uncertainty factor, you will have stop-outs that drag your average down.
I don't want to discourage anyone from trying, but realistically it is extremely difficult to achieve a regular monthly return of 10% for the full account balance. It's easy when markets are trending up. It may also be possible when markets are trending down and you trade the Short side. But in choppy seas, you will find it extremely challenging to identify a sufficient number of safe entries.

John Swift · 8 January 2015

Julia said:
You are looking for a given % return on your capital.

You're actually looking for a given % return on your equity.

With a mere 4x leverage you are only looking for a 2.5% move in the underlying... seems doable.

minwa · 8 January 2015

shyguy said:
i am trying to weigh up the time spent doing share trading to justify the potential gains... not looking at trading as just a hobby... where are the serious gains as a home trader?

Do-able ? Of course, with excessive risk taking which probably leads to you wiping your account at some point. Realistic ? If you havn't traded before, NO. If you've traded before you know month after month of target is not realistic without excessive risk. If you're one of the rare few who can do it - you wouldn't be asking this question.

Serious gains for home trader are probably not in stocks. Futures/options/forex. Serious gains most of the time come with serious risks.

Julia · 8 January 2015

pixel said:
That may be true, Julia,
... but ...
You'd have to know beforehand which those "few days" are. No use to buy at $81 when it drops back to $80 on the next day...

They are two completely different issues, pixel, as you know. I made no comment on whether what the OP suggested was 'do-able'. (for a beginner I'd seriously doubt it), and was only remarking on % return having nothing to do with the actual SP.

John Swift said:
You're actually looking for a given % return on your equity.

With a mere 4x leverage you are only looking for a 2.5% move in the underlying... seems doable.

Are you seriously suggesting leverage for someone with the OP's level of experience?

Minwa has it exactly right.

John Swift · 8 January 2015

Julia said:
Are you seriously suggesting leverage for someone with the OP's level of experience?

Minwa has it exactly right.

I wasn't suggesting anything, let alone seriously suggesting anything. I was just remarking that he's talking about return on equity, not about return on capital. And that with modest leverage the move required in the underlying to make such gains is much less than 10%, as others seem to be hung up on. The OP actually doesn't say anything of his level of experience. So it would be remiss of us to assume anything.

As I direct answer to the question of whether 10% return a month is realistically achievable... of course it is. People in reality do actually achieve this consistently.

Julia · 8 January 2015

John Swift said:
The OP actually doesn't say anything of his level of experience. So it would be remiss of us to assume anything.

OK, but he says

i am trying to weigh up the time spent doing share trading to justify the potential gains... not looking at trading as just a hobby... where are the serious gains as a home trader?

Would he say that if he were experienced enough to increase risk with leverage?

minwa said:
. If you're one of the rare few who can do it - you wouldn't be asking this question.

Perhaps I'm especially cautious, but I'm always nervous about any response to someone in the Beginners' Lounge which they might interpret as it being easy to achieve something, especially with leverage, that will almost certainly see them in trouble.

shouldaindex · 8 January 2015

You could flip a coin 3 times.

hhse · 8 January 2015

John Swift said:
...People in reality do actually achieve this consistently.

I wish I was that good... o_o I'd be a millionaire with $3284.27 in capital after 5 years.

Pnut · 30 January 2015

Good question but you should consider asking the underlying share or instrument you want to trade. I personally use NT7 because I can program and back test to get a feel for what I should or should not do.
It is a very simple process and you only need a few things.

1) Trading idea or plan.
2) Underlying instrument data to back test.
3) A few hours to process and review.

You will not necessarily have an exact definitive answer but you will have an idea and some appreciation for what is or is not achievable.

You tube video here gives a bit of an intro into what can be done as a learning process.
http://youtu.be/1_NP1Ht_5zo

Hope this helps.
Pnut

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