TraderTom Live Day Trading 23.10.2024 23:02:27
HMMM Food for Thought
I was asked a question tonight, which I would like to answer publicly. It is a strange one, and I have something to say about it.
The question:
What is realistic percentage target of return on one’s account a year?
This is a much deeper question than you realise. The obvious answer would be “well, that is up how much risk you want to take, and if the market is volatile enough to give you the returns. “Paul Tudor Jones made 126% return in 1987, after fees. There is no way he could have pulled that off, unless he had been on the right side of the crash of ’87.
Personally, I don’t think it is healthy to have a target. I think targets creates a barrier in your mind. For example, I would not say “I want to earn 100% on my account.” I could be swayed to say, “I want to earn 100% OR MORE”.
I may not always publicly embrace this philosophy, although I hope I am, but I am a firm believer in process. I believe the process will take me to my trading to ever new heights, as long as I keep focused on this moment, and do not allow myself to be transported to either the future or the past.
During the crash of the first few months of 2020, I came face to face with this dilemma of when enough is enough. I was trading an account, in Danish Kroners, with high leverage, 200 or more to 1, and I was trying to get a runner on one of those bad days, where the market tanked.
I deposited 100,000 Danish Kroners and lost it within hours. I deposited another 100,000, and within hours I lost it. I did it twice more, over the course of 2-3 days, and then I caught a runner.
It is a while ago now, and I don’t know what day exactly it was, but I still have the brokerage state for those months, so I could find it. This was the beginning of a run like I have never seen before, nor have I ever heard of anyone ever do what I did.
I turned 100,000 Danish Kroner into 72 million Danish Kroner in the space of about 1 month. I have the brokerage statement to prove it, and maybe one day I will do a podcast, and I will publish this statement as proof.
This achievement is akin to going to the casino, and you put everything on red, and red turns up 30 times in a row. It was statistically improbable, and yet it happened. As I said, I have the brokerage statement, which if my memory serves me right is 272 pages long.
Will that ever happen again? Who knows. It is a good anecdote for others to read. For me though, it is less amusing to read. It is rather painful. I lost a significant chunk of it back to the market. I carried on betting the market would go down further. It didn’t.
I had to spend some time away from the market. I almost had to forgive myself for being so stupid. But I was. And I do not mind admitting it. I hope you don't read this and think "wow he is good". I hope you understand that it wasn't good. It was out of this world brilliant. But as brilliant as I was, as bad I turned, when the market turned. I was a one trick pony, and it pained me for a long time to realise how much I had lost.
I have long stopped wondering what my returns will be. I push my winners when my mood is up for it, and when I am right, I make huge returns. When I am wrong, I will have to retreat to a corner and lick my wounds for a while.
The point of the story is to stop looking at others to compare yourself to. Compare yourself to your old self from yesterday. It isn’t so much about being right or wrong, as it is about how much you make, when you are right, and how little you lose when you are wrong.
OK….enough for now…
Good night
Tom