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Expectations of Profits in Daytrading

What are your expectations? Do you expect to make a living from a $5,000 account in trading futures? Do you expect to make a living from a $50,000 account in futures?

What are you expecting? What is a "living", and what about losses?

A living for some might be $35,000 a year and for others it may be $100,000 a year just to pay their bills. What are you expecting from your trading?

I was touched by a recent article in Futures Magazine in their section where they choose CTA's to interview for their series on money managers. This man's name was Dennis Leontyev and he is a trader of funds.

Dennis made 110% in 1997, 52% in 1998, 57% in 1999 and 13% in the first three months of 2000, when he changed firms and positions. Although Dennis does day trade, he says his profits are made from longer-term trends on which he is 90% correct.

So, if we have $10,000 we might be entitled to as much as $11,000 in profits in a year's time according to this performance, which I believe, outclasses most CTA's on which official records are kept.

However, the average is 70% approximately based on three years' performance. So, if we have $10,000 we could expect to make $7,000 per year on average.

Now 70% is an incredible return, yet the bottom line of $7,000 is not a "living" by most people's standards.

My goals are to make 250% to as much as 500% a year on the $20,000 I use as a starting account to follow our Nasdaq Real-time e-mini signals.

I will also point out that this type of performance cannot be done with big money. Larry Williams is famous for his turning $10,000 into $1.15 million in one year.

If you ever see the statements, he was under a margin call at one point during the first month on drawdown. He also ran the money up to over $2.5 million before settling at year-end at $1.15 million, meaning during that same period he lost over $1.35 million! Make sure you look at the big picture. And what were his expectations? I'd be willing to wager he expected to win that contest and did what was necessary to do so. The risk picture he was willing to endure is not feasible for the day-to-day reality of trading for a living.

Do not misunderstand me. He did a feat that will probably never be done again and it is this feat that is his claim to fame, entitling him to charge big money for seminars and books, all of which have some value to some people.

CTA's that handle large sums of money do not have the freedom of the small trader. We are fortunate in being able to walk in and out with our one to five lots with relative ease of doing so.

Perhaps we need to re-organize our greed into what we really might reasonably expect. The results we seek may be too high to be realized in real time.

Daytrading is not easy work, but it is challenging and the market teaches me new tricks every day. I watch the market intraday, and except for an occasional vacation, I trade it nearly every trading day.

Anyway, the purpose of these comments is simply to ask, "What are our expectations, and are they reasonable?"