SCOTT WELSH TRADING BLOG

Making 100% In A Year

Making 100% In A Year

June 26, 2019

There are two worlds in trading.

And they are nothing alike.

One world is the responsible world. The adult world.

This is the world of All-Weather asset allocations, buy-and-hold institutional funds, and if you make 10% in a year, that’s amazing.

Remember Bernie Madoff? He convinced wealthy investors to give him $65 billion dollars on the promise of making 11% a year.

That’s what convinced these millionaires to fork over all their savings. 11%.

Then there’s this other crazy world.

This is the world of million-dollar trades and turning $10k accounts into $100k.

In this universe, traders enter real-money trading contests and come in second place after making 148%.

The adults look at these traders as foolish, ignorant, and amateurish (at best). The adult traders don’t believe those crazy results are legitimate and wait for anyone trying such things to inevitably go bust.

Meanwhile the crazy traders are working on systems that will make 100%. Again. The crazy traders pay no attention to that other world.

So which one is the right one? In which world should we live?

I’ve spent time in both worlds.

On one hand, I’ve made 100% in a year twice.

Once, in the mid-2000s, I made over 100% on a small company named Ceradyne (a body armor company no longer trading publicly, symbol CRDN). I’ve written about it before.

While thrilling, my method in making that return was haphazard and un-repeatable. Not surprisingly, I haven’t been able to repeat it.

Another time in 2014, I made 100% in a year using just one robot on one currency pair. The problem with trading just one robot, though, is that the results can fluctuate wildly. I’ve gone from 100% to 12% to flat for months at a time, and everywhere in-between.

That’s how it goes if you trade just one thing.

Because of those fluctuations, I’ve also lived in the adult world. Life is much easier there.

If the goal is 8-10% per year, you can trade Daily charts and only take a handful of trades. The wins are big, the losses are manageable, and it’s mostly consistent.

The data is overwhelming in the adult world. You can go back hundreds of years and see evidence that we can beat the market easily without much stress. As long as you don’t go for pipe dreams and ridiculous returns.

So which world should we choose?

In our next email, we’re going to look at a system used by a trading contest champion to see how he did it.

He won by making over 100% in a year. We’ll see if it’s something we can use to do the same.

Talk to you soon.

 

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.