How do you judge success?
Not every trader is looking for 30 and 40% annual returns. I remember
one trader, Samuel, who was managing his parents’ retirement account.
With interest rates at nearly zero and with very little tolerance for a
drawdown, they were barely getting by with their bond portfolio despite a
lifetime of saving and sacrificing.
Samuel was able to quickly transform their portfolio into a profit-generating machine earning them 10% a year with very little risk. Imagine having a $1 million portfolio that was previously providing just $30,000 a year in income that now easily provides three times that!
For this couple in their 70s, the greater returns radically changed their lifestyle AND gave them the confidence that they could spend without worrying about whether they’d have a legacy for their children.
Samuel wasn’t a typical student-most of my students are professionals in their 40s and 50s who want to maximize the growth of their portfolio so they can retire early or enjoy a higher standing of living than would otherwise be possible. They’re not content with 12% a year and expensive, unresponsive brokers.
So for these folks, establishing a benchmark for how you determine success is vital. For a lot of traders the indexes are a benchmark, whether it’s the DJIA, S&P or the Nasdaq. (There are many others of course, but these are some of the more popular).
If you DO choose to compare yourself to an index, make sure you consider all the factors. Look at volatility, max drawdown, the percentage of winning days vs losing days, the percentage of winning trades vs losing trades, the average profit per trade vs average loss per trade. You might be perfectly content to trail a bull market but outperform it during bear markets (this is great if you have a low risk tolerance).
Or perhaps you’re younger and have a big risk tolerance and you want to maximize gains in bull markets and have the stomach (and new money) for big drawdowns; I know one professional athlete with a lot of cash flow who loves a 30% correction because he can drop seven figures into the market on a moment’s notice and take advantage of those big draw downs.
Whatever your situation-establish your benchmarks and keep your perspective. Above all else, follow your rules.
Stay disciplined!
Laurens Bensdorp
Founder Trading Mastery SchoolTradingMasterySchool.com
Samuel was able to quickly transform their portfolio into a profit-generating machine earning them 10% a year with very little risk. Imagine having a $1 million portfolio that was previously providing just $30,000 a year in income that now easily provides three times that!
For this couple in their 70s, the greater returns radically changed their lifestyle AND gave them the confidence that they could spend without worrying about whether they’d have a legacy for their children.
Samuel wasn’t a typical student-most of my students are professionals in their 40s and 50s who want to maximize the growth of their portfolio so they can retire early or enjoy a higher standing of living than would otherwise be possible. They’re not content with 12% a year and expensive, unresponsive brokers.
So for these folks, establishing a benchmark for how you determine success is vital. For a lot of traders the indexes are a benchmark, whether it’s the DJIA, S&P or the Nasdaq. (There are many others of course, but these are some of the more popular).
If you DO choose to compare yourself to an index, make sure you consider all the factors. Look at volatility, max drawdown, the percentage of winning days vs losing days, the percentage of winning trades vs losing trades, the average profit per trade vs average loss per trade. You might be perfectly content to trail a bull market but outperform it during bear markets (this is great if you have a low risk tolerance).
Or perhaps you’re younger and have a big risk tolerance and you want to maximize gains in bull markets and have the stomach (and new money) for big drawdowns; I know one professional athlete with a lot of cash flow who loves a 30% correction because he can drop seven figures into the market on a moment’s notice and take advantage of those big draw downs.
Whatever your situation-establish your benchmarks and keep your perspective. Above all else, follow your rules.
Stay disciplined!
Laurens Bensdorp
Founder Trading Mastery SchoolTradingMasterySchool.com
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