Comments on: 19 & 20 February 2009 http://www.forexspirit.com/2009/02/20/19-20-february-2009/ Colin McGinley's journey of consistent, profitable forex trading Tue, 13 Jul 2010 11:59:20 +0000 hourly 1 http://wordpress.org/?v=abc By: Colin McGinley http://www.forexspirit.com/2009/02/20/19-20-february-2009/comment-page-1/#comment-1024 Colin McGinley Sun, 22 Feb 2009 16:48:12 +0000 http://www.forexspirit.com/?p=546#comment-1024 My goals have definitely shifted over time. Two years ago I was happy shooting for a 3% monthly return. That jived with me being happy with anything around 30% annually. After all, that's the sort of return that a top money manager would make in a good year, so who was I to shoot for more? Over time I've come to realise that there are several differences between the way a professional money manger (working for example in a hedge fund or pension fund) deals with risk and money management and the way I, as an individual, can do the same. The vast sums of money that a big fund must invest is one obvious difference. Another one that you often find, especially with pension funds, is that they must be close to fully invested the whole time, no matter the unfolding market circumstances. I'm trading with a small kitty and now view my short term goals as to increase that pot as quickly as possible. I don't need to live off the proceeds as I'm just trading part time so my risk can be higher than if I was wholly dependant on my trading returns. If I ever get to the stage where I'm trading full time then I'm sure my money management and risk parameters will alter radically. With that as a bit of background to my current goals, I'm currently shooting for monthly returns in the range of 10-20%. That probably works out at me desiring at least a 100% annual return (since not all months are going to show positive returns). To many that might seem a ludicrous high goal. To others (especially I'm sure most trading newbies) it might seem too small (after all this trading lark is the easy road to instant riches, right?). For me, it's a target just far enough out of reach to be motivate me to want to reach it. Of course, a major factor in ever reaching it is producing consistent positive returns, no matter how small or large they are. If I had a million dollars in my trading account then I'm sure I'd be happy gunning for an annual return of 10 or 20%, but I'm nowhere near that sort of level (as I'm sure is that case for just about every retail forex trader). I need to grow my stakes into something that affords me the chance to cut down on my goals. It's the catch 22, you have to take increased risk to grow your capital at the time when you have the least amount of experience. My goals have definitely shifted over time. Two years ago I was happy shooting for a 3% monthly return. That jived with me being happy with anything around 30% annually. After all, that’s the sort of return that a top money manager would make in a good year, so who was I to shoot for more?
Over time I’ve come to realise that there are several differences between the way a professional money manger (working for example in a hedge fund or pension fund) deals with risk and money management and the way I, as an individual, can do the same.
The vast sums of money that a big fund must invest is one obvious difference. Another one that you often find, especially with pension funds, is that they must be close to fully invested the whole time, no matter the unfolding market circumstances.
I’m trading with a small kitty and now view my short term goals as to increase that pot as quickly as possible. I don’t need to live off the proceeds as I’m just trading part time so my risk can be higher than if I was wholly dependant on my trading returns. If I ever get to the stage where I’m trading full time then I’m sure my money management and risk parameters will alter radically.
With that as a bit of background to my current goals, I’m currently shooting for monthly returns in the range of 10-20%. That probably works out at me desiring at least a 100% annual return (since not all months are going to show positive returns). To many that might seem a ludicrous high goal. To others (especially I’m sure most trading newbies) it might seem too small (after all this trading lark is the easy road to instant riches, right?).
For me, it’s a target just far enough out of reach to be motivate me to want to reach it. Of course, a major factor in ever reaching it is producing consistent positive returns, no matter how small or large they are.
If I had a million dollars in my trading account then I’m sure I’d be happy gunning for an annual return of 10 or 20%, but I’m nowhere near that sort of level (as I’m sure is that case for just about every retail forex trader). I need to grow my stakes into something that affords me the chance to cut down on my goals. It’s the catch 22, you have to take increased risk to grow your capital at the time when you have the least amount of experience.

]]> By: ThinAir http://www.forexspirit.com/2009/02/20/19-20-february-2009/comment-page-1/#comment-1021 ThinAir Sat, 21 Feb 2009 05:38:31 +0000 http://www.forexspirit.com/?p=546#comment-1021 Hi Colin, I'm wondering what are you expecting from your trading? For example, are you trying for 10%, 20% 50%, 100%, 1000% or more annually? I think it is an important big-picture question. Each of those numbers represents a risk level, probability of success and level of effort. I hear people say that is a waste of effort to plan what you want out of the market. I think not. For example, if you are expecting a 100% return buying and running a Subway franchise then you will be very disappointed! I'm guessing if you are expecting a 100% return year over year consitantly trading on a part-time basis then I think it might be a long shot. Hopefully that doesn't sound as bad as I think it might, because I don't mean to put a blanket on what anyone thinks they can accomplish. I have been at this game for years too from a part-time perspective. I also have high hopes and plans. I guess my point is to make sure you are calculating all that it takes to get from point A to point B. This of course will help with success. Hi Colin,

I’m wondering what are you expecting from your trading? For example, are you trying for 10%, 20% 50%, 100%, 1000% or more annually? I think it is an important big-picture question. Each of those numbers represents a risk level, probability of success and level of effort.

I hear people say that is a waste of effort to plan what you want out of the market. I think not. For example, if you are expecting a 100% return buying and running a Subway franchise then you will be very disappointed! I’m guessing if you are expecting a 100% return year over year consitantly trading on a part-time basis then I think it might be a long shot.

Hopefully that doesn’t sound as bad as I think it might, because I don’t mean to put a blanket on what anyone thinks they can accomplish. I have been at this game for years too from a part-time perspective. I also have high hopes and plans. I guess my point is to make sure you are calculating all that it takes to get from point A to point B. This of course will help with success.

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