Seeking Alpha

the small stock...'s  Instablog

the small stock trader
Send Message
Author of a small unique book: ''The small stock trader''. Zen/psychology, indie stock trading, girlfriend, tennis/cycle/swim, travel/poker/pool/cigar/wine...
My blog:
The small stock trader
My book:
The small stock trader
  • How Much Money Do Successful Small Stock (Day) Traders Make And Do 90% Of Stock (Day) Traders Lose Money? 0 comments
    Jun 16, 2012 5:10 PM

    Info from my small unique book "The small stock trader":

    "The successful small stock trader (a retail stock trader with a stock trading capital of no more than a few hundred thousand dollars) may make about +50% yearly net performance on the long run, after 4-5 years experience and spending at least 20 hours a week on his indie stock trading/investing "small business"… for even after over 5 years of stock trading experience, working 30 hours a week, I barely meet my +5% monthly performance target in my active months, excluding the bear markets. I say "excluding" the bear markets, because while shorting the bear market sounds easy in theory, in practice it is not an easy thing, even for some great stock traders with decades of experience. So, during the bear markets your first goal should be to protect your stock trading capital… Many studies claim that about 90 percent of the small stock traders eventually lose money and leave the stock market within their first year. Thus, only 1 out of 10 small stock traders survives to earn a consistent living in stock trading. The most important thing to remember is that the same winner often takes the gold year after year. This proves that stock trading is a skills game, one in which luck plays a small role… It is indeed rare for a small stock trader to consistently make over 5% a month, even if they work 70 hours a week. If you consistently make 100% annually, perhaps you will be one of the best stock traders in the world- and one like none I have ever heard of, though I have heard of a few derivatives traders who consistently make around 100% per annum. However, in the derivative market, the leverage can sometimes be 1:10, while in stock trading, the leverage for swing trading may be around 1:2.5."

    So, it is wise to be realistic and do not waste your little time, money, and skill/abilities on books/websites/newsletters/"gurus" that promise doubling/tripling your stock trading capital each year, for even the few great stock traders such as Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O'Neil, and Steve Cohen had an average annual return of +35-40 percent in the long run. However, generally speaking the larger your stock trading capital, the less your performance, as a small stock trader is more flexible, focused and simple than a big stock trader. Even Warren Buffet once admitted that he could make +50% each year on small caps if he had to manage a small stock investing capital.

    I hope the above small article was a little helpful!

    Mika (author of "The small stock trader")

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To the small stock trader's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.