Hi,
I was wondering about the returns we can realistically aim for with our trading strategies. Following a recent discussion with a friend who operates a private equity firm, he suggested that achieving a consistent 12.5% return would place one in the top 5% of traders globally. Is there any evidence to substantiate this claim? I am not seeking an anomalous 100% annual return but rather a consistent average over a five-year period. Thank you for your assistance.
John
Hi,
While you can set an aim of achieving consistent returns of 12.5%, claiming that it would place you in the top 5% of traders globally may oversimplify the complexities of trading. So, rather than focusing on an absolute return like 12.5%, using a benchmark index helps frame performance in a broader context.
Hope this helps!
Thanks
Rushda
Hello,
Full disclosure: I’m a retail trader. That said, one thing I took away from the EPAT course is that raw returns alone don’t fully determine how a trader or strategy is assessed.
Performance is often viewed relative to a benchmark (e.g., the S&P 500) or broader risk factors. Alpha and returns must be taken into account when assessing/ranking a trader. Alpha refers to the portion of returns not explained by those benchmark/factor exposures—i.e., risk-adjusted excess return.
Just my 2-cents.
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