Hi guys, had. question, as I never really calculated net returns, I just make my play and know what it makes in premium, but never what it is NET ( commission, margin, tax rate you are at ) do you guys use some software, an excel sheet, app, or don't even calculate it fully?? I was honestly thinking to have an app made, as I take in a fair amount of premium, and wouldn't mind at this point having someone make a custom app, as I use three apps to try to sort things, calculator app, interest app, and a percentage difference app. But if an app could take margin (rate / days holding / amount ) inputs( premium, commission, days holding ) calculate (tax bracket estimate / interest expense if not in AMT / commissions ) giving you final total, and tax implication that would be a gem to me, as you could guesstimate, but having an exact formula would be wonder just seeing what you guys use to calculate out NET proceeds , I'm all ears
I always look at net returns only, but I don't calculate these as a percentage of capital employed. I just try to work towards a rising 12 monthly rolling net profit. But I'm not a fan of metrics. Seen it so often in business environment, as soon as managers start to measure something, that something becomes the target. Profit's the real target.
No reason to over complicate this for your own account. I suggest you judge your returns by your net profits/losses for each month based on your beginning equity of the month. If you add or take away funds, you have to adjust for that. Be mindful of taxes but I would avoid the math. If you can trade the same strategy with a 1256 contract, and you make money, you get to keep more. But if you are making trading decisions based on paying taxes, that might cause losses to avoid gains. I never want to hold an asset longer than I think I should. I also suggest you keep track of the margin required for each strategy as one way to judge that risk/return from that strategy. Yes, that might not be the best way, but a simple one. If a strategy requires are 80% of your equity to make 1% for the month vs another one that takes 10% of your equity to make 1%, it helps in deciding how you allocate your limited margin. Risk management is not just about limiting losses. It is also about proper allocation of your cash. Bob
$$return-per-day is a great metric. When you get enough days together, then minimumVariance_$$return-day is another. Reward/Risk for positions, Return/Capital for portfolio. If you sell a 1-week $5-wide credit spread for 50¢, that's a 10% reward-to-risk ratio. If, however, you reserve 5x the capital margin for safety, that is a 2% return on capital. If you have to roll that position in time, that cuts the existing profit numbers because (aside from expenses) you lose re-write opportunity for that capital (because it remained in use, with $0 return for the first slice of time)...
Years ago I had a sizable gain in a mutual fund, but the price was currently going against me. I decided to "hold it until I could get Long Term Capital Gains treatment".... Big mistake. By the time I got to the 1-year holding period, almost all of the gain had been given back. Last time I made that mistake! (I've made plenty of others since... just not that one again.)
Now I understand why we do not agree on the fact that 3 digit profits are possible consistently. Your "trading " is not trading but investing and you can NEVER compare your trading with what daytraders do. Comparing holding times of 1 year or longer with daytrading is the most stupid thing I ever heard. You can indeed never make 3 digit returns consistently. A (good) daytrader trading futures with a margin account can.
I have not found one future’s CTA that has a day trading strategy that can consistently make 8% per year, let alone 100%+. If you know one, i’d Like to see that. For a guy with $10k account, I still think it is rare. If you can do it, you are the exception.
You should first learn to write, or control your emotions to avoid writing errors. Sorry for hurting your ego so hard. Your agressive way of posting shows that you have real mental problems.
CTA's have in general too big size for this type of trading. On top of that if they can make 100% a year they would not be CTA's charging 2and 20% fees on 8% returns but take everything for themselves. They will take 27.77 times more profits if they trade the same amount of own money. And have no hassle with NFA, CFTC, clients, disclosure documents, expenses for being or becoming an CTA... Bob, this remark is general and not directed to you, as I respect you: I notice that on ET you should be a loser or have very low returns to be accepted as real. Looks like a meeting of depressive people that tell to each other how bad life is in the hope that others will feel better as their life is not as horrible as the life that is being told. On ET being above average is forbidden.