Exactly. If your "markup" on your trade was more than 30%, if you could charge out your "staff" at 3 times what you were paying them, then the comparison might be more meaningful.
How is it possible then that so many retail businesses fail? Your probability of selling some inventory for a higher price than you paid is high. Your probability of selling all inventory for a higher price than you paid is low. Your probability of making enough profit on your inventory turns to pay for all the expenses associated with running your business for at least 5 years is about 40%. Now, if you learn to trade based on price action concepts, it's possible to develop a business plan with an edge that doesn't disappear as long there's a liquid market to trade. Speaking of edges, our own humble nakachalet over here appears to have one: http://www.elitetrader.com/vb/showthread.php?s=&threadid=276629&perpage=10&pagenumber=18
No one talks of Buffett (two 't's, not one) as a trader, let alone a great one. He is an investor. Buffett himself said that if you run small amounts of capital as a value investor you should be able to get 50% per annum. Running billions, it's harder. So, a small value investor, if Buffett's views still hold today, should be able to crank out 50% per annum if they are highly talented.
Ah, his Magnetic Attractor Strategy. I haven't run the stats on it lately, but for the longest time he'd call a price at which he was planning to go short or long the ES. The price he was bidding or offering was quite a few points away at the time of his post. If you took the opposite side of his call at the time he posted and placed an order to take profit 1 tick inside the price he was bidding or offering, the win rate was amazing! He posts his calls at Volente's Bar and Grille in the Chit Chat forum. I don't recommending sharing his meals, though :eek:
The daily ATR on GMCR is $3, so the stop is about 7.5% of the average range. And at 5% of position value, the risk of ruin is high. When I look at Fri's bar, I don't see a reason why GMCR at $71 is any more likely to go in one direction than another. You put the stop around the previous day's high. Maybe that's a good bet, but at that time frame and with that small a stop, to me it looks to be within the margin of random flux. And this is a countertrend strategy, so it's got that going against it. It's like hanging off the side of a bus and betting that you won't hit a lamp pole.
YUP !! IF YOU DONT HAVE ACCESS TO CAPITAL, THEN YOU NEED TO --TRADE-- AS OPPOSED TO BEING AN --INVESTOR-- **BUT** AS SOON AS TRADERS GET ACCESS TO CAPITAL, THEY REDUCE RISK.. TO TEND RATHER TOWARDS INVESTORS (THINK LARGE HF)
Bull. Met a guy once that was more than 100 million heavy, did it all futures trading. Had an exchange seat - back when there still were pits - for wheat and that is where he made his money in. Trader. From his life. Trading and investing are totally different. With money a trader turns into longer timeframes - swing trading etc. But investing is different game. Investing is based on fundamentals more than technicals.
So what does it mean? That he was still trading futures when he was 100M heavy? Of course !! he is not going to start learning about value investing after having been a successful trader... I am just saying he will take more of an investor approach in his RISK MANAGEMENT... Instead of risking 1% per trade, he may start risking 0.1%.. WHICH with 100M is still a whopping 100k for a single guy with little headcount expenses.... Instead of aiming at +100%+ per year, aiming at 10/20% per year... which is what a GREAT investor can hope to make in a year.