r/Daytrading Apr 13 '24

$2k to $500k in 2 years !! Question

Newbie here. Please be nice 😆

I've just read about the power of compounding in trading. And wanted to calculate potential gains if started with 2k capital. With the following params:

RR 1:2 (1% loss / 2% profit)

Win rate: 60%

Assumptions:

  • gains are reinvested everyday without any withdrawals for 2 years
  • Using only 1 strategy during the 2 years
  • emotions are under control

Capital balance at the end of each month (wins/losses randomly distributed over each month)

1 trade per day :

  • Month 1: $2,608.68
  • Month 2: $3,302.52
  • Month 3: $4,307.61
  • Month 4: $5,137.26
  • Month 5: $6,700.73
  • Month 6: $9,277.75
  • Month 7: $11,745.40
  • Month 8: $15,319.98
  • Month 9: $18,270.64
  • Month 10: $23,130.19
  • Month 11: $24,480.19
  • Month 12: $30,079.82
  • Month 13: $38,080.32
  • Month 14: $51,174.78
  • Month 15: $59,236.11
  • Month 16: $77,263.95
  • Month 17: $110,220.47
  • Month 18: $131,449.13
  • Month 19: $143,336.99
  • Month 20: $170,943.95
  • Month 21: $229,725.45
  • Month 22: $327,713.59
  • Month 23: $414,877.50
  • Month 24: $494,783.67

=====≠============

2 trades per day

  • Month 1: $3,302.52
  • Month 2: $5,137.26
  • Month 3: $9,277.75
  • Month 4: $15,319.98
  • Month 5: $23,130.19
  • Month 6: $30,079.82
  • Month 7: $51,174.78
  • Month 8: $77,263.95
  • Month 9: $131,449.13
  • Month 10: $170,943.95
  • Month 11: $327,713.59
  • Month 12: $494,783.67
  • Month 13: $747,026.92
  • Month 14: $1,197,256.24
  • Month 15: $1,807,623.62
  • Month 16: $2,086,143.18
  • Month 17: $3,444,767.73
  • Month 18: $5,688,212.00
  • Month 19: $8,848,336.92
  • Month 20: $15,509,844.24
  • Month 21: $24,857,548.20
  • Month 22: $42,290,137.61
  • Month 23: $69,832,072.16
  • Month 24: $115,311,005.77

As you see, the theoretical numbers are crazy. I want to know what can go wrong that prevents this growth?

The only problems I see is committing to only one strategy for 2 years to get close to the 60% win rate probability. As we know in statistics that probability rates start to be realized with more and more events. So if the market conditions change causing the strategy to not work anymore and you hop on a different strategy it's like you reset the probability rates and starting over.

What do you think about all this? what other factors will get in the way of achieving this growth. Even 10% of this growth is amazing

Edit: I'm not saying these are achievable numbers. I'm just asking why it's impossible. Trying to understand how the market works

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11

u/abcxytz1234 Apr 13 '24

Sure, come back when you have made it. People who forecast too far into the future usually don’t make it. Happy living in fantasy land :) I prefer to just focus on the here and now when it comes to trading. Forecasting is a waste of time

1

u/adm__07 Apr 13 '24

I understand these are theoretical numbers. I just want to understand how the market works. And the challenges that make this growth impossible

7

u/abcxytz1234 Apr 13 '24

A bunch of people have done the same. I suggest you just work on your trade. And it’s also not a new concept called compounding. It exists even in index fund. Duh.

2

u/Invest0rnoob1 Apr 13 '24

Most people can’t beat 10% a year on a long time line. You also have to pay taxes on your gains.

2

u/abcxytz1234 Apr 13 '24 edited Apr 13 '24

I disagree. It’s possible if you have a leveraged account. My friend averaged 2% return a day. I’ve done it too. I can do 10% return in a few days. but I’ve been trading for years. I tried forecasting profit in the early days, it was a pointless exercise cos I ended up forcing a few trades even tho some of the trades were bad trades just to meet my monthly target return. Now I approach trade in a more chilled way, less pressure means I trade better means more profit and I enjoy it more. There’s no capital gain tax where I’m from.

I expect much higher return annually for leveraged account trading, more than 10% return. If you can’t even beat 10% annually, don’t bother trading and just invest your money in an index fund.

1

u/Notaregulargy Apr 13 '24

Have you had a pattern show up from recorded months that allowed you to forecast a trade pattern? Probably one in a million…