Saturday, December 22

Secret of Successful Trading

I have interacted with many traders and first question i ask them during my interaction with them How much return you are expecting out of the market?
I get some weird answer like 50% ,100% on monthly basis and little sensible answer like 15-20%. So lets discuss a scenario to understand risk management in trading and returns expecting out of trading
Let’s say two successful PMS (Portfolio Management Service)  approach you with the opportunity to invest and trade with them.
Both of these fund managers have been very successful over the past five years.  In fact, they have both achieved an identical average annual return of 50%.
The key difference is that
  • Fund Manager A shows his trade-by-trade record and you see that he has booked a profit on an incredible 80% of his trades!
  • Fund Manager B, on the other hand, actually had many more losing trades than winning trades.  His winning percentage was just 25%.

With this information, which fund manager would you choose to invest with?

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