What return % is good in Derivative trading at the end of the year?

What return % is good in Derivative trading at the end of the year?
Are 20% yearly returns considered to be good in derivative trading? How much % should I target after 3 years of experience in derivative trading?

Capital = 20 lakhs

1 Like

Whatever i am sharing here is my personal opinion
Returns are very subjective,
Suppose one has a capital of 20 crores and his target is to beat FD and inflation/Index ,a 20-25% return yearly is excellent
If capital is say 10 lakhs and you are doing it full time , then even a 100 % return yearly is considered average income in india , maximum of which will go into monthly expenses (mind i said average income as per glassdoor )
and Don’t target be consistent

for 20% returns , small caps will do.

Since the risk and leverage is higher in derivates. I suggest returns above 100%. This is because you have to factor in the cost of trading and taxes as well.

Derivates trading is a active business , so the cost and taxes keep adding up.

Its only worth it if you can generates anything above 100%.

Bhai kya krega itne dher saare paise se

I would consider this to be good. When you target higher returns, your risk also increases. Personally I prefer 24percent.

I doubt it’s possible to get this return with bigger capital. As @Arpan also mentioned above, even 100 percent is less if your trading capital is 10 lakhs, and you trade full time. In my opinion, if somebody is doing it full time, capital of less than 25lakhs doesn’t make sense. You will unnecessarily end up taking higher risk to get higher return.
Also, I doubt even 1 percent of traders make 100 percent in a year. Do you?

OP has not mentioned his capital.

There are traders who make decent returns.

All i m saying is that he has to consider the cost of trading and taxes and that depends on his strategy.

It simply not worth taking the risk in derivates if you cannot achieve returns that beat a long only portfolio.

His returns have to match in the neighbourhood of hedge funds, otherwise just invest in index fund and diversify.

1 Like

20% is a good return, also keep looking out for worst case scenarios in your head, and what a black swan event can do to your portfolio, and increasing trading capital will always be beneficial.

Capital = 20 lakhs

100% sounds very difficult

You mentioned small caps, they fell 80% in 2008 crash, how many people will have the mental strength to stomach that and wait for years and years just to breakeven.

1 Like

with that kind of capital. don’t trade in derivates.

XIRR for small caps is around 20% , so you will recover if you hold.

1 Like

I hope you are not a full time trader with 20lakh capital. Its hardly worth it, your returns are good, so i think you should focus more on increasing capital.

calculate what returns you are getting after cost of trading + taxes. if your returns are higher than returns generated by small caps. then go for it. else just invest.

It’s not that simple, you are only calculating over a long period of time, life is not that simple, what if you need money in between, trading provides somewhat consistent returns,if you have a viable strategy that is. So you can take out that profit and use it.

1 Like

Totally agree. But long only portfolio gives only around 15 percent. That’s why I too mentioned for small capital it’s not worth. Just to get additional 5 percent you can’t be putting in so much efforts. But on big capital even 1 percent will be a lot.

If you are generating 20 percent that’s excellent in relative terms. But your capital isn’t enough to make it a good absolute value. We are talking about 4 lakhs profit which you would have got even with some job. And you could even keep these funds in FD. Are you a full time trader?

Slightly disagree here. If I had to choose between small cap and derivatives trading both giving same rate of return, I would choose small cap any day. If you want small return every month, try systematic withdrawal. Not sure how returns will work out, but I find that less risky. For me personally risk management comes first and I don’t think I have to tell you which is less riskier here.

No, not a full-time trader. I am working

Then I feel it’s decent. It’s my personal opinion. Not many traders here would agree.
Since you said you generate 20 percent, I guess you are an option seller. Try buying debt funds and pledging them and get some additional returns. Your overall returns will come around 24percent.

Why debt funds? I usually buy and pledge shares