[RavenMM]

Originally Posted by Caprica

Hi,

I was just reading Credit Suisse's website (www.hedgeindex.com) which monitors the average performance of hedge funds. The average annual performance for the most profitable class of fund (global macro funds) is only a dismal 13.47%.

Despite what you read elsewhere, the average hedge fund uses very little leverage. That's point 1. Second, these funds are usually "hedged". Look at things like sharpe ratio etc to see return relative to risk. In most cases, it will be lower than an equity index.

If a professional hedge fund is only averaging around 13%, what hope is there for the average currency trader of supporting himself? To earn a meagre $52000 at 13% per year, the average trader would need $400,000 in trading capital.

Remember that a hedge fund is usually taking 1-3% annual charge and 20% of profit. Therefore on a fund of $100 million making the 13.47% annual average return they are making $1-3 million just for being there and $2.69million profit on the profit. As the fund grows, so do the numbers. That's why they don't over leverage and aim for 100% returns each year. They don't need to.

Have I missed something here? Is a private trader able to consitently average over 13% per year?

Try reading the market wizards books, pitbull etc about individual traders. IN many cases, these types of traders do make high % returns. But perhaps most importantly, they do usually start out with a large initial stake. They don't start with $3k, $10k etc.