I've been feeling really lucky the past 4 months. I've paper trading since about 16, and tended to do very well. But now 20 I've started to invest my savings. I've made 15%, and I just want to know if this is dumb luck or not. I do make models and I have my limits and stop loss set. But am I actually doing well? Or is this honestly just dumb luck of this bullish US market?

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    The S&P500 has risen 12% in the last four months, so you're doing a bit better than it. The only real way to know if you're Really Good is to see if #1 you consistently do better than the Market, and #2 see how much you lose in a bear market. – RonJohn Feb 1 '18 at 6:36
  • @RonJohn, that is what I'm excited to see. I've have not hedge as much, since I did take a break from the market. Also, I'm not confident in any of my ideas. Side note, I want to make clear that I did dip quite a bit early on, 8%. But, time will tell, thanks for the comment. – NateAGeek Feb 1 '18 at 7:05
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    It’s almost certainly luck - no one consistently outperforms the market. – Dale M Feb 1 '18 at 9:03
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    It is pure dumb luck. (Paper trading means nothing, and teaches you nothing.) Simply keep trading but very simply do not risk too much. – Fattie Feb 1 '18 at 15:31
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    to be very harsh (and not personal!), the last three months a monkey throwing darts would have made 10%. Years will tell if you are better than average. – Aganju Feb 1 '18 at 16:28

Compare your returns to the ones generated by a broad benchmark, such as the S&P 500, the Dow Jones Industrial Average, the value of the Vanguard Total Stock Market Index Fund, or similar.

Then track over time. Beating the market over a month is a nice feeling but ultimately pointless. Beating it over five years is good. Beating it over ten years is great.


There's an old expression, "Don't confuse brains with a bull market."

Paper trading is nothing like the real thing since emotions are not involved with play money. If a position gets hammered, you can rise it out on paper, unlike real money where you feel the pain.

There's nothing wrong with making 15% in 4 months but a track record over 4 months is insufficient time to prove anything. If you had said that you made 15% shorting stocks while the market ran up, I'd be much more impressed.

Only time will tell if this is a successful trading system or whether you were just being carried along with the tide. Until you know which case it is, trade small and trade not to lose because something like 90% of wannabe get rich day traders blow out their account in less than a year. The first goal is to survive and after that, to be reasonably consistently profitable.

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