I rarely commit more than 20% of my "trading" funds to day trading, in the last few years, I am often well over 60% in cash. Only when I see periods of low risks (such as late May and late December 2000, early April and late September 2001, and few times last year). I also diversify with the day trading itself so that the complete failure of one position does not "kill me". And such failures are going to come your way (one went to essentially nil in the last 18 months or so, AREM, but only 2% of the trading funds were at risk, so I easily "survived" that catastrophe.). In the first six month of serious trading, you may actually lose a good 10% to 30% of your capital as emotions take the better part of you, then you slowly improve if you learn from your mistakes (and I still break the rules from time to times due to "lack of control on the emotions" and the tendency to rationalize a mistake as a temporary setback). Once you have paid your due, you probably can expect something like 30% to 50% per year. That includes going for longer stints during real up move of the market, namely committing 100% if you caught a bottom, my experience has been that I am between 1 to three weeks premature at entering such major bottoms, but within a month to six weeks, such lucky entries can yield overall gains of 30%. From the beginning of December last year, I actually had a sub par "performance" if it was not for the fortunate entry in the Bu$$ and subsequent lucky trades in it, I would be under 5% for the whole folio for that three months period, the bu$$ more than tripled that. The problem is that you cannot count on a bu$$ coming to the rescue every quarter.
Of course, I trade only the long side, others here are comfortable playing both sides and to the extent that they are right on both sides, they could, in principle, make twice as much. I think that playing both sides put you at risk of being wrong twice and whipsaws is one of the most difficult lessons in humility to take, it really destabilizes your "rational deliberations".
Good luck.
Zeev
