I've looked at serveral sources to try to find what a reasonable (achievable) rate of return would be to target and have found a bunch of different answers. Here is some of what I've found:
TopStepTrader combines: this may be targeted toward finding the best of the best, so may not be indicative of a good goal for the 'average' profitable trader, but the lowest rate of return of any of the combines (assuming the target is a monthly target) is 60% annually ($1500/mnth on a $30,000 account (1500/30000)*12 = .6, see for combine data). This seems to be pretty high mark to maintain.
Average hedge fund returns (supplied by Hedge Fund Performance | Top Hedge Funds Database () shows the highest rate of return for a hedge fund is just over 29%. The same link shows highest return for a CTA is in the 45% range. Both of these are lower than TopStepTrader, but may reflect the different trading/investing styles(?) and or the inertia of 'really big money'.
Index as a benchmark. This is the most common measure I've found. If using the S&P 500, the reported return for 2014 appears to be just over 11% (S&P 500 - S&P Dow Jones Indices ()
I'm currently targeting an arbitrary 12% (1% equity growth per month average), which seems to track well if using last years S&P 500 as the measure, but is way below the 60% that TopStepTrader seems to be expecting. I use this target so I can attempt to forcast income and expenses for the year for business planning purposes, and as a benchmark to measure myself against as the year progresses.
What are your opinions on a reasonable target rate of return, and why or is it even worth targeting a specific rate of return?