On Chasing Weekly Returns in the Stock Market: A Realistic Investment Approach

Introduction: Aiming for a 5% return on a weekly basis in the stock market seems overly optimistic, especially over a longer time horizon. However, consistently achieving a 1% return on capital allocated each week is certainly within reach with the right skills, strategies, and risk management in place.

Understanding the Feasibility of Weekly Returns

Consistently earning 1% of your invested capital each week would translate to a significant 60% annual return. While this is an excellent return in comparison to most conventional investment vehicles, achieving such consistent weekly gains is a substantial challenge. According to my research, no matter the stock exchange, the average annual return is significantly lower, around 2% even, as shown in my previous article, “ Baby steps into the investment universe Part 1”.

The Path to Weekly Returns

For most retail investors, aspiring to achieve a 5% return weekly is unrealistic. However, focusing on achieving a 1% weekly return is a more attainable goal. Here’s how one can pursue this more feasible strategy:

Education and Skill Development

The journey of learning how to trade stocks effectively, along with managing risk, setting appropriate reward-to-risk ratios, and selecting the right strategies at the right times, is critical. Investing in education and practical experience is key to reaching this goal.

Risk Management

Effective risk management is crucial. It involves diversifying your investments, setting stop-losses, and maintaining a sound risk management strategy. Consistently evaluating assets and making strategic adjustments can help mitigate risk and enhance potential returns.

Choosing the Right Strategies

Adapting your strategy to different market conditions is also important. For instance, value investing, technical analysis, and trend following can be effective. Each strategy has its merits and drawbacks, so it’s essential to find a balance that fits your investing goals and risk tolerance.

Case Studies and Real-Life Examples

Real-life examples and case studies from successful traders can provide valuable insights. By studying their approaches, one can gain practical knowledge and apply it to their own trading or investment strategies.

Conclusion

While aiming for a 5% weekly return is highly optimistic, consistently achieving a 1% return on a weekly basis is a realistic goal. This translates to an annual return of 60%, which is quite impressive by most standards. Achieving such consistent returns requires a combination of skills, practical knowledge, and a well-thought-out investment strategy.

As a retail investor, it's important to set achievable goals and understand that building a career in stock trading is a challenging but rewarding endeavor. Instead of chasing unrealistic weekly returns, focus on building a sustainable and profitable investment strategy.