InvestorQ : How should I benchmark my trading with other traders and peers?
Akansha Shivdasani made post

How should I benchmark my trading with other traders and peers?

Niti Shenoi answered.
3 years ago

You are as good as bad as how others in the market doing. In a bad market when most traders have negative returns if you make positive returns, it is good. But, if others earn over 20% and you earn 15% then your returns may be good in isolation but in perspective it means nothing. One of the best methods of putting your trading activity in perspective is to constantly benchmark with peers in the trading business. Have you been consistently underperforming your peers across all kinds of market situations? Obviously, you need to seriously rethink your trading strategy. You are apparently missing out on something. Have your trades given extremely good returns while others are getting market returns.

That may appear to be a good problem to have but you may be missing out on something. You are probably too aggressive on stocks and your returns have come at the cost of a very high level of risk. Alternatively, you have been plain lucky and that is something that may not last for too long. Remember, being a contrarian may help you as in investor. For a trader, a contrarian strategy may not always work. The trick is to be as close to the market momentum as possible. Also benchmark your trading performance (in post tax terms) against the performance of other lower-risk asset classes in the market. The funny thing about stock markets is that each time a person buys another person sells and both of them believe they are astute. Interestingly, that is every person believes and yet you need to be smarter than the flock.