Reddit Trading Discussion: Relative Metrics vs Absolute PnL & Account Size Impact

A Reddit post (timestamp: 2025-11-22 UTC) discusses core trading principles for retail traders, emphasizing:

• Prioritizing relative metrics (percent gains, risk ratios) over absolute profit/loss (PnL) for risk management and position sizing.
• Choosing small, predictable daily gains (0.5% or under) over unrealistic targets like 1%/day to leverage compounding growth.
• Account size as a critical factor in trading ease and success (e.g., $5k cash accounts are mentally grueling vs. $30k margin accounts).
• Validity of 20% profit targets (context unspecified).

a.

: Percent gains and risk ratios (e.g., Sortino ratio) aid position sizing and downside protection (User’s post; [1]).
b. : 0.5% daily gains are more feasible than 1%/day, with compounding leading to long-term growth (User’s post; [2], [3]).
c. : $25k+ margin accounts (Pattern Day Trader-eligible) reduce restrictions and stress, while small accounts (<$5k) struggle with profitability (User’s post; [0], [4], [5]).
d. : Cited as valid by the user, though context (per trade/timeframe) is missing (User’s post).

Relative metrics (e.g., percent gains, Sortino ratio) account for account size, unlike absolute PnL. For example:

• A $100 gain = 2% for a $5k account vs. 0.33% for a $30k account ([1]).
  This aligns with the user’s point that relative metrics help with position sizing and risk calculation.

The user’s recommendation of 0.5% daily gains contrasts with unrealistic claims of 1%/day ([3]). Compounding 0.5% daily over 20 trading days yields ~10.46% monthly ([2]), demonstrating how small gains accumulate to significant long-term growth.

FINRA’s Pattern Day Trader (PDT) rule requires $25k minimum equity for margin accounts to avoid restrictions on day trades ([0]). The user’s experience of switching from $5k (cash) to $30k (margin) aligns with this: PDT eligibility removes limits on daily trades, reducing mental stress. Additionally, data shows small accounts (<$5k) have lower success rates, while top traders often use larger accounts ([4], [5]).

The user’s 20% target lacks context (per trade/month/year). If applied per trade, it may be aggressive (higher returns imply higher volatility [1]). If applied monthly (~1.5% daily), it is more reasonable—though sustainability depends on strict risk management.

• Risk Management
  : Adopting relative metrics reduces overexposure and improves loss mitigation, increasing the likelihood of sustained profitability ([1]).
• Long-term Growth
  : Small consistent gains lead to exponential compounding ([2]), which is critical for growing trading accounts over time.
• Accessibility
  : PDT rules create a barrier for small traders, limiting their ability to day trade freely ([0]).
• Mental Health
  : Larger accounts reduce stress from restrictions, improving decision-making (User’s post; [4]).

• PDT Rule
  : FINRA requires $25k minimum equity for margin accounts to day trade without restrictions ([0]).
• Compounding
  : 0.5% daily gains → ~10.46% monthly → ~280% annually (compounded) ([2]).
• Success Rates
  : Only ~1% of day traders succeed long-term; larger accounts correlate with higher success ([4]).

a.

: No data on the sustainability of 20% profit targets (per trade/timeframe) for retail traders.
b. : No studies linking account size directly to trading-related mental stress (user’s experience is anecdotal).
c. : No data on how many traders use relative metrics vs. absolute PnL.
d. : No long-term data on retail traders maintaining 0.5% daily gains consistently.

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[0] FINRA Day Trading Rules: https://www.finra.org/investors/investing/investment-products/stocks/day-trading
[1] Quantinsti Blog on Risk Metrics: https://blog.quantinsti.com/performance-metrics-risk-metrics-optimization/
[2] TradingwithRayner Compounding Guide: https://www.tradingwithrayner.com/compound-your-trading-returns/
[3] A1 Trading Article on 1% Daily Gains: https://www.a1trading.com/is-it-realistic-to-make-1-per-day-as-a-trader/
[4] Quantified Strategies Day Trading Stats: https://www.quantifiedstrategies.com/day-trading-statistics/
[5] Investing.com Article on Top 1% Traders: https://www.investing.com/analysis/how-the-top-1-of-traders-think-databacked-lessons-from-25k-accounts-200670119
[6] Reddit Post: Stop thinking in cents… (2025-11-22 UTC)

: This analysis is for informational purposes only and does not constitute investment advice. Always consult a licensed financial advisor before making trading decisions.
: 2025-11-23 UTC
: Reddit post + Web Search outputs (1-4)
: General Information Analyst
: 1.0