Making $5K with $20K each month
- Thread starter PennyTrader
- Start date
Possible, yes, likely, no. And I would say for a beginner with stocks, it is not doable, unless he is using at least 1:4 margin. But in that case it is really 5%.
With options or futures it is much easier. With a 5K account making 1 ES a day, there you have your 20% monthly profit. But not with stocks without margin....
Yes it is possible but is it probable? That's the question.
Think of the market climate we're in now. Black Swan event is always possible. It could be anything at any time not just a catastrophic occurrence. Fat finger, hardware failure, panic selling, sec halt......
Having said that, if you are very disciplined and adhere to set guidelines it is quite possible.
Don't lose your focus.
Think of the market climate we're in now. Black Swan event is always possible. It could be anything at any time not just a catastrophic occurrence. Fat finger, hardware failure, panic selling, sec halt......
Having said that, if you are very disciplined and adhere to set guidelines it is quite possible.
Don't lose your focus.
With the proper use of leverage it is possible. But if you swing the other way you must adapt very quickly. It's easy to have huge days if you are, well, anyone. I believe the real skill is holding on to most of your gains after you have huge days. To me this is the challenge of trading small amount of capital. It is done and can be done, but oh boy does it take some serious discipline to not knock of huge wins with losses equal in magnitude.
If you have some leverage, and really limit the downside diligently, and consistently, you can do it. The difficulty is that takes a long time (or short time intense effort see Dweck article) to learn how to do this each time.
With a small account and big leverage, the first day you make a mistake by being in too much when it's not right could erase all of your confident gains.
So I am not really sure if the money goal is the best goal. If it works, then fantastic. I think you will become a better trader if you focus on skills goals, the successful effect of learning those skills will probably be the money you seek.
Process goals over performance goals. See the Dweck article cited in here on ET.
If you have some leverage, and really limit the downside diligently, and consistently, you can do it. The difficulty is that takes a long time (or short time intense effort see Dweck article) to learn how to do this each time.
With a small account and big leverage, the first day you make a mistake by being in too much when it's not right could erase all of your confident gains.
So I am not really sure if the money goal is the best goal. If it works, then fantastic. I think you will become a better trader if you focus on skills goals, the successful effect of learning those skills will probably be the money you seek.
Process goals over performance goals. See the Dweck article cited in here on ET.
My solution has been this. Ill just tell it. I worked another job and developed contingency funds amongst a whole host of other savings accounts at my bank.
I scale down my living expenses to 33% of earning from other job. I live in CA so it was possible to trade US stocks and do this timewiese. So other 66% split amongst 6 other accounts.
Over two years of doing this, those accounts grow. Yes I live like a poor man's poor man, no new car, no new house etc.
But I have a clear disticntion between my trading accounts and my living accounts. I didn't like the pressure to make my living all the time from trading, although I did it for a while.
I am just now tapering off my business contracts. So now I have the next 7 months to focus more on trading solely.
My biggest thing I need to learn is not to overtrade. How do I know when I am doing it or not. So anyway, the profits from trading go right into the checking account and then get split up just like money from other things does.
I believe the key is personal money management. That's for me. Some traders need to make 12K per month just to pay expenses...
I am building my net worth and using trading and other vehicles to funnel into that worth. I am more set up now to focus on the skills i need to learn for trading..
This is the type of plan that I can follow, and after April I will be able to trade solely for the rest of the year getting better. To me this represents a significant change in the environment surrounding my trading, and its very cool.
I scale down my living expenses to 33% of earning from other job. I live in CA so it was possible to trade US stocks and do this timewiese. So other 66% split amongst 6 other accounts.
Over two years of doing this, those accounts grow. Yes I live like a poor man's poor man, no new car, no new house etc.
But I have a clear disticntion between my trading accounts and my living accounts. I didn't like the pressure to make my living all the time from trading, although I did it for a while.
I am just now tapering off my business contracts. So now I have the next 7 months to focus more on trading solely.
My biggest thing I need to learn is not to overtrade. How do I know when I am doing it or not. So anyway, the profits from trading go right into the checking account and then get split up just like money from other things does.
I believe the key is personal money management. That's for me. Some traders need to make 12K per month just to pay expenses...
I am building my net worth and using trading and other vehicles to funnel into that worth. I am more set up now to focus on the skills i need to learn for trading..
This is the type of plan that I can follow, and after April I will be able to trade solely for the rest of the year getting better. To me this represents a significant change in the environment surrounding my trading, and its very cool.
Thank you all for the comments. I cerntainly appreciate your inputs - good or bad.
(1) I'm new to ET, but I'm not new to trade stocks or futures. I've been actively trading stocks for about nine years.
(2) Yes, I've paid my tuition in the process. I was doing quite well in trading stocks before 2004, my account grew from four figure to $250K in 2004. In May 2004, I quit my IT job and started to trade stocks full time. In 2005, I switched to trade futures and options to gain maximum profit. This is the biggest mistake I made. Trading futures and trading stocks are totally different for me. I was not very good at managing the 10 x leverage and the votality of ER2. I was doing well with 1-2 contracts, then I became very aggressive, I trade with 10 or 20 ER2 contracts.
Within a few weeks, my revenge trading mentality blew almost $10K per day (please see http://i19.tinypic.com/2gtdzbm.jpg ). I blew the 6 figure account in a few months. With almost nothing left in the account, last year, I came back to trade stocks.
(3) For the past year, I trade more carefully, I trade with very small size, I trade with almost no margin, I minimize my risk exposure, I don't abuse my daytrading buying power. The capital in my account slowly back to over $30K, I also took out $5K each month to pay bills. Last night after I finished my 2006 federal tax return, I found I had to pay extra $5700 Federal taxes and $3200 state tax by Monday :- ((please see http://i19.tinypic.com/44rbj82.jpg ). I've no other income ratehr than daytrading, this unexpected expense will effectively reduced my account below $20K. I really felt bad last night, this is why I started the journal. I've to be very careful in my trading, I am back to step one, I have no room for any errors. I wanted to make a blog to monitor what I am doing and constantly re-examine myself, I found ET and this place is a much better place to monitor what I am doing.
(4) Yes, I am just a regular trader, but I should beat many big boys you mentioned percentage wise. I'm a consistent trader in stocks. I pursue consistent return, small risk, and preserve capital as my main goal in trading stocks these days. Attachements 3-6 were the trades I made each day for the last week. My max loss is $300 on any given stock anyday. I am making an average of $1K per day last week. From these attachements, you can see I trade the same stocks as most of you guys did - DNDN/CNDS/NUVO/IMCL/DYAX/ISON etc.
Day 1
http://i19.tinypic.com/2vkgdgx.jpg
Day2
http://i17.tinypic.com/4cmd2s1.jpg
Day3
http://i16.tinypic.com/4cmyoi8.jpg
Day4
http://i10.tinypic.com/2sadklw.jpg
(5) Yes, I am also trading for two friends, they know me for years in trading stocks, they welcomed me back from trading futures. Why not to allow someone to trade for you if your account can grow over 100% in a few months? This friend's account was at $12000 when I took over in May last year, in a few months after I took over, it went to $20,000, we took out the net gains and split it, then the account went back from $12000 to $20000 by the end of the year 2006. This is my friend's Etrade cash account, since his account is below $25K, I cannot use the money to buy another stock immediately after a stock is sold, I have to wait for three days until the trade settles to use the cash. I'd say Etrade really sucks, I used to have an account with Etrade too. I could do much better for his account if I can trade it often, most time, I cannot sell a stock because I cannot buy back immediately after sold it. We'll keep the money and won't take any $ out this time until it is over $30K.
His account performance after I took over in May 2006:
http://i19.tinypic.com/4hkkrxc.jpg
http://i18.tinypic.com/4gg6lqo.jpg
Again, I appreciate everyone's inputs, thank you!
(1) I'm new to ET, but I'm not new to trade stocks or futures. I've been actively trading stocks for about nine years.
(2) Yes, I've paid my tuition in the process. I was doing quite well in trading stocks before 2004, my account grew from four figure to $250K in 2004. In May 2004, I quit my IT job and started to trade stocks full time. In 2005, I switched to trade futures and options to gain maximum profit. This is the biggest mistake I made. Trading futures and trading stocks are totally different for me. I was not very good at managing the 10 x leverage and the votality of ER2. I was doing well with 1-2 contracts, then I became very aggressive, I trade with 10 or 20 ER2 contracts.
Within a few weeks, my revenge trading mentality blew almost $10K per day (please see http://i19.tinypic.com/2gtdzbm.jpg ). I blew the 6 figure account in a few months. With almost nothing left in the account, last year, I came back to trade stocks.
(3) For the past year, I trade more carefully, I trade with very small size, I trade with almost no margin, I minimize my risk exposure, I don't abuse my daytrading buying power. The capital in my account slowly back to over $30K, I also took out $5K each month to pay bills. Last night after I finished my 2006 federal tax return, I found I had to pay extra $5700 Federal taxes and $3200 state tax by Monday :- ((please see http://i19.tinypic.com/44rbj82.jpg ). I've no other income ratehr than daytrading, this unexpected expense will effectively reduced my account below $20K. I really felt bad last night, this is why I started the journal. I've to be very careful in my trading, I am back to step one, I have no room for any errors. I wanted to make a blog to monitor what I am doing and constantly re-examine myself, I found ET and this place is a much better place to monitor what I am doing.
(4) Yes, I am just a regular trader, but I should beat many big boys you mentioned percentage wise. I'm a consistent trader in stocks. I pursue consistent return, small risk, and preserve capital as my main goal in trading stocks these days. Attachements 3-6 were the trades I made each day for the last week. My max loss is $300 on any given stock anyday. I am making an average of $1K per day last week. From these attachements, you can see I trade the same stocks as most of you guys did - DNDN/CNDS/NUVO/IMCL/DYAX/ISON etc.
Day 1
http://i19.tinypic.com/2vkgdgx.jpg
Day2
http://i17.tinypic.com/4cmd2s1.jpg
Day3
http://i16.tinypic.com/4cmyoi8.jpg
Day4
http://i10.tinypic.com/2sadklw.jpg
(5) Yes, I am also trading for two friends, they know me for years in trading stocks, they welcomed me back from trading futures. Why not to allow someone to trade for you if your account can grow over 100% in a few months? This friend's account was at $12000 when I took over in May last year, in a few months after I took over, it went to $20,000, we took out the net gains and split it, then the account went back from $12000 to $20000 by the end of the year 2006. This is my friend's Etrade cash account, since his account is below $25K, I cannot use the money to buy another stock immediately after a stock is sold, I have to wait for three days until the trade settles to use the cash. I'd say Etrade really sucks, I used to have an account with Etrade too. I could do much better for his account if I can trade it often, most time, I cannot sell a stock because I cannot buy back immediately after sold it. We'll keep the money and won't take any $ out this time until it is over $30K.
His account performance after I took over in May 2006:
http://i19.tinypic.com/4hkkrxc.jpg
http://i18.tinypic.com/4gg6lqo.jpg
Again, I appreciate everyone's inputs, thank you!