4 Simple Steps to Turn $10,000 into $133,033 in 5 Years Day Trading

Money Stacks $100 Bills Success 4 Simple Steps to Turn $10,000 into $133,033 in 5 Years Day Trading

By following these 4 easy steps, you can realistically turn $10,000 into $133,033 in only 5 years by day trading. After year 5, by following these steps you could make $90,000 per year from your $133,033 account balance. Meaning, after 5 years of part-time day trading, you could quit your job and earn $90,000 per year day trading.

1. Trade All Your Money Twice per Week

In a margin account, you are able to day trade up to 3 times per week (rolling 5 business day period) without being labeled a pattern day trader. Pattern day traders are required to have a minimum account balance of $25,000. However, non-pattern day traders are only required to have a minimum account balance of $2,000, so be careful to never trade more than 3 times in a rolling 5 business day period unless you have $25,000 in your account.

Trading on margin allow you to day trade with up to four times your account value, so by trading your account balance twice per week you are using only half your potential buying power (double your money).

For the purpose of this article, we will assume you are using half your buying power in order to show the feasibility of successful day trading.

By trading all your money twice per week, with only a 50% success rate at a 1% profit, the effects of compounding cause you to increase your money by 68% per year. Most investors hope to gain 10% per year by investing in stocks, but day trading allows you to gain much more. Here's how you can turn $10,000 into $133,033 in 5 years:

  • Year 0: $10,000 ($10,000 x 1.678 = $16,780)
  • Year 1: $16,780 ($16,780 x 1.678 = $28,157)
  • Year 2: $28,157
  • Year 3: $47,247
  • Year 4: $79,281
  • Year 5: $133,033

Here's the math for 68%:

There are 52 weeks in a year. By trading twice per week, you are trading your money 52 x 2 = 104 times. However, assuming a 75% success rate would mean that 50% of the trades were profitable resulting in 52 profitable successes. At a 1% profit, that's 1.01 x 1.01 x 1.01 (52 times) which is 1.01^52 = 1.678 or 68% gain.

These number assume that you are skilled day trader and effectively know how to use trailing stop-losses.

Related: Stocks vs Forex: Why Trade Forex?

2. Aim for 1% Profit per Trade

Most long-term professional day traders only aim for a 1% gain on their money. Even traders who claim to make $1,000 in one day are trading thousands of shares worth roughly $100,000 in order to make that $1,000.

Aiming for a 1% profit on a volatile stock that moves an average 5% in a day will significantly increases your success rate as long as you have learned when to enter the trade. This strategy is simple and reliable: enter the trade when it is going up, get your 1%, get out of the trade. Or short sell when it is going down, get your 1%, get out of the trade.

Don't wait for a higher percentage, because you may decide to sell at 1.5% only to have it rise to 1.4% and fall back down to your purchase price. The stock may actually go up 5%, but by selling at a 1% profit you are avoiding losing thousands on all the times you would have lost on the trade while waiting for that 5%.

A lot of day trading websites prevent others from truly learning to day trade by teaching them to wait for the breakouts and unique trades.

However, this 1% method of trading is all about reducing risk as much as possible and increasing the success rate. We cannot predict the future, so rather than waiting for those breakouts and other unique trades, we want to trade within the realm of high probability in order to maximize our success ratio.

3. Follow Your Stop-Losses

If you follow your stop-losses there should be no reason why you "lose it all." Many like to joke about day traders making $200,000 and then losing it in a single day. This should not be possible if they had followed their stop-loss. The very basics of day trading strategy are to have an EPS: Entry Point, Profit Goal, and Stop-Loss. If you reach the profit goal, sell the stock. If you reach the stop-loss, sell the stock.

If you buy the stock and within a minute the price drops to your stop-loss, sell the stock. If the price is already dropping to the stop-loss, then you may have been wrong about the reversal signal and the stock may continue going against you.

If liquidity is the reason they "lost everything," then that was their mistake in trading a stock with low monthly volume. Every stock you trade should have a minimum volume of 2 million, with a volume of 4 million being ideal.

4. Don't Be Greedy

Greed and emotion will destroy you. Greed is what makes day trading equivalent to gambling. Do you want to win or do you want to gamble? If you are day trading to win, then don't be greedy. Get your 1% profit and be satisfied with it. Don't feel bad about missing out on a potential 5% gain.

You are saving yourself a lot of time, money, and headache from all the times you would have lost chasing that 5% gain.

$130,000 Account Value can Easily Generate $90,000 per Year

These steps are intended to grow your account value until you can actually start living from the money generated by day trading. While the $120,000 gain over the course of 5 years averages to only $24,000 per year, if you do not spend that money and grow your account to the $130,000 then you can easily generate $90,000 per year day trading.

This means that if you day trade part-time, by following these steps for 5 years you could potentially quit your day job and make $90,000 per year day trading.

What About Commission and Fees?

While most brokers charge anywhere between $5 and $10 per trade, these calculations assume zero commission because there is a broker that offers $0 Commission trades.

Stocks vs Forex: Why Trade Forex?

Want to easily calculate your stop-loss and profit goals?

Download this easy-to-use Stock Profit Calculator. Just type in the stock price and it will automatically fill with stop-losses and profit goals. You can also change the percentages to match your personal needs, as well as enter in your margin use in order to keep your stop-loss at -1% of your account value.

The cost is only $1, which is just to help cover the costs of the automated system to send you the Calculator.

Stock Profit Calculator for Daytrading/Day traders - InvestGrowRepeat.com

Get the Stock Profit Calculator now.

Day Trading Myths

How to Day Trade with Daily Volatility (Stock Selection)

Day Trading Strategy Basics

How it Actually Feels to Day Trade

Day Trade Articles

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