How to Make $50,000 per Year Day Trading

Money Stacks How to Make $50,000 per Year Day Trading

In order to make $50,000 per year day trading, you would need to have a minimum of $21,000 in your margin account if you use only half your buying power (double your money) when day trading. This assumes that you are aiming for a 1% profit per week. However, if you use your full buying power (four times account value), then you would only need to have a minimum of $9,000.

Notice that using your full buying power requires only $9,000 to make $50,000, whereas using half that buying power requires $21,000 to begin. This is the power of leveraging, and it is the same principle used in the forex market when trading currencies.

Related: Stocks vs Forex: Why Trade Forex?

The Power of Leveraging and Compounding

Leveraging and compounding are the two primary principles behind day trader success. A 1% profit per week translates into a 68% gain per year, which is well above the 10% desired by investors. However, a 1.5% profit per week translates into 117% gain per year. This is the power of compounding. That half percentage increase translates into a much higher yearly gain.

Here's the Math:

As a decimal, a 1% profit would be represented as 1.01 because it is 100% of your account value plus the 1% = 101% or 1.01. While there are 52 weeks in a year, imagine multiplying your money by 1.01 each week 1.01 x 1.01 x 1.01 (52 times). This is 1.01 to the 52 power: 1.01^52 = 1.678 or 68%

Likewise, a 1.5% increase would be represented as 1.015, which is earned 52 times: 1.015^52 = 2.17 or 217% of your account value which is an increase of 117%. That half percentage increase massively affects the end result, because of the power of compounding.

With leveraging, by using your four times buying power you are actually trading with $36,000 instead of $9,000, which means that your 1% increase is actually a 4% increase of your account value. This is the power of leveraging.

Turn $2,000 into $55,857 in 3 Years Day Trading

Don't have $21,000 to day trade with? Let's look at how you can turn $2,000 into over $21,000 in only 3 years. We will assume a 1% profit gain per week, and we will assume that you are using only 3/4 your buying power (which is triple your money).

  • Year 0: $2,000 (Trade triple with margin = $6,000 x 1.678 = $10,068) While we are trading with $6,000 we didn't earn a full $10,000. We earned $10,068 - $6,000 = $4,068. Our new account balance is $2,000 + $4,068 = $6,068.
  • Year 1: $6,068 (Trade triple = $18,204 x 1.678 = $30,546; then $30,546 - $18,204 = $12,342 increase; so our account balance is $6,068 + $12,342 = $18,410)
  • Year 2: $18,410
  • Year 3: $55,857

After 2 years, you have gone from $2,000 to $18,410 by gaining only 1% per week. By year 3, if you continue to use 3/4 your buying power, with a 1% profit per week, you can start making well over $50,000 per year from your $55,857 account value.

If you are thinking about quitting your day job, you will likely want to wait until your account balance is at least $25,000 because if you day trade more than 3 times in a week you will be required to have a minimum balance of $25,000. The above calculations are based on day trading only 1 to 2 times per week.

What About Commission and Fees?

While most brokers charge between $5 and $10 per trade, these calculations ignore fees because there is a broker that offers $0 commission.

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.

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

How to Day Trade with Daily Volatility (Stock Selection)

Day Trading Strategy Basics

How it Actually Feels to Day Trade

Day Trade Articles

Enjoy this page? Share it!

Get more great stuff like this delivered to your inbox

YOU MAY ALSO LIKE

  1. How to Survive Your First Year in Business [Infographic]

    How to Survive Your First Year in Business [Infographic] Here's the first thing you should know about your first year as an entrepreneur - it's tough. There will be financial and psychological...

    Read More

  2. 52+ Common Interview Questions and Answers

    Most job interviews consist of only 5 to 20 questions, almost all of which are variations of these 52 common interview questions and answers. The following guide provides suggestions on how best...

    Read More

  3. The Millennial Job Dilemma: Why Does Everyone Want Experience?

    Many job-seeking Millennials find themselves asking the same set of questions: Why Does Everyone Want Experience? How am I supposed to get experience if no one gives me a chance? Often Millennials...

    Read More

  4. 5 Expensive Common Mistakes Made by Millennial Entrepreneurs

    As a millennial entrepreneur, handling the funds of your business can be quite tricky. Our friends over at FindMyWorkspace.com discuss the expensive common mistakes made by millennial entrepreneurs...

    Read More

  5. Link Exchange and Backlinks for Business Websites: Link Exchange Directory

    Want to exchange links for your business-related website? The following is a list of ways to get backlinks, as well as a list of websites willing to participate in link exchanges. Submitting your...

    Read More

  6. Forex: How Much Money Do You Need to Trade the Daily Timeframe

    The answer might surprise you how much money you need to trade the daily timeframe in forex. If your forex broker uses standard lots, then in order to trade one micro-lot of 1,000 you only need...

    Read More

  7. How to Trade Forex with $100: Turn $100 to $1 Million in 3 Years Realistically

    Not only am I going to show you how to trade forex with $100, but I am also going to show you how to turn $100 to $1 Million in 3 years realistically in forex. Sound impossible? Let me prove it...

    Read More

  8. Forex Trend Trading is How to Win in Forex

    I’m going to prove to you that forex trend trading is how to win in forex. There are some who claim that it is foolish to buy something that is rising in value, but I think they are foolish for...

    Read More

  9. Advanced Forex Education

    Want my advanced forex knowledge? Learn how I ensure I win with advanced risk-reducing techniques and leverage management. Normally available for $50, you can have access for only...

    Read More

  10. Trading Forex: $1000 to $1 Million in 2 Years Realistically

    Is it possible to turn $1000 into $1 Million in 2 years? Yes, it is possible to turn $1000 into $1 Million in 2 years and it is even realistic with this consistently profitable strategy...

    Read More