Here's the Math:
An overall 1% gain would mean 100% of
your trade value plus 1% increase which is 101% or 1.01 as a decimal.
There are 52 weeks in a year, so if you earned 1% each week that
would be 1.01 x 1.01 x 1.01 (52 times) or 1.01^52 = 1.678 = 68%
If your account value is $25,000 and
you trade on margin with four times the amount, that would be $100,000. Earning
1% would be $1,000 but it would be 4% of your actual account value of
$25,000. While $1,000 per week times 52 weeks is only $52,000, if you
kept this money in your account and traded with it, then the interest
would be compounded resulting in $100,000 x 1.678 = $167,800 which
would be a gain of $67,800.
Your account balance would be $25,000 +
$67,800 = $92,800.
The following 3 steps are to help you
learn how to day trade:
1. Learn How to Day Trade: Selecting a Broker
In order to day trade, you first need
to select a broker through whom you will actually trade stocks. Well
known brokers include Fidelity, E*Trade, TradeKing, and Robinhood.
While most stock brokers charge $5 to $10 per trade transaction,
there is a stock broker that offers $0 commission trades.
This broker is highly recommended,
especially if new to day trading, so that you can focus on learning to
trade without losing money from trade fees.
2. Learn How to Day Trade: Know the Rules
Anyone who day trades 3 or more times
per week is labeled a pattern day trader and must have a minimum
balance of $25,000 in their margin account. However, you can avoid
this label by trading less than 3 times per week (rolling 5 business
day period). If you day trade less than 3 times per week, then you will be
labeled a non-pattern day trader and must maintain a minimum balance
While these rules apply to all margin
accounts, there are ways to day trade without minimum balances or
restrictions. Learn how to Pattern-Day Trade with Less Than $25,000