How Much Do Day Traders Make?
Day Trading +$94,119.54 in 3 Months
The summer of 2016 will go down in the history of my trading career as a summer to remember! I had some truly fantastic trades and, with $50k, was able to lock up just under $100k. I finished the summer with $94,119.54 in profits, returning a nearly 200% gain by trading just 2 hours a day. My 3 months of trading was highlighted in this Huffington Post interview. I focus on trading a simple momentum day trading strategy that is based on trading stocks that have the potential to squeeze 20-30% intraday. As a beginner trader, I realized that if I could find one of those stocks, invest 1/5 of my portfolio into the position, and generate 20%, I would be able to grow my account 4% in that day. Just think: if I could do that twice a year, I would outperform most mutual funds. I instead try to do this several times a week.
I started June with a simple goal to not to trade anything other than A-quality setups, and to take 2X the average size on those setups. That meant increasing my average position size from 2500 shares to 5k shares. As a result, I traded less overall, taking only 88 total trades. But because I was only taking the best quality setups, my accuracy surged to 69% with my average winners being over $800/trade. I finished the month with just under $35k in profits, making it my best month of the year to that point. Based on the success of June, I decided to continue this strategy through July (+$30k) and August (+$29k). During these months, I was also trading in real-time in our day trading chat room so our students were able to watch over my shoulder as I tripled my account size in 12 weeks. Many traders say that I’m making this look easy, but for me it was like the process of learning to ride a bike–I got banged up learning, but since I figured it out, it’s been smooth sailing. The hardest part about trading is that most beginner traders don’t learn the rules of the game. Until you learn the rules, you can never achieve consistent success.
Step 1. Managing Risk
The first concept every trader must master in order to achieve success is risk management. Every single trade carries risk. Traders have to make quick decisions every day about whether an opportunity is worth jumping at or if it’s something we should pass on. This requires a quick risk assessment. The first question to ask is, “How much am I risking by taking this trade?” The second question is, “How much do I stand to make?” The rule of thumb is that if you can’t double your risk in profit, the trade isn’t worth taking. That means you should risk $100 at most to make $200, or $500 to make $1000. Unfortunately, many beginner traders find themselves in the pattern of taking trades where they risk $100 to make only $50. When you have a poor profit-loss ratio, it becomes almost impossible to make a living as a trader.
Step 2. How Do I Choose Stocks To Trade?
Out of the thousands of stocks you could trade on any given day, what is the best strategy for finding stocks with home run potential? Finding the stock with the potential to move 20-30% intraday can be like trying to find a needle in a haystack. What’s the fastest way to find the needle? Either burn the haystack or use a magnet. As traders, our magnets are the stock scanners we use each day to search the market for the stocks that have home run potential. One of the biggest discoveries I made as a beginner trader was the fact that almost every single day there are stocks that make big moves, and they all have several common denominators: a Float of under 100mil shares, a Breaking News Catalyst, and High Relative Volume. The good news is that I can use my Trade Ideas stock scanners to find stocks that meet these criteria. The only thing I need to manually check is the breaking news catalyst. I usually go on Benzinga, Market Watch, or ask traders in our Day Trading Chat Room.
Step 3. Trading the Best Chart Patterns
The third concept every trader needs to master is the ability to find entries in real-time. I find stocks by using my High of Day, Gappers, and Momentum Scanners in Trade Ideas. Once I find a stock that fits into my criteria as having home run potential, I look for my entry. I prefer to buy bull flag breakouts, flat top breakouts, and moving average pullbacks. The requirements of these trades is typically that the price is close to the 9ema on the 5min chart. I don’t like to buy stocks that are extremely extended because that’s when I can find myself risking $100 to make $50. In the context of a bull flag or a flat top breakout, I buy the first candle to make a new high with my stop at the low of the previous 5min candle. This strategy is what I used to make a living as a day trader. It’s simple–you just need to learn to follow the rules.
Verified Broker Statements
Unlike many traders out there who make outlandish promises or astronomical claims, when I say I made $94,119.54 in 3 months, I back it up with my broker statements. I do this for two reasons. The first reason is because I believe in transparency. I have winners and losers, and you get to see them all. The second reason is to show skeptics that the strategies are real, the trades are real, and the gains are real. This is the same strategy that I’ve been trading for several years and teaching to our students in the Day Trading Courses. I also want you to understand that I don’t talk about the amount of money I make to brag. At the end of the day, the amount of money I make is meaningless if I can’t teach you how to profitably trade the markets! That’s why in the spring of 2016, we conducted a survey of 100 recent trading course students. In that survey we found that over 80% are now profitably trading the markets since graduating from our classes. These students have learned my strategies and are trading side-by-side with me in our day trading chat room.