The difficulty in trading for yourself, for a living, is the regular withdraws from the account. It makes it much harder to grow the account and let gains compound. Despite a bad month or two, or three, or a blown account; the rent/mortgage is still due. That stress can mess with your game unless you’re experienced and ability to keep your cool… most people are not despite their untested belief in themselves.
Making 1% a month to cover bills is a lot easier to do versus 10%, 25%…etc. Don’t forget taxes either. In the US the rates are higher on income earned from trading depending on your personal tax bracket.
$100k account would need to make 1.2% gain a month just to stay at $100k while you take out $1000 each month.
i agree with you, it’s much easy to make 1% a month then 10%. When I see people talking about doing only 1% from a 100k account it discorage me from trading.
Thinking i have to accumulate 100k and still have to trade in order to make 1000$ is a bit sad.
However, taking 50k as an average anual salary of americans, I’d need 150k minimum. So I still have to Learn and save a lot to do that.
Tks for the reply.
If I have a great month I dont spend the money , I have a trading bank account that is my reserve and start each month with the same capital at the broker to cover my max positions, if I draw down I use the bank account to pay myself instead of the broker account as the capital in the broker is just a tool rather than wage money
You cannot expect any return unless you trade and you should not trade until you have a strategy which you have tested in a demo account and which works.
The strategy will tell you how much return to expect, not the other way round. If you want more then, you will need to use a different strategy.
If you want to avoid trading to make the money, there’s the job option. Or building passive income through a multitude of routes.
Last would be a dividend portfolio, but starting one today would require a few hundred thousand to make the $1000/month return. Not to mention they are mostly going out of favor since the cost per stock and the average yield vs 20-30 years ago, it’s almost not worth it.
Don’t worry about questions , thats what we are all here for. In response I do grow my account each year but because trading is my job I look at it as a job that pays me a salary so the math works like this for me.
Say you want a salary of 20k per year as example
£20,000 per year = £1666 per month or £385 per week
To achieve this at 3% growth per month I need an account worth £55,000 this is the tool in need.
I loosely aim for 5% per month so if I hit a bad spell and I do, the extra 2% or so builds up to put back into the broker or pay me when the trades have not worked in the month.
End of each month I either withdrawn profits to pay my salary & save the balance after a little bonus or top up from my trading bank account that is growing and look at the broker account simply as a tool.
I am paid a salary that I want and also a nest egg building up for flat times and the future ,best of both worlds as the money in the broker is just a tool for me to do my job and not real till withdrawn. Hope that kind of makes sense
Sure, demo accounts are only a simulation, they cannot exactly replicate the real experience. If you can afford to test using real money that is definitely better.
I have to agree however demos do serve a purpose for testing a new way to trade prior to going live. When new a demo is best way to get a feel for the platform and the market you trade. After that the demo is a great test area, if I am testing I open a trade in my live and also check it in a demo with same size and risk, to see if it would work better with the new plan. I am then compare
No just a retail spreadbet account , I have done this for a long time and have a good size trading pot. ie to fund a £30 a pip size on my broker you only need £12,900 to open the position.
To understand how much you’d need me to do this. First I’d estimate my statistics for the last six months. I’d choose the lowest rate, like 10%. So in order to make a thousand dollars you need 10 thousand dollars in your account, etc. It’s hard to call it a well-thought-out format or a golden approach, but it seems to me quite acceptable.
For ordinary traders – who are not superstar traders – that number is way too low, in my opinion.
Realistic numbers
For each $1,000 of required monthly income (before taxes),
you will need somewhere between $25,000 and $150,000 in trading capital,
depending on the consistent, long-term-average return on investment (ROI) that you are able to achieve and maintain in your trading.
HERE you can read how these numbers were derived, and how they might apply to a trader with a typical, monthly budget requirement of $4,000.
Then, you can figure out how they might apply to you.