Is it possible to make 10000 $ per month by trading? – Life Hack for Traders
Is it possible to make 1000 $ or rupees per month by trading?
It is very much possible to make 10000 $ or more per month trading stocks..
Can you do it on a consistent basis?
MAY BE …
Depending on your capital !
Let me explain….
When people first start trading, they always want to know how much money they can make.
Are day traders profitable?
How much you can earn trading?
How much can you earn from crypto trading/ forex / stocks / derivatives like futures and options etc?
How much can I earn in intraday trading?
How can I earn 1000 a day in intraday trading?
Can you earn a living day trading ?
Can you earn a living trading stocks?…..
Does any of this sound familiar?
When we first considered starting to trade, we may have considered any of these questions.
However, there is no one-size-fits-all answer to these questions.
Because it is influenced by a variety of factors such as capital, strategy, psychology, and so on.
Assume you have a $1,000 trading capital.
1) And you successfully identified a profitable strategy, such as an EMA crossover strategy in forex.
Risk-reward ratio being 1:2, meaning that if 10$ is your stop loss and 20$ is your target. Win rate being 60%, which means if you take 100 trades, 60 trades will be profitable.
Your strategy on 100 trades will give you..
60 wins * 20$ ( Reward ) – 40 losses * 10$ ( Risk )
= 1200$ – 400$
So, on 100 trades you can earn 800$ on a 1000$ trading account.
Which equals 80% returns on your capital.
So, under the same conditions, this strategy will give you 80% returns on any capital used.
100$ capital = 80$ profit.
10000$ capital = 8000$ profit etc.
But can you do it on a regular basis?
Being consistently profitable is possible, but no one can expect the same percentage returns every month for the rest of their lives.
This is because of the factors involved which are as follows…
1. The market is not always consistent because market participants are just human as we are and are not always 100% consistent. So no strategy can give you 80% returns with 100% accuracy. As a result, money management becomes an essential.
2. We are also not 100% consistent with our trades and that’s why managing our emotions and understanding ourselves is important in being consistently profitable. This can be done by using a trading journal to track all your trades, mistakes etc.
3. That’s not all. There is also something called a drawdown. This just means that you should have sufficient capital to cover the consecutive losses made in any strategy. So, the best option is to have your total capital to be trading capital * 2.
4. Check your yearly returns if you are tracking monthly profits. Because all your trades will not be profitable. So backtest your strategy 100 times to find out the win rate and track monthly P/L for yearly returns.
And so on…
So, in this example, in order to make 10000$ per month,
Your capital should be 10000 (goal) * 100/80 (% returns ) * 2
= 25K $ should be your total capital for trading to make 10000$ profits every month.
Do not expect all your trades to be consistent as your yearly might not be 10000 *12 = 120000
Instead it might look like this…
+9000, -1000, +6000, -2000, +7500, +7800, -2000, -3000, -1000, +10100
= 40400 – 9000
= 31400 $ in 12 months.
So, 31.4K is your profit in 12 months instead of 120K in 12 months.
These are the basic factors involved to make 10000$ per month by trading. So consider all the factors and every little detail in your control to be consistently profitable.