Day trading may become your primary source of income if certain conditions are met. With patience and effort, it is possible to reap 10% profits monthly.
How to Get a 10 Percent Monthly Return Day Trading
Today, global financial markets are often a click away. Anyone can profit from movements on the exchange. All you need is the right software, good knowledge, and a reputable broker. Many rookies dream of making a living off the marketplace. Indeed, quitting a full-time job is often tempting. Even day traders can manage to do it. Here is how.
Even if you start with the minimum amount, you can manage to make as much as $1,000 monthly. This is a decent income, and it will grow further. Just follow our guidelines to achieve the 10-percent finance goal. Importantly, the blueprint works for any asset traded online. Whether it is Forex trading, stocks, or CFDs, strategies are the same.
Method 1. Start Big
This requires a sizeable initial deposit. Even a modest return percentage translates into a decent sum. The more capital – the less skill needed.
Method 2. Start Small
Here, you start investing with a modest deposit. This falls into the $10,000-30,000 range. To generate enough profit, you should focus on higher returns. As a result, more skill is needed.
How Long will It Take?
Do not expect the results to be instant. On average, the journey to the target income takes 6-12 months of work on online trading platforms. It requires patience, focus, and perseverance. Only some players have the potential to make a living from day trading.
Success relies on four crucial indicators. These must be strictly controlled at all times. Do not let impromptu decision mess up your strategy. Be consistent, and profits will grow. Here is what you should focus on.
1. How Much Risk Is Allowed?
Risk management must be effective. Every trade may not exceed 1 percent of risk at most. This means that for someone with a $10,000 balance, only $100 may be at stake. To ensure the limit is not exceeded, use stop loss.
Based on this value and the entry price, determine the volume. This means the size of your new position. Depending on the market, it is specified as the number of shares, lots or contracts.
The key is to make sure winning positions are the largest. This way, a losing streak will not be detrimental. Once losing trades exceed gains, you are on your way to failure. Generally, aim at a 1.5-3% profit. This way, the same $100 risked brings you $150-300.
2. Are Rewards Higher Than Risks?
This is the proportion between the amount you could gain and the amount you could lose. Given the 1-percent-risk rule, this should be at least 1.5:1. This requires a profit target which is further from the entry point than the stop loss.
Supposing you purchased an asset for $10. Here, your stop loss could be set 5 cents lower, while the profit target would be 8 cents higher. This means that loss would amount to 5 cents per share, and profit would bring 8 cents for each. This results in a reward/risk ratio of 1.6:1.
3. How Often Are You Winning?
This indicator is closely tied to the reward/risk ratio. Basically, the win rate shows how many of your trades are profitable. For instance, if 55 out of 100 trades bring returns, the figure is 55%. You should ensure at least half of your trades are winning. At the same time, remember to stick to at least 1.5:1 of the reward-risk ratio.
Here is a closer look at the numbers. Let’s take the same 100 trades and the same risk-reward ratio. This means 1.5 percent is gained on successes, and 1 percent on failures. Would a 50-percent win rate suffice? The profitable half of trades bring 75% gains. Meanwhile, your losses are 50%. In the end, you reap a 25% profit. This is the lowest you may go.
4. How Many Trades?
How much you trade depends on how long you can maintain the required ratios. This means the following set of criteria:
- profits are at least 1.5%,
- losses are 1% at most,
- at least half of all trades are winning.
You could even make a single trade daily. In this scenario, the overall profits are under 10%. To go higher, execute at least two. This will result in an 11% return monthly. These figures are calculated based on 22 trades for the single-trade scenario and 44 for the double-trade plan.
A Word of Caution
Remember that some days will have unfavorable conditions. Sometimes, you will make no trades at all. Other days, you could make a dozen. Do not risk too much and stick to the optimal reward ratio. With all four indicators under control, day trading is likely to turn into a source of decent and consistent income.