Can day traders really make a living? This question is asked over and over again by normal, ordinary people. The answer is simple: yes, absolutely possible! And, better yet, you can do it yourself! Sometimes people don’t believe me when I say they can be successful full-time day traders, but it’s true. I’m going to prove it to you now.
Before we start, I need you to ask yourself a very important question: How much life is there? A lot of people want to get rich, but they can’t quantify what getting rich means to them. If you have a million, are you rich?
Start small Set weekly goals for only one contract: When trading futures, options or forex intraday, you can use leverage and trade multiple contracts on a fairly small account. If you’re thinking about trading the futures market, you can easily find a broker that allows you to trade contracts on almost all futures instruments we have, such as e-mini S&P, e-mini Russell, currency futures, $2,000 account rates, commodities etc. interest.
I teach my students to set a goal of $300 per contract per week. So, if you want to make $3,000 a week, then you need to trade ten contracts. Your broker may agree to let you trade 10 contracts at $20,000 in your trading account, but don’t worry if he doesn’t agree or you don’t currently have $20,000 in your account. Just stick with me and I’ll show you how to get there.
How to achieve your weekly goals: The key to successful trading is to have a sound trading strategy, and it must be one that works effectively in a variety of markets. If you are able to trade on multiple markets, you will greatly increase your chances of trading success. Now, please understand that when I say multiple markets, I don’t mean different types of currencies! This is a common misunderstanding. What I’m talking about is true diversification, which means keeping a close eye on two U.S. stock index markets, one or two currency markets, commodities like grains, interest rates, and/or foreign index markets. At Rockwell Trading Company, we teach our students to observe six different markets each day.
Another obvious key factor is profit. To achieve your weekly goals, ideally you have a high average win rate per trade. It goes without saying that your average win should be at least 50% higher than your average loss, preferably twice.
The strategy I use and teach calls for a profit target of $300 per contract and a stop loss of $200 per contract. You will notice that the profit target is larger than the stop loss. That’s the beauty of it: you only need one win to reach your goal of making $300 per contract per week.
FYI, this is why scalping is much harder. Most scalpers try to make $10-20 per trade, so you need to win 15-30 times a week to reach your weekly goal. Which do you think is easier? Make one profitable trade or try 15-30 profitable trades?
Sounds good, but what about losses? Everyone in trading knows that losses are part of the business and you can’t avoid them. If this is something you can’t stand, you’re in the wrong industry. However, there is a huge difference between large losses on a regular basis and small losses in a controlled trading plan. Our trading strategies carry certain losses and we prepare our students accordingly. You already know you should keep your losses small; we’re just teaching you how to make them small so you can win evenly.
Let’s go back to the scenario I mentioned above: you have a trading strategy that generates a profit of $300 every time you win, and it costs you $200 every time you lose. Now, if your weekly target is $300 and you lose $200 on your first trade, you need to make two profitable trades to hit that weekly profit target.
Let me go a step further and actually break it down for you: you lose $200 on one losing trade, then you make $600 on two winning trades ($300 each). Your net profit = $400. Achieve goals. It’s that simple.
Of course, you are not always guaranteed to lose only once a week. Let’s look at a week that started with three losses. After three losses, you are now $600 ($200 per game). So how many wins do you need to win before hitting your $300 weekly profit goal? Three wins. Only three wins will be worth $900 ($300 each). Subtract the $600 you lost on the losing trade from the $900 you won on the winning trade, and your net profit is $300. Achieve goals. Again, it’s that simple.
It gets even better: let’s say you end up with only a 50% true win rate. Now, when you start trading again on Monday morning, what are your chances of success? Since we’ve determined that you earn $300 per winning trade, and since $300 is your weekly profit goal, your odds of hitting it after your first trade on Monday are also up to 50%! You have a 1 in 2 chance of hitting your weekly profit target on one trade!
So if you hit your weekly profit target on your first trade Monday morning, what happens next? Stop trading that week! Just enjoy life! It doesn’t get any better than this! Remember, you need to stick to your trading plan and weekly goals. Once you reach your weekly target, stop trading; you may lose too much on your second trade and you will return your funds and profits to the market. Overtrading and greed are trader failures, so resist them and stick to your strategy.
How to Increase Your Win Percentage: I just showed you that you can achieve your weekly profit goal with just a 50% win percentage. But wouldn’t it be great if you could increase your winrate to 60% or even 65%?
Sure, there will be days now where you only have 1-2 entries in six markets; however, chances are high, especially when you’re looking at uncorrelated markets, where you’ll receive at least two entries per day, or Ten entry signals are received each week.
Pay attention to your entry signals and rely on them. You already know that it only takes one successful trade to reach your weekly goals, so be patient. If there are no good deals on Monday, wait until Tuesday. The same goes for the whole week. Don’t push it! Wait until the market is ready to trade. it will happen.
Waiting for your trade on your terms will increase your odds of winning. By using general entry signals to skip trades and only take the best the market has to offer, you will be on the right path to solid profits and success. Quick recap: The first step to financial success is to define your weekly profit goals. Next, you need to find a reliable, straightforward trading strategy to help you achieve your profit goals. When you make a trade and your trade hits your profit target or stop loss, exit the trade immediately. Stick to your trading plan and strategy until you hit your weekly profit goal, then give yourself a break until next week.
If you don’t already have a trading account to trade the amount of contracts I’m talking about, now is the perfect time to start building it. Remember to be patient with your trades, be smart, slow and steady. Trading success doesn’t happen overnight, but with the right strategy and structure, you can achieve profitable results in less time than you think.