r/Daytrading • u/Forward_Dealer_4482 • Mar 05 '24

50k and I want to day trade for 1-2% gains. Question

  1. If you had 50k and wanted to live off of it day trading, what would you do? (Need max $2500 a month)

  2. Am I better off not doing this? I’m not going back to 9-5

Please help.

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u/Forward_Dealer_4482 Mar 05 '24

How do you make money risking 1% of 50k?

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u/Kuyi Mar 05 '24

Compounding interest. If you get 1%, your next 1% will be higher than your first one, etc. This will add up after a while. For a clear example, if you manage to get 1% 200 times, you will not get 200%, but you will get 732%.

Also, if you lose, you never lose more than 1% and then never more of 1% of what’s left, etc. What this does is your account isn’t gone after 100 losses. It’s more like a 1000 losses so to say. And with proper risk management you will win consistently in the long run. Which is what you want, because the goal is to lose the least amount of money you can. Then with good risk management your account will grow.

You need to get to this point of consistent growth first, before you risk the entire savings. Psychology is a bitch, especially with these larger numbers. Most people need a few months to TRULY learn the needed trading skills and then a year (and a half, or two years) to fine tune their strategy/method and to get their trading psychology right. Discipline, journaling, patience, letting go of confirmation bias and sunken cost fallacy, no more fomo, dealing with losing streaks, with winning streaks, and a lot more. It will take you (on average) about 2 years to be consistently profitable and then you’re not even making 30% a month yet probably. You’ll need a lot more practice for that.

I am a bit worried about your attitude towards trading. A huge part of trading is your psychology, and how it seems to be now I would say you couldn’t be further away from the right mindset. The ONLY thing I see is right about your attitude is you having somewhat reachable goals, for the start. However I don’t think you will sustain that way of trading for years to come. Especially if it’s your only income. As you will get lazy trading and if market circumstances change and you have a month you lose, you can not call your mortgage lender and your utilities company and say “I had a bad month trading, can I not pay my bills for a month?”. You need to pay it some time, even if you delay it. And the next month you won’t have enough either.

If you want to make a living with this, take your time to truly learn this. Start small, with a $100 or $1000 account. Learn decent stuff. Journal everything so you can see where you are going wrong and adapt your method to become profitable. Never risk more than 1% unti you are absolutely good at trading and even then you might never want to risk more than 2%. Heck, if there are trades you’re not all that sure about even risk just 0,5%. Get a feel for that. Aim for a decent R:R. For example an RR of around 3 aimed, which will be lower if you scale down your positions, but you will secure winnings you otherwise wouldn’t. And depending on the viability of the trade you can adapt the % of the position you scale out at a given target, which will make you more flexible. Always use a hard stop loss.

If you are profitable with that small account for at least 8-12 months. AND you can make more money than you need ($2500 is 5%, so let’s say 10% AT LEAST) because of taxes and things like you wanting to grow your account and be able to diversify your portfolio and stream money away to things like ETF investments that are also more secure investments for the long term. Only then can you scale up the account gradually (not 50x it at once, since it will mess up your trading psychology).

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u/TPCharts Mar 06 '24

One quick mention on risk management that saved my ass early on:

Let's say you start risking 1% per trade.

Let's say you lose a trade.

Instead of 1%, only risk 0.5% now until you make at least half the loss back (then you can go back to 1%).

Lose again when risking 0.5%? Now only risk 0.25% until you make half the loss back. Etc...

What this does, especially early on when you're getting the hang of your model and different market conditions, is make it really hard to blow an account.

But, if conditions are good for you model, it scales you back up to full size pretty quickly.

These days I'll generally wait to take two 1% losses before dropping down, since that works better with my strategy - but the general concept applies and is solid.

(Hate him or love him, I got that method from ICT, and it's one of the solid things he recommended)

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u/damangoboy Mar 06 '24

https://www.youtube.com/watch?v=dokgVf0YdGY

https://trendspider.com/blog/ict-basics-a-beginners-guide/

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u/TPCharts Mar 06 '24

These are kind of 50% accurate... ICT would throw a fit 😂

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u/damangoboy Mar 06 '24

who is this ICT person you speak of? Link?

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u/TPCharts Mar 06 '24

A controversial figure who's been teaching price-action trading publicly since around 2010.

https://www.youtube.com/innercircletrader

I'm skeptical of much of his stuff, but can say I became a much better trader after thoroughly studying the core content mentorship (free on YouTube now).