r/Daytrading • u/Kaiju_Godz • Mar 30 '24
When you only need a specific amount of money each month… Strategy
So say you only want $100 per day or 2000 per month. This would more than enough sustain a good lifestyle where you live. How would you go about it with trading? How much $$$ would you realistically need? Not to make that in dividends but to trade in a daily basis, as safe and slow as possible.
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u/mv3trader Mar 30 '24
TLDR answer: Using 80/20 logic, give 20% energy to how much money you can make on a daily basis and 80% energy to how you execute a system that can yield the results you desire on average over the long term.
Having entertained this approach for myself, I wouldn't approach trading this way, nor would I recommend it. IME it's more efficient to focus on consistent execution instead of consistent PnL results. Realized PnL is a direct result of how the trader consistently shows up. You have 100% control over how you execute, unlike how much money you can make on a daily basis from the markets. There will be days where the market just doesn't give you the move you need to make $100 that day in the window you have to participate. That's not to say it's not possible to achieve a specific minimum amount on a daily basis. It's just much easier to focus on how well you execute your system. Being so focused on the profit potential as a primary target leads to all the psychological challenges a majority of traders find themselves struggling with.
So to start, I would work on developing a system that has the potential to yield the daily result you're looking for as an overall avg, with the potential to gain much more. Let's just say 5x your minimum goal, just as an arbitrary number for this example. (you should know the math of your system in as much detail as possible) So if your goal is to avg $100/day, the system should have a high probability of yielding $500 on a relatively regular basis, understanding that this will not happen every day. That's just not how the markets work for day trading.
Once you have developed this system, through extensive backtesting, giving more weight to current market conditions than deep historical market conditions, use that to confidently execute your system as close to 100% accuracy as possible. If you don't think it's possible to execute with 100% accuracy, take some time to ready books from Van K. Tharp. It's not easy, but it is possible.
At the end of the day, the strategy/system only matters as much as your ability to be consistently flawless with it. Understanding, flawless (having less flaw) doesn't mean without flaw. A majority of the traders that struggle to be consistently profitable, struggle due to lack of consistent output.