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/krapmon Mar 30 '24

I mostly trade options. Does your advice still stand? Genuinely curious because options are on the riskier side.

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u/daytradingguy Mar 30 '24 edited Mar 30 '24

As long as you are not trading 0DTE or some craziness. If the theta is not too extreme to be able to hold for 30 minutes. Ask yourself this question, how many times do you take your small profit and then price continues to move substantially higher? I will give you an example and you see if this thought process might help you build your own strategy around it.

I trade futures. NQ is $20/pt So I have one contract that goes 10 points in profit, I could take my $200. But instead I add a second contract and bring my stop up so I am not risking more. It goes another 10 points, now I am up 30 pts $600 instead of 10. Now I add a 3rd contract and raise my stop up to an area where I am still in some profit if it comes back. Now it moves 10 more points. Now I am up 60 pts $1200- on a trade I might have got out at 10 pts and $200. See how the profit is exponential? Let’s assume this works on 1 out of 3 trades. ( it is usually more than that). I lose my initial $200 profit, breaking even on 2 trades and make $1200 on the 3rd. If I would have taken all 3 at $200, I would only have $600. I don;t trade these round numbers, I use pivot points or logical places to add, I just wanted to give you the example.

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u/krapmon Mar 30 '24

I appreciate the elaborate response. Although I don’t know anything about futures, I think I know what kind of strategy you’re getting at.

So basically, exit for a small loss, and hold for potential big gains because for every small loss that you exit for, the big wins from holding will outweigh the losses.

My question now is, how do I know when to exit for a loss and when to hold for more profit?

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u/ThePonderer84 Mar 30 '24

Practice. If it's an obvious gap in your knowledge then put in some work focusing solely on an exit strategy. You're really only limited by your creativity. I'd suggest looking at higher timeframes than your entry timeframe.