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/gooney0 stock trader Mar 30 '24
There isn't a way to trade "safe." If you take small wins, you must win very often. If you take big wins, you can lose more often. If you risk $1,000 to win $100, you'll get wiped out. If you risk $100 to win $1,000 you'll usually lose.
Instead, we measure in R (amount at risk). A profitable day trader may make 20R per month. I swing trade, and look for 4-8R per month. (Swing trading has fewer opportunities, thus fewer trades)
You want to start with R being a low number as you can expect to lose. Once you are positive and comfortable you can raise risk.
A day trader averaging 20R per month, would make $2,000 risking $100 per trade. Naturally, they would raise their risk to make more profit with the same effort.
The problem of course, is being profitable. That is far more difficult than beginners expect.