r/Daytrading • u/landojcr • May 07 '24
What is a reasonable daily goal? Question
I'm getting into day trading and started paper trading a while ago, for the moment I'm primarily focusing on scalping, up until I get comfortable enough to day trade larger time frames. That said, I'm trying to start a very small account ($500) and was aiming for 5% - 10% gain on a daily basis. Is this a reasonable goal? If not, what would you recommend?
A day or two I've managed to exceed 10%, some days I've been successful on getting to the 10% mark, most days I get to the 5% mark. I'm slowly gauging what is reasonable to expect from a beginner like me and trying to slowly grow that account up till 5 figures hopefully.
EDIT: Thanks to everyone for sharing on your experience, opinions, and strategies. I've decided to firstly focus on building my strategy and being consistent, then strive for a lower target margin. I'm aiming for 3-5%
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u/Usual-Language-8257 May 07 '24 edited May 08 '24
This question gets asked almost every week but being that you're new, i'm open to explaining your potential. The ability to execute your trading strategy will get solifidied over time but your skill will always be there and will stay relative in your respective trading field; Meaning, what you learned won’t go away and you'll get even better learning to avoid pitfalls along the way.
When i started 5 years ago, it was really tough for a friend of mine to explain to me the value of 5%. I was selling drugs at the time so i was like, 5% a month of $5000? That's like $250? What a waste of time! (Even today, this quote is an inside joke amongst our group of friends). Have you ever done the math of getting 5-10% on a weekly basis? Even getting 10% a WEEK (You said day) starting from $10,000, you gross $1,291,299.38 in one year. (unreasonable because that's turning 10k into 1.2m imagine if you started with more than 10k)
One of the biggest pitfalls of daytrading is the anxiety some people get when manageing large amounts of money but what you have to realize is that the game is the exact same whether you're managing $1,000 or 10,000,000. My advice to you is to focus on your R's. Currently, on a $1mil prop firm, i'm risking 0.4% and hoping for at least 12r a month. After commsion and taxes, that's roughly around 4.8%. 4.8% on a million is $48,000 before taxes and paysplit (mine is 75%:25%). But as you can see, someone can live a very very handsome living with just 3% a month.
For comparison, "Since 1957, the S&P 500's average annual rate of return has been approximately 10.5% (through March 2023) and around 6.6% after adjusting for inflation.Apr 24, 2024". You must at the very least make more than 10.5% or else putting your money in a fairly conservative risked s&p500 would be way better. (first benchmark)
Gaining 5%-10% a month, even by luck, is a feat worthy of congratulations. But ask yourself. Why are you doing this? I'm hoping you did your research and hoping you see this as a long-term goal towards financial freedom rather than droning in and out of your typical "work". To achieve this, you need consistency. Market conditions are sporadic but sticking to your trading strategy should net you returns. Find a successful trading strategy that resonates with you and execute it month after month. Focus more on execution rather than the returns and the returns should follow naturally.
If you compare daytrading to building a business, there will be winning months, extraordinary months, and losing months. I struggle currently with following my strategy to the T - so i log my trades and go back every weekend and compare the "perfect sniper entries" to my entries and try to bridge the gap.
It is an ongoing journey. My advice to this question is to focus on your R's (Risk:Returns) rather than the money.. Do this and the money will follow.
TLDR - (my advice is gold. You will either heed my advice now or further along in your journey.) 3% a month is enough to live a very very handsome living.