There is an idea around the stock market and day trading that makes most people believe that they A) Need a lot of money to start and B) That is is 'gambling'. While some of this may be warranted, I can say that it is just so far from the truth.
Currently I am traveling in Barcelona, Spain, the first 'vacation' I've taken in 7 years. Really. Its' been 7 years spent trading at the desk either at a fund or some institution then on my own. As I've been here I've been chatting with a trader who is currently going to leave the US and live in Barcelona to begin trading her own money. She gave up her job, life and has made the choice to start a new life and to really create her own freedom.
So during this time I've got a lot of questions from her that have sparked conversation so I want to explain more about day trading and how professional traders go about making a living doing it. Even more, I am going to show you how to attain the $25,000 in profits idea.
The Basics: How Professional Traders Make Money in the Stock Markets
So most of us are conditioned to think that 'investing' in companies for years to come is the way professional traders make money in the stock markets. This is false. There is a major difference in attempting to replicate Warren Buffet or Carl Icahn and being a professional trader.....
We're also conditioned to think we can only make money when things go higher. This is false. In fact, many professional traders make more money betting against prices falling and this strategy, called shorting, is something that is widely used for traders. Personally, I trade both long and short as I just see price action and price charts.
So what this means is pretty simple: Regardless of the economy, whether stocks are going up or down, whether we are in a recession whether or not unemployment is high, you can still make money trading.
As a new trader you're prone to 'drinking from a firehouse' with the information you come across and this is overwhelming. I'll save you the journey and tell you what it is we trade. We trade futures and options. For me personally the mix is probably 80% futures and 20% options.
I trade S&P500 E-Mini, WTI Crude Oil and Japanese Yen Futures. I trade calls and puts on the same 10 stocks over and over. My trading plan is very boring, very systematic and very reliable. I like it this way.
Now why the mix of options and futures? Well, futures tend to be very short-term, instant gratification trading that can be done in a matter of seconds or hours. Options, for me, tend to be large bets where I risk $1 to make $5 like this $3,000 Apple Earnings Trade.
Now people always ask if you can make money trading and I know you've heard the horror stories from a friend, or maybe even on your own, about losing large amounts of money in the stock market. If that's you, let me show you how to go about making money doing this, in a reasonable, logical and methodical way, without needing $50,000 of starting capital.
There are 252 trading days in a year. Now of course, not all of you may want to be a Wall Street Warrior and be stuck at the screens like me 24/7 so let's discuss how to do this passively. If you trade just half of those days, 126, and make just $300 a day you're at $25,000 in gains.
$200 a Day Trading 126 Days a Year = $25,200
$300 a Day Trading 126 Days a Year = $37,800
$500 a Day Trading 252 Days a Year = $126,000
How can you do this? This can be done using two main products: S&P500 E-MIni and WTI Crude Oil futures. You don't need to trade Soy Beans, worry about crop reports, know what new policy Trump will take or read the Wall Street Journal. You simply learn to be a price action trader and trade the chart, the price on your screen for 1-2 hours a day and stop.
The kicker here is this. Knowing when to stop. If you want to do this passively and not play Mr. or Ms. Hedge Fund Manager then you can do this. Now I don't know many people that would say an extra $25,200 a year would not be worth it doing it part-time, a few hours in the morning or late at night.
You don't need $50,000 to start, more like $5,000. The thing that makes this possible is margin. For S&P500 E-Mini I pay $500 to trade one contract, which, with that plan above, is all you should need.
If you don't understand margins or want more information watch this short 5 Minute video here.
Create Your Financial Freedom, The Right Way
I didn't realize the freedom I had until I spoke with one of my traveling pals. Hearing her story to why she decided to trade made me realize again the great opportunities this industry provides.
So there you have it. A bit of a background on how professional traders make money in the stock market and how to go about reaching that $25,000 mark.