How much can I make in trading ?

Well the answer you will be pleased to hear is “really quite a lot !”   and pretty quickly as well if you are doing things right. Certainly the earning potential in trading is far more than you could greater than you could earn in any other normal career or profession.

In the course manuals that  attendees on both the beginners/intermediates course and the advanced trading course are provided with there is a very simple example of placing just one trade per day with 50% winners and 50% losers but also applying some very standard position sizing formulas.

If you start with $500 at the end of the first month after placing just 20 trades and having lost on 10 of those trades but having followed the  staking strategy suggested your capital would be standing at around $800.

At the end of the first year you would have placed 240 trades and had 120 winners and 120 loses but amazingly your capital would have increased from $500  to around $40,000.

The table in the manual is designed to illustrate how money in trading is really made. It is not really made by being right all the time in your trades (none of us can do that). It is made by having a small statistical edge and then exploiting it using standard compounding theory plus one or two other techniques.

The position sizing side of trading is a fascinating area for research although often much overlooked by novices. Most of the original position sizing research emanated from gambling theory and has then been modified to suit the trading arena,  It is probably the single most important factor in just how much money people make in a trading career. Most traders will spend hour after hour studying trading systems trying to get the perfect entry or perfect exit to improve  performance by just a few percentage points and almost no time on fully understanding their  position sizing options and opportunities.

This is absolutely the wrong thing to do. Position sizing deserves much more attention than most people are prepared to give it. Both of the courses that I run include a separate manual detailing several very aggressive position sizing techniques that professional traders are using day in day out. This knowledge can mean the difference between making $10,000 and $200,000.

I’m not for a minute suggesting that everybody that trades will achieve these sorts of results and as we all  know the statistics suggest that most people that start trading actually give up within their first year.

The point is not that you absolutely are guaranteed to achieve such  returns but simply that such returns are possible at all.

I am 60 years old now and has seen the inside workings of many businesses and there are virtually none that you can start with just a few hundred dollars that have the genuine potential  to make you hundreds of thousands of dollars in such a short period of time.

One of the problems at novices have is that they have an incomplete picture of how the trading game fits together. There are several critical components that most people are either not aware of or do not pay sufficient attention to. Position sizing is one of these areas.

For those of you that have been trading for a few years and are sitting there quietly confident thinking “well I already know all this I use fixed fractional –  betting a fixed percentage on each trade” so this guy cannot teach me anything new. Well you would be absolutely wrong there are several infinitely better ways of managing your positions than using simple fixed fractional especially when you are trading shorter term.