As day traders, it's important to realize that the outcome of a single trade or even a single day doesn't really matter. We work off probabilities and our tested edge, so what's truly important is the outcome a larger sample of trades over time.
If our expectancy is good due to a decent win rate combined with a high risk to reward ratio, we will be able to achieve excellent profitability.
As I was recording some of the Weekly Reviews for students in the STA Training Program this weekend it got me thinking that I should put together a new post using some prior weeks that really drives home the importance of keeping a longer term focus.
A good student to look at for this examination is AK. Many of you will recognize him from some previous weekly recaps such at this one. AK is a good example because he is someone who is fairly new to trading the markets, but he has been diligently applying himself each week and sending in his charts on a regular basis for review.
Considering that AK basically came into the STA Training Program as a raw trader, these results are an excellent example of the consistency that can be achieved in only a couple of months if a student is determined and willing to put in the effort to be successful.
Once weekly consistency is reached, the sky is the limit for further development of your trading skills and profitability.
One of the things I find most interesting about AK's results is his impressive returns despite not having a high win rate. Some of our more experienced traders are able to achieve hit rates of 70% or more but as AK shows, it isn't necessary to have a large majority of winning trades in order to have excellent weekly results.
This is especially important for newer traders taking their first steps into day trading, because the pressure of needing to maintain a high win rate often crushes even the best laid plans under its weight.
As AK gains more experience in the markets, his win rate will continue to improve and his already substantial trading edge will grow.
I don't want to clutter up this post with dozens of charts, but here's a handful for some of the days above (click to enlarge):
Day Trader Income Breakdown
The most common question people email me about is always the same - how much money can you make as a day trader? For the sake of this example, I've broken things down with the quick chart above.
You might have noticed that although AK's trading breakdown showed 57 points earned for the month, this chart only shows 50. I've done this to account for commissions and fees in order to give a more realistic look at what would be made if a trader was taking ~80 trades per month.
If a trader was trading with a decent number of contracts his costs would likely be much lower (through better commissions from his broker), adding to his profit.
Please keep in mind that these results are not guaranteed. Our aim is for our graduates to consistently make 10-15 points per week trading Emini S&P 500 futures, but individual results can vary depending on experience level and time spent each week actively trading. The example above is a trader who generally trades for a few hours each day. Please see our disclaimer for more information.