How much Money can you make in a Year Trading?

The dream to make a fortune trading in just a year is what gets many traders in the game.

Committing to the profession of a trader one spends a lot of time and energy on learning and practicing this craft. The money aspect has to make sense at some point. Therefore, you will probably imagine a yearly result where you are okay with what you get from pursuing the patient work of risking hard earned money in the markets.

I’m sure you already have an exact amount of money in your mind, that would satisfy your desire of yearly trading profits.

The first question: Is it realistic?

Percentage-wise the goal should be realistic. Very good traders make 10-20% in a year with a reasonable max drawdown but their money background might differ from you.

It’s very likely that you don’t have the money needed to make a reasonable amount at the end of the year with a very reasonable maximum drawdown.

You would need half a million to make $50,000 a year with 10% profit.

However, that’s no reason to give up the trading game.

The only thing you should worry about is not getting over 30% drawdown. In a previous article I stated that having a drawdown over 30% equates to ruining your profitability.

By taking a few hundred trades you CAN get exponential returns. 300% is possible. With small accounts you won’t have liquidity problems, meaning you can get in and out of any CFD, futures, stock or option easily. It is even possible to make 1,000% in a year having the profit metrics like shown in the picture below.

Link to the page: Risk Simulator

You’ll need super trading skills to achieve this kind of result. But my point here is: anything is possible!

Reasons you will likely not reach this result

  • 300 uncorrelated trades: It’s really hard to do. Usually you’ll have a few trades correlated to each other because of emotions.
  • 300 trades which have all the same chance of reaching on average 1:3 RR and having a 60% chance of working out: that’s not easy to do.
  • The goal-setting itself can destroy your result.
  • More reasons: slippage, self-sabotage, drawdown steepening and changing market conditions.

Reality is often different than what you expect from it. That’s why I always think of my system to have a Profit Factor under 1.5 at any point in time and calculate my drawdown depending on that.

Just play a bit with the risk simulator with your personal worst case hypothesis and find out how much money you can still make in that case.

Or use your own trading history as an input in my Risk Simulator from real trades, with real money. This will make sure it’s also realistic, depending on your personal approach to dealing with money at risk.

Remember, that having a drawdown of 50% in your system over the long term will cut your buying power in half and make it percentage wise very hard to get out of drawdown again.

Mental techniques to reach your goal

The question which you can yourself when thinking about how much money you can expect to make in a year is the following:

How do I turn my desire into reality?

The method from “Think and Grow Rich” by Napoleon Hill

  1. Imagine the amount of money you desire. Don’t just say “I want plenty of money!”.
  2. Write down what you will give to be entitled to receive the money you desire.
  3. Write down a date until you want to have this exact amount of money.
  4. Imagine yourself every morning already in possession of the money.

For a trader it can look like this:

  • Definite Goal: $ 20,000.00 in trading profits
  • Definite Date: 8 months from now on the 5th of December 2019
  • What whill I give to obtain it:
    • Take care of myself with enough sleep, food, exercise
    • prepare well for the trading day with meditation and pre-analysis
    • do post-analysis every day with full concentration and try to improve edge
    • read 2 books about trading every month

Telling other people your goal

In an article “When intentions go public” by Peter M. Gollwitzer, Paschal Sheeran, Verena Michalski and Andrea E. Seifert, the authors argue that identity goals are serious changes in character.

You are perceived by family, peers and friends by what you are now, a serious change would make them perceive you different.

If all the sudden you anounce “I’m a successful trader and make $50,000 in a year.”, then what whill probably happen is that you yourself and your surrounding now already see you as the”successful trader” and therefore your goal will backfire.

You will lack the commitment of becoming a profitable trader for the very reason that you think that you already are the successful trader.

So just don’t tell anyone your exact goals, give them only the vague ones. Keep your goal-setting via Napoleon-style for you until you have reached it.

The goal is everything?

If the goal is all that you want, it might be that you don’t love what you’re doing. If you’re already thinking about quitting after you achieve the goal, that might as well be the reason why you can’t ever achieve the goal!

You have to love the process of getting there, and reality is that successful people never stop improving their game, they would be bored if they didn’t have their work, where they can give the best of what they have.

Drawdown, Risk Simulator, Think and Grow Rich, Trading Goals

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Who I am

My name is Niclas, I day trade futures since 6 years.

Leveraged products offer a high risk exposure and 95% of people don't understand the real risks in trading them.

I teach traders how to understand risk on a professional level. Moreover, I created the Risk Simulator to give the trader community a tool, that is useful for anyone who trades a trading system.

If you want to improve your risk management skills and learn more about trading. Visit my courses or read articles in my blog section.

Risk Disclaimer

Before buying or selling any kind of derivatives, you should carefully review the rules and regulations of the exchanges offering the system and/or listing the instruments you intend to trade. Trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, and other factors. You should understand these and additional risks before trading. None of the information provided on this website constitutes a solicitation to trade any investment or security of any kind. Read the full Risk Disclaimer.

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