How Much Profit a Stock Trader can make
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How Much Profit a Stock Trader can make

Some traders are trying to use the capital to make money, some are losing. So, both types of scenarios have been seen in the stock market. The success of investors mostly depends on risk management. When a person will able to apply the risk management strategy properly, he or she will able to control the risk and able to make a large profit. Professional investors do not take high risk in every trade. Such as, if the account balance is $40,000, they will not take a risk of more than $400.

Trading Strategy

The strategy can be divided into two parts. One is the success rate of the people and the other is the profits. The win rate can be estimated by dividing the number of winning trades by the total number of trades. For example, if the amount of winning is 70 out of 100, the win rate will be (70/100) =0.6 or 60%. You can think that if you face more winning streaks, you will succeed. Nut, if the person’s winning amount is smaller than the loss amount, then he or she will not be profitable. For this reason, most of the investors want to make more winning amount than the loss amount. So, people are required to consider the risk to reward ratio.

How Much Stock Day Investors Can Make

If the winning rate is 1.5 times greater than the losing rate. The investor has a 55 percent win rate and $30,000 in the capital. So, the person does not take more than 1 % risk per trade. Six round-turn trades are done every day, and there are 20 trading days in the month. That refers to taking 120 round-turn trades in every month. Commissions and fees are $40. Here, one round’s cost is 20$. If people use 3:1 leverage on the account. That means that if the person has $40,000 account balance, he or she can use $120,000 for opening the position.

As here the leverage amount is not free, this is debt. So, when the investors will earn money, he or she has to repay this. For example, you have $40,000 account balance, and the winning rate is 70, you have fixed the stop-loss at 0.05, and take profit at 0.07. The risk per trade will be $400, so, the person can take ($400/0.05) = 8,000 shares per trade. If the strategy is applied, let’s see what will happen. The winning amount is= (70*0.07*8,000) =$36,750.The losing amount will be = (40*0.05*8000) =$12,000. So, the gross profit will be = ($36,750-$12,000) =$24,750. And the net profits will be =$24,750- ($40*100) = 20,750, when the cost of commission is $40. This is the approximate profit, as several variables can interfere here. To control the situation, people might need to adjust to the various types of situations.

Refinements of the Plan

Various types of components can stop the investors to make money. So, they have to learn how to cope up with the situation. The investor is required to find the stock which can allow this to make the best use of the capital. Because of the slippage of the value, the investor can countenance the loss even by placing the stop-loss. In this situation, he or she needs to reduce the net profitability. One of the best ways is to research on the market and its different types of features to cope up with the different circumstances. Before investing money, this is necessary to determine, how much you can gain.

So, this can be said that the day investors can make a profit of more than 25% every month. However, this will be challenging for the beginners as they are not totally prepared. To get good rewards, the person needs to do hard work. Last but not the least, emotional attachment in personal life must be avoided at any cost.