How Much Money Will You Make Trading Stocks?

One of the most popular questions “I’m asked is how much money can I make trading stocks?” or “how much money do you make trading stocks?” All good questions and I would like to provide the best answer by setting the proper expectation. In general, trading stocks is like fishing. You need a big boat to get the big fish.

Imagine for a moment that you are going fishing in the massive Atlantic Ocean. There you will find every type of fisherman and crew that you can think of. You came out to sea in your little canoe to get some fish like everyone else. As you look out across the flat horizon you see pontoons, yachts, and massive fishing vessels all around you. Everyone is out there to get the fish, just like you. Theoretically, you could capture thousands of fish, but the reality is that your little boat can only hold a coolers’ worth. Meanwhile the Yachts and Vessels can literally capture and hold tons. It would be insane for you to get disappointed if you don’t capture tons of fish knowing that you have a little canoe. In the same way, new traders with small accounts are like the guy on a canoe in the mass ocean. Theoretically you can make millions but realistically you probably won’t.

There are plenty of fish in the sea, but you can only catch what your boat can afford you. Worrying about how much the guys on the yachts are bringing is a complete waste of your time and mental energy. In fact, it can be a downer for sure because you aren’t even close to their level. “Comparison is the enemy to progress”. Instead of focusing on the next boat your goal should be to fill up your little boat every time you come out to sea.  From there you can reinvest the earnings into a bigger boat so that you can capture more, then rinse and repeat.

New traders are always fascinated by the millions and for some odd reason set that as their goal until reality sets in and when it hits, they quit. The problem is that many new traders enter the arena with the wrong expectations. Yes, trading can change your life, but the reality is that you won’t make millions with a small account. You must do the work and grow it.

Imagine the guy on the canoe pulls up to the guy on the yacht and asks him “Nice Yacht, how much can she catch?” The guy yells back to him with an excited grin plastered across his face “tons of fish man!” The guy on the canoe leaves the conversation with the expectation that he can do the same thing thinking “if he can do so can I.” He is going to be in for a rude awakening.

If I’m the guy on the yacht I would tell the new guy that you can capture tons but not in that canoe. You need to keep grinding until you can get a bigger boat so that you can get to the tons that’s available. It’s realistic to expect to turn a 100K account into a million dollars. It’s realistic to expect to turn a $50k account into a 100k account. The size of the account that your are trading is an important variable to get you a realistic idea of how much money you can make. Since everyone comes to the trading game with their own money that makes the answer to the question a personal matter. What you bring to the table gives you a good idea of what you can flip that account to realistically.

Trading is not a get rich quick scheme. It takes time for you to get the necessary experience, wisdom, and knowledge. The account size plays an important role but without all the ingredients just mentioned you would just be sharks food in the markets.

I think that our social construct has people wired to believe that success equals a million dollars and so that expectation is at the root of the disappointed that causes new traders to drop out of the race. Theoretically you can make a million dollars but not with $2500 account.

When you are trading a small account instead of focusing on the million-dollar dream it would be wise for you to focus on growing that account in realistic increments. For example, let’s first aim to grow a  $5000 account and then a $10,000 account and so on. No, that’s not enough money for you to quit your job but it’s passive income stream that only takes about 30 minutes per day of your time. The alternative would be a part time job that eats up more of your time and cost you more expenses like gas and fast food since you won’t have time to cook.

Wouldn’t it be awesome to fire that part time job so that you can feel like you are a human again? Well that’s a realistic goal for new traders. 

A few years ago, I developed the WSJB Trading Journal as a tool to help me to track and analyze my trading progress. It helps me to see my trades at a glance. I use this data to ensure that I pay myself a portion and reinvest the rest. This tool is perfect for helping you to grow your account. 

The trading journal allows you to treat your trading like a business. When you track your trades, you can manage your risk, identify your weaknesses and maximize your strengths. Trading is really about self- mastery. Overtime you can use this information to grow from a figurative canoe size account to a big boy yacht in your due season. If you are ready to take your trading to the next level and start to manage it like a business, I invite you to grab your trading journal here.