What Can I Realistically Make My 1st Year Trading Stocks And Options?

We all start trading for 1 reason – to make money. And usually when we start you will ask yourself “What can I realistically make my 1st year trading?” Pretty normal question to ask when you just start out I would say.

I often find that most wannabe traders don’t have a clue as to what to expect in terms of profit from the market. Yet there they go, investing their hard earned money day in and day out. Unfortunately most of you are going to learn the hard way – hell I did.

To be blunt, I have no idea in the world what you can expect to make in your 1st year of trading. And you can never really command or assume to much when trading. What I can tell you is that without proper education and a solid trading plan you are probably going to lose a couple years worth of income.

Setting Realistic Expectations

Every trader, especially beginning traders, opens their account with unrealistic expectations what their possible future performance might be. How much they will make in profit or return right. But where are they getting these numbers from? Just because someone traded 1 penny stock 5 years ago does not mean that a 454% return is normal, or even expected.

This goes for options trading as well. I see sales pages all the time that show you 200%+ returns on some cheap options they bought. But what they don’t tell you is that those trades happen once in a while and are not consistent. Maybe they did make 200%+ on a trade, but that doesn’t happen all the time and to set your expectations that high would be very ignorant.

Starting off your trading career with unrealistic expectations inevitably will lead to failure. It’s better to face reality now than to be blindsided later. Set manageable goals that are thought out. Have a trading plan in place. Learn about technical analysis and trading psychology now. Trust me, it will make things much easier down the road.

Why I Don’t Advertise On This Blog

I personally feel that the trading expectations most beginners have now were subconsciously formed by all the advertisements and “over-night millionaire” type sales literature found online. When I started out building this blog I knew that I never wanted to put big flashy advertisements on it.

I hate them on other sites so why would I subject my readers to it? Plus, it distracts from the purpose of providing educational content that you can actually learn from! Sure I put some hard work into my website’s design and functionality, but you’ll never catch me selling advertising space here. And isn’t it refreshing not to see those annoying ads? I think so.

Need Help Making Realistic Goals?

Here’s a quick list of some things to consider as you write down your expectations and goals.

1. More traders lose more money than they make. The figures are a little off depending on who you talk to, but it is 80% to 90% (maybe more) who end up losers and leave the business altogether. So figure out why they fail and learn to avoid the common mistakes early.

2. Only a small percentage of retail traders are profitable. The numbers get even smaller if you look at a 3-5 year average which measures consistency. Don’t get discouraged, we all fell off the bike before we learned to ride it right? If you are just starting out, you should expect to incur some losses as you climb the learning curve.

3. Paper trade first with a small amount of money. I always tell my beginning coaching students to paper trade everything first. This way you learn how to enter orders, adjust trades, and more importantly learn you’re your mistakes without losing real money. Then when you are ready to invest real money, keep it small. If you can’t trade profitably with $1,000 how in the world are you going to make it with $100,000.

4. You will have losing trades. Again, I see too many people quitting after a streak of 4-5 losing trades. What, you didn’t think this would be a walk in the park did you? Come on people, losing money is part of the game. It’s how you manage your losses that make all the difference. Besides, it is impossible to predict price movements consistently (which is why our strategies don’t need the requirement for success). Listen to the technical indicators, control your emotions, and above all…preserve your capital!

5. Don’t expect to become financially independent. Don’t you think it’s completely unrealistic to expect a small account, say under $5,000, to generate consistent income to replace your regular job? I sure do and anyone who has done it in a year wouldn’t be reading this blog. Rather, concentrate on low-risk, low-frequency trading with income-oriented trading systems. Hit singles instead of home runs.

What Were Your Expectations When You Started?

Don’t be shy on this one. I’m sure we all had some pretty crazy expectations before the market knocked some reality into us. Add your comments below and share your “beginner” expectations, however crazy they might have been!

Start Our Free 4-Part Video Course And Learn How To Make Smarter Option Trades. . .

I've been told by tons of people that you've got to either have a lot of money or a really killer system to trade options and win. Some new indicator or signal that will transform your portfolio magically overnight.

And I'm sure you've heard the same thing and are sick of these expensive, dead-end courses and websites wasting your time and money. This course is different.

Free Options Trading Course

You see, there is no "magic secret" to trading options. It simply comes down to an understanding of risk management, option pricing and strategy selection.

Instead of learning these lessons the hard way (i.e. losing your shirt in the market), why not take my free 4-part video course as I cover each area in detail. Plus, I'll go over the exact checklist I use for selecting trades each month!

  • Joe Bracco

    Sounds like a plan to me! Great work!

    • Kirk

      @Joe Bracco, Thanks Joe. The reality is that if you break-even your first year trading then you did really good. But most people will have an “education” and take a loss. Stick with it though!

  • http://www.horizonprofessional.com.au Mike Smith

    Great post Kirk,

    If you:
    a. dont understand the share market (as of course these are derivative products based on underlying equities)
    b. Dont understand how the options market works including how options are priced
    c. Short your learning for each strategy – master each before you move to the next
    d. dont have a written trading plan for EVERY options strategy
    e. dont follow your trading plan
    f. Dont have s system to choose the right strategy for prevailing market conditions and YOUR personal circumstances (for we all know there are many options stratgies you can use on a technical buy signal for example)
    g. Dont have an options specific position sizing calculator (and it needs to be more than just dividing your capital into chunks)
    h. Dont have a method to record your trading (and this is MORE than P/L ..we want your decision making processes recorded)

    Miss any of the above your expectations should be you WILL lose!..simple

    Do them all..and you will know what you can realistically expect after 3-6 months of trading.

    It is complete folly to state a $ figure it is meaningless and will always be unrealistic..celebrate great decision making consistently and what can be real for you will become clear… Be the trader you can be (in attitude, diligence and discipline x Do the right things consistently = results will follow automatically.
    Mike

    mike@horizonprofessional.com.au

    PS My expectation is most who read this will not take action nor will even take it seriously enough to use it to review their own trading..rather they will believe the ”used car salesman” who bring a bad name to those who are REALLY interested in educating, will perhaps add another indicator for of course that is bound to make a difference to mediocrity in results ..NOT.. or simply look to the next new vehicle to trade:-)

  • ty

    Im a 18 year old college student. Is it unrealistic to think I could make roughly $500 to 1000 a month purely by trading stock?

    • http://optionalpha.com/ Kirk Du Plessis

      Depends on how much you start with in your account but probably trading stocks that might be unrealistic

      • disqus_82nORETPLU

        lets say we started trading with 500 dollars, would it be possible to make 1000-1500 a month then? even if we nickel and dimed our way to said goal…

      • http://optionalpha.com/ Kirk Du Plessis

        Is this even a real question? No way! Find me any system that comes close to that overtime and I’ll pay you the difference. You cannot expect to start and account with $500 and make that kind of money!

  • Sue

    Hi Kirk, I think you will find a lot of people are thinking exactly the opposite to what you believe. I am one of those people that have avoided educating myself about the stock market because my expectations are that you make $0.00 money from it. I have made my money from real estate. I really enjoyed reading this though, so I am going to subscribe. Some people have the same unrealistic expectations in real estate. I built my wealth and knowledge up over 30 years and tell people ‘go slow and don’t get burnt’. I had no opportunity for education and therefore no way of earning a decent wage so I had to learn how to make extra income but if I were young, I would just concentrate on my education and getting a well paid job as top priority. Maybe this will teach me how to get a few extra bucks in my retirement which I could pass onto the kids, that would be nice.

    • http://optionalpha.com/ Kirk Du Plessis

      Thanks for the honest insight Sue (and for subscribing of course!). I agree, an education in any particular area of investing is needed badly.

  • http://optionalpha.com/ Kirk Du Plessis

    Thanks for adding in here Stephen!

  • http://optionalpha.com/ Kirk Du Plessis

    Thanks for comment!

  • http://optionalpha.com/ Kirk Du Plessis

    I agree – I would hate looking at them every day too!

  • ken

    good basic intro to options …yes there is to much hype out there regrading options …my advice paper trade until you are getting 7/10 trades in profit before investing real cash…patience is crucial…

    • http://optionalpha.com/ Kirk Du Plessis

      Approve.

  • http://optionalpha.com/ Kirk Du Plessis

    That’s great!