Originally Posted by
nextbigthing
Sorry for the off topic post, however this does seem to be 'on topic' for this thread at the moment.
My thoughts on the realities of trading for a living....
Say you want $1000 a week in the hand to live on... hardly living like a royal but should be comfortable enough.
$1000 + $500 for tax... so you need $1500/week.
Lets say you trade $10000 a pop and make +2% per trade. I have chosen $10000 as it is the first point where standard brokerage becomes most economic, and $10000 is a smaller amount to increase the chances of having that liquidity in the stock and minimising the risk by using smaller amounts.
So $10000 x 0.02 = $200 a trade. Minus $60 brokerage (30+30) leaves $140
$1500 / $140 = approx 11 trades per week.
So that means you need to pick just over 2 stocks a day that are going to go up by 2% and time it perfectly.
Obviously you can change all the variables, eg only go for a 1% rise but then the frequency at which you need to successfully trade increases accordingly and becomes less likely. Also, obviously you would have $10000 x a few lots so that you could be in multiple stocks at any one time.
The above example doesn't allow writing off brokerage costs and claiming other expenses, however it also doesn't allow for the ones you get wrong! So call that even.
Looking at the top gainers the other day, there were only about 5 stocks greater than a 2% increase, and this is especially the case if you minus out penny dreadfuls that rose say 5% on a $1000 turnover which is no use. I realise you can trade intra-day and get more 2% movements but again, you're going to have to time it to perfection.
Some people may think 2 trades a day is easy. I personally think 2 trades perfectly timed every single day in NZ with no mistakes would be very hard.