The Dow Jones Industrial average gain is estimated at 10.4% per year in the 20th’s century (100 years). The S&P 500, since it’s inception in 1926 through to 2011, gained about 11.69% per year over 85 years.
Ross, from Warrior Trading, gained 17052% in 44 DAYS! If you consider about 252 trading days in a year, that’s a 97,661% gain per year! Ok ok, enough with the crazy numbers. The point is, Mr. Ross managed to prove a point. That you do need to have a large sum of money to make money on the stock markets. All you need is knowledge, skill and the correct mental attitude.
Ross is still trading his 100k challenge portfolio, and is up to $60,000 after having withdrawn $70,000. So he would have been at about $130,000 today having started with $583 on January 1st this year. There are four lessons to learn from this incredible feat.
1. You do not need a large sum of money to be successful in the stock market. Anyone, even with a minimum wage job, can save $583 and with the proper trading education and paper money training be able to make profits.
2. Day trading is extremely volatile and dangerous. This is why, the majority of trading experts advise those just getting started in trading to stay away from day trading. In day trading, everything happens at lightning speeds, since to make the most out of day trading one needs to trade volatile high volume stocks. If you day traded Apple or Amazon, you’d need a huge portfolio in order to make any gains, as you’d be lucky to get a 3 or 4% gain in a day. Where as small cap stocks can jump over 100% in a matter of hours or even minutes. But at the same time, they can fall just as quickly and wipe out trading accounts instantly if one does not know what they are dealing with.
3. The name of the game is consistency and the proper mental attitude. Ross has had quite a few “Red Days” as he calls them. He’s had many days where he’s lost between $5000 to $8000. Days like those can be very hard on the psyche of a trader, and the difference between successful traders and those that quit are the ones who know that losing is part of trading, and the sooner one comes to term with it the better.
4. Day trading has a limit on earning potential. Stocks that jump 100% are normally penny stocks where you would have a hard time buying more than say $20-40,000 worth of shares. If you want to go bigger in position size, you’d have to move to mid and large caps but those never make 100% moves. So trading is generally a trade-off between Large short term % gains with small positions vs Small short term % gains with large position sizes. Alternatively, one would have to increase the trade period to medium and long term with large position size in order to have large % gains and large position sizes. But in such instances you are locking up your capital on a single trade for what could be weeks or months. A long term trader could get a 120% move over a year on 1,000,000 (a 1.2 million gain) for example if someone had invested in NVDA last year. A day trader on the other hand, could make on average a 10% move, 5 days a week, for a year on a daily $50,000 position (or 100% on 1 x $5000 position)(for $5000 daily profits) and also make $1.2 million over a year. You get the idea 🙂
So the day trader and long term trader both achieve $1.2 million in profits, the difference being that the day trader risks say 20% of $50,000 every day (say roughly $10,000 if things went really bad), while the long term trader risks say 1% of his 1 million position of a slow moving stock in any given day (or $10,000).
So check out Ross’s Day 44 of the challenge video below (and check out his other videos). Also, if you are curious about the details of the challenge, and his strategy and goals, visit his 100k challenge page.
Ross made $222,244 from day trading in 2016. His best month was a gain of $35,000.