Build a Steady Income Trading Stocks

One of the questions our subscribers ask most often when seeking advice is how to start build a steady income trading stocks. This is understandable given the instability of the economy and the insecurity that exists in the job market today. Earning a living from the stock market isn’t easy, despite the hype and promises some less than scrupulous websites and stock trading services will present you, but I believe it is possible if you stay disciplined and focus on protecting yourself from losses as opposed to focusing on finding the next big winner.

First, a Quick Warning

First, I should warn that this year has been a very difficult year in the markets.  Professional hedge fund managers, those with a lot better access to market information and more experience than your average stay-at-home-trader, are down on the year by roughly 9%. We have managed to earn a bit more than 15% this year so we are feeling pretty good by comparison. Nevertheless, this year was not the year to start building a steady, secure income from trading.  That said, the market looks ready to break free from its range to us and if it does, next year could be ideal for earning a living from the markets.

How Much Can You Expect to Earn from a $20,000 Trading Account?

Perhaps the best way to approach this question of how to build a steady income trading stocks is to backtrack and see how much you could expect to earn during a typical month last year before the market became so entrenched in a volatile trading range. Thus, in the example below, we used actual trades from our accounts last year in order to test this idea using real world experiences. To make the test more fair or realistic, we chose a 30 day period which had roughly an equal win to loss ratio.

In our example, we make the following assumptions:

  • Investment Account Size: $20,000
  • Amount invested per stock: $10,000
  • Taken from the true record, the average loss is 2% and the average success is worth 10%


Building a steady income trading stocks
Building a steady income trading stocks

One Month Income $3,600

We purposely chose a time period on the track record that had an equal number of losses to winning trades. Thus, your results are going to vary as you earn more money one month and less than others. However, as you can see from the results, if at least 50% of the trades are successful, which is entirely reasonable in a normal market environment, it is possible to earn $3,600 from a $20,000 trading account.

Again, we want to emphasize the fact that we used trading results from a trending year in the markets. During years when the market is not trending, results are not likely to be as strong. Nevertheless, this example at least provides a benchmark to measure your trading performance against and at least provides a good idea of what can be possible as long as you use a good risk management system, remain patient and remain disciplined.

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