(12/10/21) How Much Can You Make From Stocks in a Month?

In 2002, I was fed up with my corporate job at IBM. I was ready to quit. I wanted to do something different, and I was always fascinated by trading, recalls Markus Heitkoetter of Rockwell Trading.

The idea of working from home without the time-sucking commute to work was VERY appealing. I wanted to work when I want and where I want, and trading seems to make that possible. But the question is…how much can you make from stocks in a month?

What is a realistic number? Is it possible to make a part-time or maybe even a full-time income with trading? Let’s take a look at this.

When I was still new to trading, I had completely unrealistic expectations. I remember it exactly, that I started trading with a $20,000 account. And I had this crazy idea that I could double it every three months. So, after a year, my $20,000 would become $160,000! Easy enough right? NO! It was a completely unrealistic expectation.

How Much Money Can You Make From Stocks?

I have been trading for 17 years, and in my experience, beginners can expect to make 60% per year. And here’s how to do it:

Let’s say you start with a $10,000 account.
You should never risk more than 2% of your account on any given trade. When you start with $10,000, that would be $200 per trade.
As a goal, you should try to make 1.5 times as much money as you risk.

So if you risk $200, try to make $300 on this trade.

Yes, this is very conservative, but trust me: As a beginner, you should start with a low goal. You can always raise your goals AFTER you reach your small goals. Too many traders set their goals way too high, and then they are surprised if they don’t hit their goals. Be conservative. Trust me, the math works!

Let’s say you make 10 trades per month. And let’s assume that half of your trades are losing trades because losses are part of your life as a trader.

So here’s the math:

You have 5 losing trades, and you lose $200 per trade = -$1,000
You have 5 winning trades, and you make $300 per trade = $1,500

So, at the end of the month, you have $500 left, even though half of your trades were losing trades.

There are 12 months in a year, so 12 * $500 is $6,000 based on a $10,000 account. $500 per month is not a lot, so let’s talk about…

Can You Make a Monthly Income from Stocks?

By now you already know that you can realistically make 60% per year—even if half of your trades are losing trades. If you would like to make $60,000 per year, you need to calculate how much money you need in your trading account so that 60% equals $60,000. Here’s the formula you use:

Take the amount you want to make, in this case, $60,000, and divide it by 0.6:

$60,000 / 0.6 = $100,000

If you want to make $60,000 per year, you need at least $100,000 in your trading account.

If you would like to make $120,000 per year, you need $200,000 in your trading account.

Making sense?

How to Grow a Small Account?

Now you know how much money you need in your account to make a monthly income with stocks. The next question is: How do you grow a small account into a larger one? If you start with $10,000, you need to use aggressive MONEY MANAGEMENT to grow this $10,000 into $100,000. This means that you have to increase your risk, because the more your risk, the more money you can make.

The important thing: You have to first be able to CONSISTENTLY make money with trading before you start increasing the risk.

It’s like learning how to drive:

In the beginning, you should learn how to drive on an empty parking lot. That’s what I did with my son. And after that, we went into neighborhoods with a speed limit of 25 mph. Then we moved on to neighborhoods with a speed limit of 35 mph. And after a few months—and lots of practice—we finally went to an interstate.

What do you think would have happened if we went to the Interstate on Day 1? My son would have probably crashed the car! Same in trading: Start slow and work your way up. And once you see consistent profits, you can start increasing your goals.

Here’s the new math:

Instead of risking 2% of your account size on any given trade, let’s assume that you would risk 3% of your account. Based on a $10,000 account, that’s $300.
And let’s say that instead of taking profits as soon as you see 1.5x the risk, you take profits when you achieve 2x the risk. So, in this case, you would risk $300 and try to make $600.
The rest stays the same—for now: We assume that you make 10 trades per month, and half of your trades are losing trades.

Here’s the math:

5 losing trades of $300 per trade = -$1,500
5 winning trades of $600 per trade = $3,000

So, at the end of the month, you now have $1,500 left, even though half of your trades were losing trades.

$1,500 per month * 12 months = $18,000 per year. Getting better. Now let’s say that you are getting more experienced, and you start trading more:

Instead of taking 10 trades per month, you now take 20 trades per month.

Here’s the new math:

You make 20 trades per month
10 trades are losing trades, and you lose $300 per trade = -$3,000
10 trades are winning trades, and you make $600 per trade = $6,000
This means that you now make $3,000 per month

$3,000 per month * 12 months = $36,000 per year!

But here’s the kicker:

Of course, you would increase your risk as your account grows. So, if your first trade is a winning trade, and your account grows from $10,000 to $10,600, you now risk 3% of $10,600 = $318. And you try to make $636.

As you can see, with this “progressive money management” you can achieve your goals much quicker.

In summary: How much can you make from stocks in a month?

As you can see from the examples I mentioned, it depends on three factors: