How to make a million dollars a year trading

www.Tsunami-Trade.com

Making a million dollars a year in trading is a Holy Grail for us all.  Although admittedly difficult to achieve, if we divide the task up into small achievable gains, perhaps a few of us will reach the goal.  Money management is the key.   What we mean by this is proper position sizing, which always knows how many contracts to trade with the very next trade.  There is a way to achieve your trading goals with the least amount of emotional distress and in a relatively short period of time.  We will divide the task into 3 steps.

1.       Analyze your current trading methodology and decide what a highly achievable profit goal on most trades is. 

2.       Make that per trade profit goal or twice that, your total daily profit target

3.       Use as much as possible Other People's Money, trading only 1 contract until you have attained at least 10x your daily profit target in bottom line account profits, then and only then can you trade another contract.

Step 1. Decide upon a highly achievable per trade profit goal.  Whatever methodology of entry you currently use, decide what amount of profit is highly achievable for most of your trades.  Our trading software, "TsuBot -Your Automated Trading Assistant" uses Price Volume and Momentum in her trading algorithm and verbally, visually, and email alerts us of high percentage trade entries, three profit targets and a stop.  Real-time and historical testing across multiple markets and time frames has demonstrated that the first profit target is reached in about 73-80% of trades overall with TsuBot.  We analyzed recent Eurocurrency market volatility and decided that 24 tics or $300 per contract was achievable in most cases in the Eurocurrency futures.  That became our reasonable or "safe" per trade profit goal.

Step 2. Because we decided that making $300 per contract on a per trade basis was also a nice daily profit target, we let that single per trade profit goal be our daily profit target as well.  Why stop at only one or two trades you might ask?   Why not!  We all must remember what we are trading for, and that is in most cases for Financial Freedom, but also to lead a better life.  We don't know about you but sitting in front of a computer monitor trading all day is not the best way to spend your life!  Make your money and get up from the tables!  You took the casino's money and now go enjoy the fact that you are becoming a consistently successful trader!

Step 3. Make your daily profit target at least 10 times before you allow yourself to trade another contract.  If our daily profit target is $300 per contract, we must add to the account bottom line, 10 X $300 = $3000 per contract to increase the number of contracts we trade by one.  Why 10X?  Why not again!  Let's make ourselves and our system prove consistent profitability, before putting any more of our account at risk.  And since this is a zero sum gain, guess where that $3000 per contract will have come from when you make it?  That's right OTHER PEOPLE!  So we only trade one contract when we are just starting out, when we are most likely to commit trading errors.  The damage, if we make a mistake, will therefore be minimized until we can get up to speed and learn the ins and outs of our particular trading system or market.  If we are trading just 1 contract, blowing out our accounts, if properly initially capitalized (if trading the e-minis starting with a minimum of $5,000 -$7,500), should be less likely.  And when we have made at least $3000 in profits, we should have reached a more emotion-free state of mind, as we are starting to trade with Other People's Money!  This also acts as an automatic risk management mechanism.  As our account balance goes up, we can trade more contracts.  As it falls, if we or our chosen system starts to fail, we will automatically reduce our trading size and risk less of the account, until we can right the ship once again and get back on the path to consistent profitability.

In our next elert, we will develop our money management plan that will build on this consistent profitability towards the goal of Making a Million Dollars a Year Trading!