Introduction
In this blog post, we will discuss a step-by-step process on how to make $500 a day from trading. Making $500 a day can be a significant achievement, as it amounts to more than what 90% of people make in a month. However, it is important to approach trading with the right mindset and strategy to achieve consistent profits.
The Two Types of Beginner Traders
Before diving into the trading strategy, let’s first understand the two types of beginner traders commonly seen in the market.
Jeffrey: The Risky Trader
Jeffrey represents the first type of beginner trader who risks too much on each trade. Instead of following proper risk management rules, Jeffrey puts a significant amount of money at risk, hoping to make quick profits. This approach often leads to overleveraging and excessive stress.
John: The Overborrower
John represents the second type of beginner trader who borrows money from friends and family to trade. He believes that having a larger trading account will allow him to make more money quickly. Unfortunately, this approach often results in significant losses and debt.
The Moving Average Crossover Strategy
To make $500 a day from trading, we will be using the moving average crossover strategy. This strategy involves identifying the crossover of two moving averages and using an engulfing candlestick pattern as a confirmation signal.
Let’s take a look at an example trade:
Example Trade
Yesterday, I took a trade on US 30 using the moving average crossover strategy. The trade lasted for about one hour, and I made approximately $1,000. I entered a short position when the moving averages crossed over, and I saw a bearish engulfing candlestick. I placed my stop-loss above the entry point and set my take profit at twice the distance of the stop-loss.
Building a Trading Account with Demo Trading
If you don’t have a large trading account, you can start by practicing with a demo account. Follow these steps:
Step 1: Stop Trading with Real Money
For the next 30 days, stop trading with real money and open a demo account instead. Set the account value at $25,000.
Step 2: Trade Every Day with a Plan
During the next 30 days, trade every day with a clear plan. Only enter trades that align with your strategy and trading rules. Aim for a minimum risk-to-reward ratio of 1:2.
Step 3: Journal Every Trade
Keep a trading journal to record every trade you take. This will help you identify mistakes and learn from them. Make sure to note any deviations from your trading plan or risk management rules.
Step 4: Review Your Performance
After the 30 days, review your demo trading account to assess your profitability. If you are still not profitable, repeat the process until you consistently make profits.
Trading with a Funded Account
Once you have proven your profitability with a demo account, you can consider trading with a funded account from platforms like FTMO. These funded accounts allow you to trade with their capital and keep a portion of the profits.
The FTMO Challenge
FTMO offers a challenge to traders who want to trade with their funds. The challenge consists of two stages: the challenge stage and the verification stage.
Challenge Stage
In the challenge stage, you trade a demo account for 30 days. You must trade for a minimum of 10 days and have a maximum daily loss of $1,250. The maximum loss during the challenge is $2,500, which is 5% of the account. The profit target is $2,500, which is 5% of the account.
Verification Stage
If you pass the challenge stage, you move on to the verification stage. In this stage, the profit target is reduced to $1,250. Once you achieve this target, you can qualify for a funded account.
Earning $500 a Day with a Funded Account
Once you have a funded account, you can aim to make $500 a day by risking 1% of the account on each trade. With a $25,000 account, this amounts to $250. To achieve a 2:1 risk-to-reward ratio, you should aim to make 2% on each trade. If you achieve a 2% return, you will make $500, which is your daily goal.
Conclusion
Making $500 a day from trading is possible with the right strategy and approach. By following the moving average crossover strategy and practicing with a demo account, you can build the skills and discipline necessary for successful trading. Once you have proven your profitability, you can consider trading with a funded account to start earning real money. Remember to always prioritize risk management and follow your trading plan to achieve consistent profits.
