How to Turn 10k into 100k in a Year

Warning: this question is likely to really make you think about your trading potential!

As you might know, I’m a stickler for planning. Naturally not all my plans work out as they are supposed to, but the fact that I have taken the time to plan greatly improves my chances of success. Many traders want to be able to make a lot of money with their trading, yet very few (if any) have ever developed a trading plan to do so. So here’s your chance.

Question:

If you are a trader beginning January 1, 2005 with a $10,000 account, and you wanted your account balance to be $100,000 at the end of next year, how would you accomplish that?

HINT: It will be more realistic if you figure your results on 10 or 11 months instead of 12.

Answer:

It seems that this question got a lot of people’s attention as many of you have never really considered your trading potential much less taken the time to figure out a plan to achieve your goals. I received many emails regarding the how-to’s and we had a good discussion happening at the Support and Resistance Forum as well.

Thank you to all who shared their ideas and input, but top honours at the forum go to Dino Dave for his answer – you hit the nail right on the head my friend. As this week’s lesson explains, the true power in trading comes from two things: consistency and multiples. If you can achieve both, then you are bound to become a successful trader.

So how would you go about turning $10,000 into $100,000 in a year (or 10 months)? It is doable you know? Ever hear the children’s riddle, how do you eat an elephant? (Answer: one bite at a time) The same thing is true with trading futures. It is possible to take $10K and turn it into $100K in a year; however you have to do it step by step.

The key of course, is consistent profits. Without consistency you will not be able to achieve your objective. The profits don’t have to be huge mind you, but they do have to be consistent. THIS CAN NOT BE OVERSTATED! I normally recommend trying to achieve a NET weekly profit of $250 per contract per market. This means that after your expenses and losses you should aim to clear $250 per week per contract per market traded.

Doesn’t sound too demanding does it? It’s not…but it does require patience and lots and lots of practice. The futures markets are not like anything else. You have to understand that you CAN NOT make the markets do anything. There will be weeks where the markets simply will not give you even a little bit of profit; however there will also be weeks where you considerably exceed your profit objectives, on average your goal is to earn a modest $250 per week per contract. After that it becomes a numbers game where multiples add the punch you need to propel your trading into big numbers.

For instance, if your objective is $250 per week, per contract, per market and you choose to start by trading one contract in three markets, then your objective for the first month is to earn $1000 net per market. Therefore for three markets you would have earned $3000/month and after three months this would increase your account balance from $10K to $19K.

Now let us say that for the next three months you decided to trade two contracts per market instead of one. Now your trades should yield $2000 net each month per market. Again if you are trading three markets, with two contracts per market, you should realize $6000 per month, or another $18K at the end of three months. Your account balance is now $37K after six months.

Okay so far, so good, now it’s time to get serious. If you have had good success so far, then you might consider trading three, or four contracts for the next three months. This means that you should earn $4K per month for each of the three markets, or $12K per month (if trading four contracts). For three months this will give you another $36K to add to your account giving you a balance of $73K at the end of nine months.

You’ve now hit your stride and just need to continue along the same path. You’re just $27K short of your objective now which you should reach in a little over two months…Viola! $100K in one year.

Don’t let the simplicity of this plan fool you – it is VERY powerful. Think you can do it? If you remember you need to become a consistent trader before you begin trading multiples then nothing can hold you back from achieving your goal.

One last piece of advice: To find three markets from which you can glean $250 per week, you may need to follow six markets regularly, as not all the markets will be giving you tradable formations week in and week out. Monitoring more than three markets will also give you a little added flexibility so that you don’t become too demanding of the markets you are watching. The last thing you want to do is begin trading less favourable formations just because you feel like you “have to” trade.