Making money is the main motivation for beginning stock market trading. Your trading income is an essential part of your financial well-being and serves as an inspiration to improve your trading and continue your education.
The question “What can I realistically expect to make in my first year of trading?” is one of the most frequently asked.
Novice traders frequently invest their hard-earned money without a strategy and jump in feet first. Unfortunately, the majority of them eventually discover the hard way that earning a full-time living as an options trader is more difficult than it seems.
Those who are new to trading and have not done their research typically have wildly inflated and unrealistic expectations for their first-year earnings.
- What Kind of Earnings Can You Expect from Stock Market Trading?
- What do I Need to Know to Have a Successful First Trading Year?
- 1. Initially, paper trade with a modest sum of money
- 2. Recognize the common mistakes to avoid
- 3. Consistently trade- don't stop after a brief losing streak.
- 4. Develop your Trading Strategy
- 5. Expecting Financial Independence to happen instantly is Unrealistic!
- You can also watch our Learn2Trade series to learn how to trade in the stock market by Mr. Vivek Bajaj
- Bottomline
What Kind of Earnings Can You Expect from Stock Market Trading?
When someone starts trading stock options, they often have unrealistic expectations because of trading-related movies and TV shows, anecdotal evidence from friends, and online “gurus” who have no track record or professional experience.
Five years ago, someone may have traded one penny stock, but that doesn’t mean that a 454% return is typical or even expected today. People have even directly asked us if earning a 25% return each month is reasonable; surprise, surprise: it is NOT!
Starting your trading career with inflated hopes will inevitably result in failure and let you down. Better to face reality now than to be caught off guard later. We would say that a 20–25% return on investment would be a reasonable target. Not monthly!
What do I Need to Know to Have a Successful First Trading Year?
Let’s start focusing on education rather than how much money you might or might not make. Before investing a single penny in the market, it would be best if you learned how to trade stock options successfully; otherwise, you will fail.
Would you quit your job or leave college and then begin to present yourself as an authority in a subject you had no prior knowledge of? Let’s hope not.
That is essentially how stock market trading without research or education is. Similar to stock trading, trading derivatives is a highly technical and complex process. It’s not impossible, but you have to get off to the right start.
To increase your chances of success in your new endeavor, be sure to develop a trading plan and educate yourself about the stock market beforehand.
Below is a checklist that will help you to be successful in your first year trading in the stock market-
1. Initially, paper trade with a modest sum of money
Novice traders should paper trade everything first. By doing so, you can practice placing orders, modifying trades, and learning from errors without risking actual money.
When you decide to invest real money after becoming comfortable with your paper trades, you must keep your investment small. Consider this: How on earth are you going to trade profitably with Rs. 100,000 if you can’t even do it with Rs. 1,000?
2. Recognize the common mistakes to avoid
Around 80% to 90% of traders eventually lose money consistently and give up trading altogether (possibly more).
The sad part is that most of those could have avoided suffering such severe losses if they had started early on learning how to avoid common mistakes.
After you’ve learned what NOT to do, spend some time learning how successful traders trade, the methods and tactics they employ, as well as any additional advice that will position you for trading success. You don’t have to invent the wheel, so embrace the knowledge that traders before you have acquired.
3. Consistently trade- don’t stop after a brief losing streak.
After a run of four to five losing trades, many people give up. This is regrettable because those losses are the best teachers, particularly early on. Although it’s inevitable to lose money when playing, how you handle it can make all the difference.
It’s a good habit to develop to record each trade. Examine each element of the trade-
Why did you choose that business? Why did you travel far or short? Did you choose the right course of action? If so, did it advance sufficiently in that direction to tip the scales in your favor?
Our trading strategies do not require perfect predictions in order to be successful because it is impossible to predict price movements consistently. Read the technical indicators, keep your emotions in check, and most importantly…protect your capital!
4. Develop your Trading Strategy
Having a sound trading methodology is one of the best ways to be successful at options trading. Take the time to read through the information on our website and conduct fact-driven research on stock market trading and options rather than basing your trading decisions solely on gut feelings.
This will make it simpler for you to set reasonable income goals and steer clear of common mistakes, which will stop your feelings from interfering with the maths.
Organizing your research is one of the best ways to create a fact-based trading system. Choose your preferred sources of market news and sign up for their newsletters. You should also read fresh viewpoints that contradict your preconceptions and play devil’s advocate with your trades.
You will be inspired to view your trades objectively if you develop these research techniques and make yourself evaluate them. You will improve your trading reflexes and have an easier time spotting inefficiencies if you can establish the habit of conducting objective research early on in your trading career.
Last but not least, using a fact-based research methodology will help you develop a clear understanding of how to set reasonable earnings expectations. Although the early going will be difficult, persistence and careful research will help you develop an efficient and manageable trading strategy.
5. Expecting Financial Independence to happen instantly is Unrealistic!
Focus on low-risk, high-frequency stock market trading with trading systems designed to generate income rather than treating your trades like a slot machine. Trading options consistently and persistently, even on a losing streak, is the key to success.
You will be far ahead of most aspiring traders if you can let go of the idea of becoming a multi-millionaire trader overnight and adopt an unbiased perspective on your strategies. The secret is approaching option trading as a sustained commitment to personal development.
You can also join our course NSE Academy Certified Capital Market Professional (E-NCCMP)
Contrary to other “hobbies,” trading puts a lot of your money at risk all the time. Take on the determination and focus necessary to approach your trades with professional skepticism and to treat trading as a profession.
After all, the ultimate objective is to eventually make money.
You can also watch our Learn2Trade series to learn how to trade in the stock market by Mr. Vivek Bajaj
Bottomline
You can successfully complete your first year of trading if you remain composed, adhere to the rules, manage your money sensibly, and take things one step at a time. Remember that learning and practicing should be done as frequently as possible.
We hope you found this blog informative and use the information to its maximum potential in the practical world. Also, show some love by sharing this blog with your family and friends and helping us spread financial literacy.
Happy Investing!
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