The $100,000 per year Challenge

What does $100,000 a year in net trade profits look like for the short term trader? I want to find out. Not sure how long it will take, or how it will end up, but here goes.

First, some definitions. In terms of 'trade profits', this will be before taxes, and after margin interest and transaction fees. This will be tracked via my standard 'lump accounting' method - adjusted end-of-the-day gains (I don't want to spend time keeping track of everything else).

Progress tracking metrics come out to $2000/week and $400/day (using 50 weeks a year, and 5 trading days a week).

Why am I doing this? First off, I feel like I am still very much in the experimental stages of trading, the notion that someone, somewhere, is actually making enough money to live off of, is, as far as I can tell, nothing more than a rumor (probably perpetuated by online brokerages to get me to keep coming back and spending my hard earned money on transaction fees). As it turns out, I have been quasi-successful with this trading thing the last two months, and the idea of actually living off of the procedes is starting to become a little more real and personal. This seems like the natural progression - how do I bump this up to some feasible and reliable income levels? How much capital do I need? How would it affect my trading style? Will my trading strategy scale effectively, or do I need to adopt and implement additional strategies?

To make this more realistic, the challenge needs some type of time frame: let's say I have one month to generate the income for the next month. By the beginning of February, I will need to pull enough out of the account ($100,000/12 months = $8334) to make it thru February, and still have enough capital in the account to trade and generate income for the next month. Meh... already thinking of what this means - will I liquidate in order to meet cash requirements if I think it is better to stay in? Hmm...


I won't actually be withdrawing the money, so I can use any additional capital to generate additional income. If the working capital is just not enough to make enough this month work out this month (and again, if I don't go broke), there might be more capital to work with next month. Eventually, there might be enough capital in the account to actually hit $8334/month. Time will tell.

This sounds incredibly and quite stupidly ambitious: ~$25,000 in capital used to raise ~$8000; = ~33% gain for the month, for 12 months of the year... Oh well, I need to start somewhere. Worse comes to worse, I can lower the annual in 6 months and start over (if I am not broke).

And along the way, some avid (future) reader may feel sympathy and find the courage to offer some gentle suggestions. As far as that goes, how about some suggestions for how to impose the challenge more realistically? As long as they aren't too complicated I am all ears.

Regardless, it will be fun, and it means an interesting progress chart at the top of the blog. Rawr!