I would not be a fan of leverage myself so to advocate it to the masses is somewhat irresponsible. That said, to those that know what they are at, yes, its a game changer of course. I will never use leverage as I simply would not have the mentality for it. That is a personal thing.
What hasn't been mentioned before is the spreads on some Irish issues. Looking at FBD there recently I noticed there was a 35 cent spread, which for a EUR7 stock is a bit nuts to be honest. Compound that into your calculations and you need an even bigger gain to break even. Market maker is obviously trying to make up for lost liquidity by taking the p1ss with the spread.
I have not really bothered trading Irish stocks bar one or two highly liquid and highly promising issues. I have been more an NYSE/NASDAQ investor (not trader). As a couple of people previously pointed out (Daytrader/Mercman) you really need to be looking further out on the investment horizon. If you are not medium/long term, going long on stocks may not be the correct way to play the market. Also, small lots of 1k is going to do nothing but make you broke, which is unfair for the average retail investor as sometimes lots of 1k is all they can afford. You really need to be going up in the lot value to make it worthwhile.
I will also add, you use TDWaterhouse as the broker in your example. Try using any of the Irish ones (Davy/Goodbody etc) and you will find your commissions far higher. Even though they offer a research facility I find their charges complete extortion and unfortunately for those trading with a corporate account (ie. Irish resident company account) you have little choice as far as I am aware so essentially what I am saying is, you could more or less double those commissions in your example above. Its only recently that TDW are available in Ireland. Lets hope more come to the party as it will elliminate the cartel approach in Irish investing.
Back to the point of the post: I do believe it is possible to earn a living from trading alright. But not the Irish market. You would need to go to where the heavy duty funds invest and that really is the NASDAQ/NYSE. At the end of the day it is the big US institutions that will rocket a stock price, not a mickey mouse Irish institution. It is there you tend to get the nosebleed rises and falls. Along with this, you would need a very cheap online broker and you would need intimate knowledge of swing/position trading. All of the above I dont really do myself as I wouldn't have the b@lls for short term trading on a continuous basis. I'm more of a fan of the business cycle approach, start buying in bulk during a recession/bear market (obviously timing being important here) and then start going to cash when you get nervous or things start looking top heavy and everyone is getting greedy. You would also need a lot of experience in the area of trading and have traded through plenty of ups and downs.
All of the above, a very efficient loss cutting approach and a large cash balance should see you making a decent living out of it.
It all sounds great. I would say the practicalities of it though are quite different
Mercman, you mentioned you made a living previously but not in the last two years. Why not in the last two years. I would have thought the volatility of the last two years, the financial crisis and the ride up from the March lows would have set the stage for spectacular returns?