What is the potential annual return from consistent day trading on a $1,000 account?

• A. About 50% per year.
• B. About 100% per year.
• C. About 250% per year.
• D. About 500% per year.

Answer: (C)

The main idea tested here is compounding small, daily profits into a much larger annual return. If you can average a tiny, consistent edge each trading day and reinvest the gains, those small gains multiply over a full year.

For example, if you target about 0.5% profit on every trading day and trade around 252 days in a year, the growth factor is roughly (1.005) raised to 252. That works out to about 3.5 times your starting capital, which is a gain of roughly 250% over the year. In other words, modest daily gains repeated and compounded can produce a sizable annual return even from a small starting balance.

Keep in mind this is a theoretical potential that assumes you can hit that small daily edge consistently and avoid big drawdowns that would break compounding. The other options would require either much larger daily edges or fewer compounding days, which is why they don’t fit the same realistic compounding scenario.