HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
MultiBank Group information and reviews
MultiBank Group
84%

How much do day traders make?


The trading world encompasses a lot of different styles depending on how long traders hold positions open for and how often they are willing to trade at all. Day traders are traders that buy and sell securities within a single day. They almost never hold their trades open overnight and tend to capitalize on the small price movements that occur during one day.

In this article you will learn about how day trading is different from other trading styles, what earning potential day traders have, and how you can become a successful day trader.

Key Takeaways

What does a day trader do

Day trading is probably the most popular trading style because it doesn’t require long-term commitment to trades. Day traders tend to trade securities the prices of which tend to change noticeably within one day. This includes stocks, all kinds of currencies, futures or options. Their strategy involves finding securities that are most likely to experience some price fluctuations, opening positions and holding them for a short amount of time, usually for a few hours, but sometimes for just ten minutes or so.

Of course, these price fluctuations can’t be that big. So to make a difference, day traders tend to buy bigger lot sizes, sometimes using leverage to amplify their potential gains. But the key to becoming a successful day trader is consistency in trading and a strong trading strategy that takes into account all the risks associated with this style of trading.

How to become a day trader

Before becoming a day trader, you need to first consider whether you’re ready to turn trading into your everyday job. You will have to spend several hours each day in front of the screen, scanning the price charts and following the news for updates on the financial markets. You also need to be ready to learn a lot as you go because the theory doesn’t cover everything you need to know.

Next, you need to make sure that you have enough trading capital. The more securities you are able to afford, the bigger your potential returns will be. Without a proper capital, it will take a very long time before you see the results you might be hoping for.

After this, learn about the best day trading strategies and risk management. Day trading carries a lot of risk, so having a plan to stick to and a safety pillow will help you mitigate potential losses and save your capital from unsuccessful trades.

Day trading: career paths

Day traders can be self-employed and working from the comfort of their home, or work for a large financial institution. Both options have their own pros and cons. Self-employed traders don’t have to get a degree to work with financial instruments. They keep all their earnings to themselves and can plan their work day in accordance with their own goals. They don’t have a boss hovering over them and don’t need to meet any targets or standards that financial institutions may set for their employees. At the same time, self-employed day traders don’t have much job security, nor do they have any promotion opportunities.

As for the traders employed by large institutions, they must have a degree in finance in order to get hired. The pros of working for big companies is that day traders use the company’s capital to make their trades, so they don’t risk their own money.

Besides, large companies have more capital, so professional day traders have the opportunity to make bigger trades. On the down side, professional day traders are usually salaried employees, so they don’t get to keep their earnings to themselves. They also don’t have the freedom self-employed traders do and must follow their company’s working hours and policies when planning their trading strategy. However, these cons can be seen as advantages because professionally employed day traders don’t have to worry about job security or overworking.

What influences earning potential in day trading

Day trading is a volatile career choice, and your returns depend on a lot of different factors, some of which are outside of your control. But there are some things you can take care of that can help you secure stable profits:

Day trader salary

Day trading has long had the reputation of being a high earning career path, but the reality is much more complicated. Day traders’ earnings can be influenced by their skill level, capital, the markets they are working in, the strategy they prefer to use in their work and other factors. According to zippia.com, the average annual salary of day traders in the United States is $116,895. However, this statistic includes only those traders that are able to secure a stable income thanks to their solid capital.

Another thing that is quite hard to calculate is the capital increase. If you only have a capital of $100, a profit of $1,000 means that your total gain reached 1,000%. But this same profit with an initial capital of $10,000 means a capital increase of only 10%. However, this indicator is rarely taken into account in the overall statistics.

But what a lot of people forget to note is that only 20% of traders manage to turn day trading into a stable career. Many traders suffer losses when they first try their hand at day trading and give up before they manage to develop a solid trading strategy. This is why it is very important to plan each trade and write down your price targets early on. Having a well thought-out strategy can save you a lot of trouble in the future and keep you from making mistakes that can cost you your whole trading account.

How many trades can you make in a day as a day trader?

According to trading regulations, you are considered a day trader if you make four or more trades over the course of five business days. However, thanks to the different algorithmic and high-frequency trading tools, day traders can now automatize a lot of tasks and improve their overall productivity. Typically, an average day trader makes from five to thirty trades per day, though with the help of specialized software this amount can be higher.

What is the success rate among day traders?

Day trading is a rather difficult way to make consistent profit from. According to the statistical data gathered by Business Insider, only a small portion of day traders – from 5% to 20% – manage to make it in the trading world and continue to get consistent earnings. The rest of the traders aren’t as lucky and usually burn through their capital without making much profit.

Are there any financial risks in day trading?

The answer is yes. Day traders are at risk of losing money just as much as other traders, especially since in order to make consistent income they often need to risk a large portion of their accounts. In order to minimize their risks, experienced day traders know how to place price targets and stop-loss orders, which helps them limit the amount of losses they might incur.

Conclusion

Overall, day trading can be a very lucrative job, though it does have its hidden dangers. Aspiring day traders need to remember to use risk management strategies and create a trading plan before deciding to commit to day trading fully. Read analytical and educational articles by FBS analysts to take your market understanding to the next level. Don’t stop learning, and be consistent in your decisions. That’s how big players act, and we suggest learning from them.

#source


RELATED

Long Position Vs. Short Position: What's The Difference?

The tried and true formula for successful sales, "buy low, sell high," applies equally to financial markets. Traders use various types of transactions to achieve this, including short positions...

Maximizing Trading Performance: Strategies to Overcome Distracting Factors

Trading in the financial markets is akin to a high-stakes chess game, requiring a multifaceted approach that extends beyond traditional market analysis...

Federal Funds Rate vs Discount Rate

In 1913 the USA government passed a law, according to which...

Navigating the Commodities Market: A Comprehensive Insight into Recent Trends

In the intricate web of global markets where economic fluctuations resonate across borders, the art and science of trading commodities have unfolded into multidimensional realms...

Guide to Efficiently Diversifying Your Currency Trading Portfolio

In the ever-evolving world of currency trading, mere awareness of market trends and ad-hoc decision-making are inadequate. The success of a trader is underpinned by strategic portfolio design...

How much does Metatrader 4 cost

Venturing into the world of forex trading requires research and knowledge. This becomes particularly important when choosing your trading platform and the broker through whom you’ll trade...

Unraveling High-Frequency Trading Systems for Novices

High-frequency trading, abbreviated as HFT, is a trading style that utilizes advanced algorithms for rapid transaction execution. This article breaks down the intricacies of HFT...

Conquering the Clamor: Navigating Market Noise for Informed Decisions

In the whirlwind world of finance, market noise is a constant presence, creating a din that can easily muddle the decision-making process for traders and investors...

What are the advantages of Metatrader 4?

To manage trades in the most optimal way requires a robust trading platform like MetaTrader 4. Released almost 20 years ago, MT4 has gone on to become the most popular platform in the world...

Mastering Asset Correlation: A Key to Successful Trading

In the complex world of financial markets, success hinges on more than just intuition; it demands an intricate understanding of how different assets interact...

How to Avoid Overtrading

In Forex, when traders start excessively buying and selling currency while disregarding their strategy, they are "overtrading". Overtrading is dangerous as it often happens when traders get caught up...

Understanding the Impact of the Best US Dollar Rate

In the interconnected global economy, the strength of the US dollar rate holds significant influence over international currencies and commodities. As the world’s primary reserve currency...

Is a forex hedging strategy effective?

Forex hedging is a risk management strategy that offsets potential losses by taking opposite positions. It involves placing trades that serve as a safeguard against adverse price movements...

Forex Trade Ideas: Start Learning About Forex

If you have just started trading, then you must have started getting acquainted with the basics of trading forex and online forex trading techniques. The more you learn, the more you will understand...

Mastering Bond Trading in 2023: Strategies and Insights

Bonds, often known as fixed income securities, remain a fundamental financial instrument for both governments and corporations, allowing them to raise capital for various projects and operations...

Why traders shouldn’t underestimate an Economic Calendar

Brace yourselves for the ultimate weapon in your trading arsenal - an Economic Calendar, revealing the future of financial markets. So, why should you care?

MetaTrader 4: A Deep Dive into the World's Most Renowned Trading Platform

When discussing modern trading platforms, MetaTrader 4 (MT4) inevitably takes center stage. Launched in 2005 by MetaQuotes Software, its revolutionary features and pioneering tools have firmly rooted it as a global trading mainstay...

Things Football Can Teach Traders

As the 2022 FIFA World Cup countdown is fast approaching, football fans from around the globe are picking up the pace to gear up for the world’s most popular game...

The psychology of forex trading – overcoming common biases

In this article, we explore the common biases experienced by forex traders across the globe, and how to overcome them...

Ten Trading Quotes that Will Change Your Trading

Having trouble setting your mindset on trading mode? Need inspiration or a tip to improve your trading? Look no further...

XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
Octa information and reviews
Octa
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.