Are you curious to know how much money day traders make? A quick glimpse at Instagram and Twitter, and you’ll see numerous claims of day traders making thousands of dollars a day. Heck, one just posted profits of $115,000 in one day.
Or what about the penny stock trader who turned $12k into $5.4 million? I could name names, but you probably know who they are. Let’s just say these returns are outside the norm but not outside of reach. Day trading can be a lucrative career if you use the right strategies and techniques.
How Much Do Day Traders Make?
- Do you know how much day traders make? This can vary depending on if the person in question does it professionally or as a supplemental income. The average day trader typically makes $80,000 a year. However, there’s no easy answer to the question how much do day traders make. Read more to find out how to be a successful day trader.
What Is Day Trading?
Day trading is buying and selling stock within the same trading day. The goal of a day trader is to profit in the moves the market makes each day.
Surprisingly, the moves don’t need to be big. In fact, you can make a substantial profit from just a small move in the stock price. Unfortunately, in their eagerness to win big, many new traders jump all in, risking their hard-earned capital. According to the North American Securities Administrators Association, 9 out of 10 day traders lose money and eventually deplete their trading capital.
But, those who follow strict trading rules can easily make an income of over $100,000 per year or more.
Likewise, for those day traders that work for a company, the national average salary is $122,724 (source: Glassdoor). You can see below that this average varies based on where you work.
How Much do Day Traders Make and Salaries of Day Traders at Public Trading Firms
- City Equity – $154, 260
- Bank Of America – $275, 000
- Morgan Stanley – $276,000
Does this answer the question how much do day traders make? Remember, these are individual trading salaries.
One additional point of consideration is that you can earn substantially more as a fund or hedge fund manager.
If you want to be your own day trader, make sure you have good technicals. Tradestation indicators can work for you quite well.
Salaries of Day Traders at Public Trading Firms
If you’re wondering how much do day traders make at a public firm, your guess is as good as mine. But, what you will often find is the top traders venture out to hedge funds.
I could give a few different reasons, but the main one would be the freedom to make their own trading decisions and the potential for sky-high pay.
It’s nothing for a top trader to out-earn their boss; I’m thinking in the range of millions. Don’t forget that they have the best laptop for stock trading.
With the lure of lucrative returns, many are quick to jump in. But before you jump off the cliff, you need to ask yourself a few questions first.
Can I Make a Living Day Trading?
- If you want to make a living at day trading, you need to be good at it. That sounds simple doesn’t it? It’s not. It requires time and practice. How much do day traders make? You have to decide how much you want to make. And then work towards that goal before going live. You can also decide what style you’re going to trade. For example, trading outside stock market hours.
Is Day Trading Gambling?
Some experts consider day trading to be a form of compulsive gambling. And they’re right, to a point. The roller-coaster excitement and the chance to make a fast buck are luring people into the profession more and more.
Not to mention, the desire for quick cash may leave inexperienced traders with a depleted bank account if they don’t properly manage their risk.
Like any undertaking in life, you must protect yourself at all costs. It’s common knowledge in casinos, the house always wins.
Luckily trading, if done skillfully and artfully, can put you in the position of the house.Your goal is to trade like a casino so you know how to make money day trading.
A casino is not in the business of making predictions; they manage their risk and let their edge play out. So how much do day traders make?
How to Be the Casino and Protect Your Account
Did you know that your position size is more important than your entry and exit points when day trading stocks?
Even if you have the best strategy on the planet, if you don’t manage your risk, you will lose. You want a way to minimize to losses, and this is accomplished by following the 1% risk rule. The rule is quite simple: Don’t risk more than 1% of your account size. What you do is take your account (whatever size it is) and multiply it by 1%.
Think of it like this: By risking only 1 percent, you need to lose 100 trades in a row to wipe out your account. And if you happen to find yourself losing 100 trades in a row, it’s time to take a step back and reflect. How much do day traders make depends on how to apply the 1% rule when buying stocks.
Two Key Mistakes the Plague the Inexperienced Trader
- A focus only on profit and losses and not on the process. If your strategy is sound, the only thing you need to worry about is the consistent execution of your trading plan, and your profits will take care of themselves. Summed up: follow your rules, more on that below.
- Constantly changing strategies. Learn one or two that work for you and master them. Bonus for reading this far: a list of strategies you can easily implement! Your welcome.
If you want to be profitable and know how much do day traders make, make sure you have the best day trading system.
Is It Profitable to Be a Day Trader?
- How much do day traders make to be profitable? You have to decide for yourself how much you need to be profitable. Do you want to do this for a living? What are your expenses? Are you good enough at trading to cover those expenses? What happens if you have a bad week?
Success in Day Trading
We can all learn to trade for a living if we want to, but he or she needs the right rules and attitude. Traders who face the same opportunity must trade the same.
Personal feelings can’t interfere. Unfortunately, however, those proper rules and attitudes collide directly with fundamental human nature.
Sadly, many panic and sell when the market turns against them or hold on to losing trades too long. Make sure you know the four tips new traders should follow if you want to know much do day traders make.
“ You are not smarter than the market. You must follow your entry and exit rules based on your trading plan.”
How Much Do Day Traders Make Depends on Picking the Right Stocks
If you want to make a living day trading stocks, it is important to understand the qualities of a stock that make it a good candidate for day trading.
As a rule of thumb, these factors are liquidity and volatility. Liquidity in a stock allows you to easily buy and sell stock at a reasonable price.
Alternatively, volatility dictates the range in price of the stock throughout the day. But keep in mind, higher volatility brings a chance for greater profits but a higher risk of loss.
How much do day traders make depends on you knowing the intraday meaning. Intraday trading makes you a day trader.
Practice Makes Perfect
Let’s say we ask 100 random strangers to hit a fastball going 95 miles an hour. How many do you think would hit it? I would dare to say less than 0.5%.
Likewise, the same rule applies to trading stocks. Think of it, if 80 out of 100 people never practiced trading and threw money into a brokerage account, what do you think will happen? I think you know the answer.
The real question is, how long does it take before a trader begins to make money? That depends on how much time and practice you put in. So before you up and quit your job, make sure you can turn a profit.
If you cannot make money trading a $5,000 account, you will not make money trading a $50,000 account. For these reasons, you need to practice in a simulator. You can’t expect to be raking in six figures a month right off the bat.
Learn to Trade the Right Way With Bullish Bears
The lingering question remains: how much do day traders make? Some make enough to support their families. Some don’t make enough to cover their brokerage commissions.
Make no mistake about it; day trading is hard if you don’t have the proper rules and system in place. The moral of this story? Instead of focusing on how much money you can make day trading, focus on the process of making the right trades. Once you have your system in place, the money follows.
We understand that no two traders are alike. Luckily, Bullish Bears is in the business of tailoring systems for individual traders. Therefore, check out our day trading course.