The last thing you will worry about is your day trading salary.
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The stock market is the one place that if you are careless with your money, it will leave you faster than any other investment vehicle known to man. My gut tells me that you have landed on this article because you are thinking about venturing into the world of retail day trading. Imagine you are responsible for someone or something.
Really think about that, do not just skim over this point. Now imagine that you are relying on what is completely unpredictable — the stock market, to provide support for the people that matter to you the most. How does this make you feel? Now, I am not trying to scare you by any means. I genuinely want you to walk through this exercise with me. Now imagine that you cannot meet these demands for a month.
Then a month becomes six months. Well, six months becomes five years. Are you willing to endure the constant questioning from the people that have every God-given right to question you? Will you be able to withstand the mental laps you will put yourself through as you go on this journey? For the first time in over 30 years, the United States has finally decided to do something about our tax plan. Before we go any further, while there are a number of winners and losers with the new deal, as a day trader you are likely to come out slightly ahead.
Short-term capital gains are still taxed as ordinary income rate. In case you are unaware of your potential tax obligation, you can reference the below data. Click on the tabs of the graph to visually cycle through the differences in the tax bracket [6]. In case I am the first to tell you, these tax breaks only last until , after which point everything resets back to the existing tax rates.
For some reason, day trading is looked at as the lottery of life. For me, learning to day trade has arguably been one of the most challenging endeavors of my life. It still baffles me that everyone wants to know about all the money to be made but are unwilling to put in the thousands of hours of trade review and practice to get better.
As I have stated in other articles, just learn to make enough money to cover small bills first. This could be your cable bill or gas bill. Do not include time in this path to profitability. Just make it about you progressing in the right direction on a quarterly basis. If you focus on the process of making money the right way, you will be able to scale up to the targets discussed earlier in this article. Make no mistake about it, every single day you will be in a never-ending battle with the best and brightest to make a living.
Instead of focusing on how much you can make per year trading, you need to think of how much you are willing to lose. I know that is a bit ironic since this entire article is based on making money. The thing is learning to trade takes time, and tuition is not free. There are few studies that speak to the profitability of retail traders. I did find a recent study from the Autorite des Marches Financiers AMF [7] that took a look at profitability across active retail currency traders in France from — The study looked at a total of 14, customers.
This small group of investors made So, one thing I wished I had done was set a not to exceed level in terms of money I was willing to lose when I first started out trading. Nothing is given.
Foreign exchange market
Everything is earned. You work for what you have. I have to give the full picture of trading — good and the bad, to paint the reality of what it will take. So, the same rule applies to trading. If 89 out of have never traded and then fund a forex account, what do you think will happen?
Forex Market by Country
The real question is how long and how many trades does it take before a trader begins to make money? Therefore, do not get caught up in these percentages, other than to know you will need to work hard for what you want. Check this out, I came across an interesting article from the Guardian [8]. I found it to be on-topic for this article and have developed an infographic that calls out clear themes that can be applied to your existing or future journey in trading.
There were a few standouts from the interview, which I will highlight for those too busy to read the article.
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For starters, the trader segmented what it means to be a trader. He then classifies himself as a quant that needs time to run quantitative analysis to identify his edge. Another interesting fact is that the trader does not simply go long or short. The trader hedges every trade he places in order to limit his risk exposure on the account.
I also found it interesting that he made it a point to clarify that traders are not evil.
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From the sounds of it, he is trading volume and can potentially have an impact on the price of a contract on the exchange. This is where things really get interesting. He makes , per year, but his bonus can be many multiples this value. If you are ambitious enough to read this article, you are likely more interested in the multiples. The last standout from the article is the trader did not like the idea of trading at a hedge fund for the risk of investors pulling their money out at any time.
Now a couple of key points from the article you should be aware of before you spend your millions:. Just focus on being the best trader you can be and do whatever you can to avoid losing your shirt. Follow these rules and at some point, your equity curve will take off and your dream will become a reality. But like J Park, are you willing to put in the hard work for two years before seeing any results or will you take the easy way out like those poor souls trading the Forex in France?
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Well, I hoped to tear down some of these barriers to information in this article, so you know exactly what you can expect to make if you take this journey. Now, speaking of journeys. While I hoped to make things very public and data-driven when it comes to how much you can make, at the end of the day this is your personal journey to the career or life experience you hope to achieve.
When you really think about it, if you are working for a company you will have a salary, but that salary is minimal compared to the bonuses you could receive from successful trading. Now if you are trading for yourself, I would dare to say you do not make a salary. A salary implies you receive money on a regularly scheduled basis at relatively the same value. Your entire well-being in terms of money coming in is predictable somewhat, but not really.
You also do not have a salary in traditional terms. You are an investor which means you make a return on your money or receive income from your investment decisions. I say all this to say the income you will make or are already making is solely up to you. You have to decide what type of salary if employed or income self-employed you want to make that will 1 keep you in the game the longest and 2 allow you to live a full life where you are not concerned with every tick in the market.
How much money you can make in the market comes down to two simple things: 1 your ability to profit on a consistent basis and 2 your starting capital.