How much do Day Traders earn?
Posted On March 27, 2021
The question of how much money daily traders make is difficult to answer not only because the answer will vary from one trader to another, but also because the vast majority of traders do not publicly disclose their income in the same way that other professions do (although I disclose my verified business results because transparency is very important to me.) Thus, while most people have a general idea of the salary range of a lawyer or teacher, the income level of a professional day trader remains shrouded in mystery. Before addressing the question of how much a professional trader makes, it is important to note that this article is not intended to be conclusive and is based solely on my own experience. Your results as a day trader will depend on your skill, your account size, the instruments you trade, and a number of other factors. Let’s start first with the main problem in estimating the average income of a daily trader: the survival bias.
The problem of the basis of survival
Survival bias refers to the distortion of results that is incurred when targeting only people who have survived the learning curve of day trading. While the exact numbers differ from study to study, the vast majority of traders fail before becoming profitable. Therefore, an examination of the average earnings of today’s day traders cannot account for people who failed in the day’s trade and are now pursuing other careers. With that said, I’m going to give you an idea of the possible income ranges for professional day traders by separating traders at different skill levels, similar to how major league baseball works.
Top-tier traders are like amateur baseball players in that they don’t currently make enough money as traders to fully support their lifestyle. I characterize any trader who makes less than $ 50,000 a year as a hobbyist. While every trader should start at this stage, being a hobbyist is usually transitory; If a trader is stuck too long at this stage, he will probably get a job at some point.
Minor league players
These traders have shown promise and have the talent to break into the major leagues of the trade. Any day trader who makes between $ 50,000 and $ 100,000 a year can be considered a minor league player. Traders in this category typically have strong fundamental skills and a strategy they trust. Getting to the next level will require adding more size to operations and adding more strategies to diversify your operations.
These traders have beaten the odds and are consistently making six figures a year, putting them in the major leagues. Any day trader who earns between $ 100,000 and $ 500,000 falls into this category. These traders are larger in size than those in the minor leagues and are generally more experienced as well.
All the stars
The stars of day trading consistently earn between $ 500,000 and $ 1,0000,000 a year. These traders have excellent fundamental skills and use a variety of trading strategies, and they also often possess some creativity and market insight not found in other traders.
Hall of Fame
Simply put, these are the best daily traders in the world, consistently making more than $ 1 million a year. These traders typically have at least five years of experience and are trading very large positions compared to other traders. Very few daily traders reach this level.
While the income of a professional day trader can obviously vary greatly, the above categories should give you a general idea of how much a day trader with a certain skill level can earn. It is important to remember that just as all baseball players started in the minors to hone their skills, traders must also work on their skills before becoming the cream of the crop. As you can see, the financial rewards for becoming an elite intraday trader are impressive.