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How Much Money Do Day Traders Make?

  • By Jenna Gleespen
  • Sep 28, 2022
How Much Money Do Day Traders Make?

Do you ever watch those TV shows about day trading and think to yourself, “Could I do that?” Well, you’re not alone, because day trading can be a very tempting way to make money in the stock market. In this article, we will take a closer look at how day traders earn their income and answer the question, “how much money do day traders make?”

What Is A Day Trader?

A day trader is an individual who trades stocks, bonds, options, futures, or other financial instruments within the same day. 

Day traders typically buy and sell securities multiple times throughout the day in order to take advantage of short-term capital gains and price fluctuations.

How Much Money Do Day Traders Make?

Many day traders work independently, but there are also firms that employ multiple-day traders. Day trading is a high-risk, fast-paced activity that requires split-second decision making and can be very stressful.

Day traders must be knowledgeable about financial markets, be able to assess risks quickly, and have the ability to make decisions in a fast-paced environment. They must also have strong self discipline to stick to their day trading stocks strategies.

Day Trading Strategy

There are many different day trading strategies that you can use, but some of the most popular ones include:

Scalping

This is a strategy where you take small profits on a regular basis. You buy and sell quickly and try to make trading profits on each trade. This can be a very profitable stock trading strategy, but it can also be a very risky one.

How Much Money Do Day Traders Make?

Momentum Trading

This is a strategy where you trade based on the momentum of the market. You buy when the market is moving up and sell when it’s moving down. This can be a profitable strategy, but it’s also a risky one.

Swing Trading

This is a strategy where you hold onto your trades for a longer period of time and try to make bigger trading profits. This can be a less risky strategy, but it can also take longer to make profits.

How Much Money Do Day Traders Make?

Whichever strategy you use will depend on your own personal preferences and risk tolerance. It’s important to test out different strategies before settling on one you’re comfortable with.

What Does A Day Trader Do?

If you want to become a day trader, you will need to have some trading capital to start with. Once you have the funds, you need to find the right stock.

They use different sources of information to research stocks. Then they need to determine how much they are willing to pay for the stock and what price they are willing to sell it at.

Next, day traders need to set up a trading account with a broker that supports day trading. They also need to find a good broker that offers low commissions and has good customer service. Once the account is set up, day traders can start buying and selling stocks.

To make money, day traders need to buy stocks at a lower price and sell them at a higher price. They may also sell short, which means selling a stock they do not own and borrowing it from their broker.

They would then hope to buy the stock back at a lower price so they can return it to the broker and keep the difference as day trading profits.

How Much Money Do Day Traders Make?

How Much Money Day Traders Make

How much you make as a successful day trader is largely determined by:

  • The markets you trade
  • How often you trade
  • How much experience you have

These factors, as well as others, will contribute to how much money you can make day trading.

Examples

For example, let’s say you start day trading stocks with $5,000.

You may be able to make $50 to $100 per trade, depending on the markets you trade and how aggressively you trade.

If you risk 2% per trade, that means you can make an average of 20 trades per day. Over the course of a month, that would give you 500 trades.

If you make $50 per trade, that means you would make an average of $25,000 per month. Of course, this is just an example and your results may be different.

The most important thing to remember is that day traders can lose money day trading, so you should only risk what you are comfortable losing. Also, keep in mind that past performance is not necessarily indicative of future results.

How Much Money Do Day Traders Make?

Final Thoughts: How Much Money Do Day Traders Make?

So, how much money does a day trader make? This is an important question for those considering a career in day trading.

As we’ve seen, the amount of money you can make as a day trader varies widely depending on your skill level, the market conditions, and your risk management.

However, if you are skilled and lucky enough to catch some good trades, it is possible to make a lot of money in a short period of time. 

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Jenna Gleespen is a published author and copywriter specializing in personal and investment finance. Her expertise is in financial product reviews and stock market education.