Day Trader Salary And Their Profit Target in 2022
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More and more people are trying their hand at day trading as they find out more about this method of making money. Day trading simply means that all open positions are closed on the same day.
There are two main reasons why many traders choose day trading. First off, by closing all open trades by the end of the day, you avoid any overnight charges. Secondly, day trading is a way to utilize the smaller time frame and not have to wait for days or weeks to profit from the markets.
Day traders, therefore, capitalize on short term trends and make trading profits from riding these. one of the main things to keep in mind is that if you want to try your hand at day trading, you need to set realistic expectations on how much you intend to earn with your trades.
Table of Contents
- Day Trader Salary and their Profit Target: Is Day Trading Profitable
- Day Trading Profit Target
- Using ATR to Set Profit Target
- Day Trading Rules and Good Practices
- Best Forex Trading Course
- Best Forex Brokers
- Conclusion: Day Trader Salary and their Profit Target
- Day Trader Salary and their Profit Target FAQs
Day Trader Salary and their Profit Target: Is Day Trading Profitable
If you have finally decided to try out day trading, you need to answer a fundamental question -is it profitable and is it worth it? One thing is for sure, day trading is certainly not meant for every trader.
Expect that there will be some great days and there will also be some bad and disappointing days. The best you can do is to try your hand and it and see if it works for you. If it doesn’t work for you at least you will know that day trading isn’t for you.
But what if you decided to seek out the answer on Reddit? This could end up being a bit confusing. This is because some people will say they came out with less than they initially invested aka they lost money, while others were profitable traders.
It all comes down to how well you can manage your money, your trading strategy, and your patience. Some traders will make impressive profits trading while others will not. Through day trading, some traders may find that they are better off playing the long game and trading bigger time frames.
And here are some stats. According to Forbes, just 10% of day traders make money consistently. The remaining 90% consistently make losses and often wipe out their trading accounts. According to other experts, up to 99% of day traders lose money and only 1% are profitable day traders.
That said, it is not clear which criteria experts use to conclude. What is clear though is that more day traders tend to err towards making less and only a few other traders with better risk management move towards having profitable trades consistently.
This then means that it is more likely that you will lose your own money. However, the trick is learning how to manage your losses so you make more profits than losses. also only trade using money that will not affect your financial position if you lost it.
Day Trading Profit Target
As is the case with everything else in life you must come into trading with a plan. What separates successful money day traders from unsuccessful ones is the trading plan. Often getting into a trade is not a problem. The problem lies in risk management and finding the best exit points.
You need to have a gross profit target. This is the amount of money that you are aiming to come out of the trade with at the end of the trading day. Very often, what determines the figure is how skilled you are at trading and your way of managing risk.
For many aspiring day traders, making just 1% of their account is considered acceptable. This may seem small. However, making 1% a day for a whole month amounts to come to 34%. This is assuming that the previous day’s gains are reinvested into successive day trading.
If we assumed that the financial markets are open for 250 days in a year, the figure would go up to 1100%. What started as a small figure is now quite impressive.
But let’s step back to reality now. And the reality is that you will not make profits every single day. Always remember that any type of trading that includes day trading should be aimed at the bigger picture and making money in the long term. This is because there will always be bad days.
So the question now becomes, how much money day traders can aim to get? A clearer and more reliable picture come from the S&P 500. You can see clearly that profits are not always consistent. While some years bring in as much as 40% other years can go negative 40%.
If they made 50% profits each year, this would translate to 3.5% each month and 0.15% every day. Of course, we are assuming that each trading month has 22 days.
Being able to get a 50% return is not easy even while dealing with the stock market keeping in mind that such returns have only been incurred just a handful of times since the S&P 500 was formed.
It would be a bit far-fetched to think that you would be able to make 7 times that much in a day. What we are emphasizing here is that as day traders, you will not be able to make as much money.
However, it is important to note that day trading isn’t all about luck. The great thing is that with a good day trading strategy, you can ensure that you don’t lose money. This will highly come down to the stop loss and take profit orders.
Using ATR to Set Profit Target
When it comes to trading, amongst the most well-known indicators is the ATR better known as the average true range. It is a nice tool to include in your day trading strategy. This technical indicator was designed to measure the level of volatility in the market. Volatility is one of the major pieces of information that determines whether or not a trader should take a trade.
Let’s take a closer look at how a typical day reader could use the average true range. Keep in mind however that it is more complex than this but we will keep it simple.
Let’s say that when we looked at the ATR we noticed that the price often moves up by $0.5. However today the trader noticed that it moved up by $1. The trader may get a signal to enter the stock market but should keep in mind that today’s prices are moving more than the norm.
This, therefore, means that picking a trade wouldn’t be the best decision. As the price is now moving beyond the norm, it would be smart to expect that it will go back to normal again.
Due to this, a better trade would be taken in the opposite direction of the current price movement. The logic is that price is expected to reverse back to normal.
One thing to always keep in mind is that you should never rely on a single indicator. Having multiple indicators working in unison will give more reliable signals.
Day Trading Rules and Good Practices
Any type of trading has its own set of basic rules and this goes for day trading as well. Here are a few rules and several factors to always consider with day trading.
Stay informed – the better informed you are the more likely that you will make more reliable trading decisions. Keep yourself updated with the news affecting your market and always ensure that you stick to more reliable sources of information. In other words, stay away from emails and SMS that pop up anytime no spam.
Set realistic and achievable goals-many successful day traders often fall under the temptation of riding a trend for far too long trying to get as much profit as they can. Often they also end up losing money rapidly. Make sure to take small realistic profits and remember that you will always get another opportunity.
Consider margin trading – when it comes to day trading, you will find often that it is difficult without plenty of trading capital. A way to deal with its situation is to consider margin trading. This allows your broker to lend you money which can then help you in magnifying the size of your profits and also losses. If you are just starting with day trading, you are better off avoiding margin trading at first. After all different brokers have different margin requirements and may over-extend.
The timing – the majority of investors will take day trades and enter the market as soon as it is open. This results in increased volatility. Professional traders can use this to their benefit yet only a few day traders actually do. Keep in mind that you are just starting day trading and that you will be better off staying out of the markets for the first 30 minutes allowing you to see the sentiment.
Losing money and losing trades are part of the game – you are better off understanding this principle. Day trading is often taking advantage of market swings. Due to this very reason, it is one of the riskier ways to trade the markets. It comes with a high risk. This thus means that you are better off trading money that you can afford to lose.
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Conclusion: Day Trader Salary and their Profit Target
When it’s all said and done, the most important thing is to do your best. Always go into day trading with the right information at your fingertips.
This will be the difference between becoming a successful day trader and why some day traders fail. It is always a good idea to start trading by practicing with a demo account.
That said, your chances of becoming a successful trader will go up exponentially when you enroll in a course. The Asia Forex Mentor provides you with all the skills you need to become successful in day trading.
Day Trader Salary and their Profit Target FAQs
How much profit do day traders aim for?
Day traders aim to maintain a 50/50 win-loss ratio. One of the advantages of having a higher win-loss ratio is that the trader gets greater flexibility on the risk to reward.
A trader with a win-loss ratio of 55% aims at getting a 20% return on their starting capital each month.
How much does the average day trader make?
The average day trader can make $118, 812 in a year. This can translate roughly to $57 in an hour. That said, some top-performing day traders can make as much as $195,000 per year.