Every newbie trader decides to trade, dreaming about significant returns. They want to know how much exactly they will make per day, month, or year.
How much can day traders make a year? According to statistics, on average, America’s day traders gain $57 per hour.
Inspiring numbers. However, you should remember that there is no exact amount you can make. Every trade will depend on numerous factors, including the asset you trade, the timeframe you trade on, the level of volatility, etc. In this article, you will find a tutorial on calculating the potential return of every trade you do.
How much does the average person make day trading?
If you trade on Forex, you can always use leverage and start trading with $50. However, if you want high returns, you should increase your investment. Let’s consider an example of the EUR/USD trade.
On Forex, the price movement is counted in pips. In a standard lot, which is 100,000 in currency, one pip equals $10. For a mini lot, which is 10,000 in currency, one pip will be worth $1, and in a micro lot, which is 1,000 in currency, one pip will stand for $0.10. The pip value will depend on the asset you trade.
Imagine you have $500 and take a 1:100 leverage, so you have $50,000. You can open five mini lots or 0.2 standard lots. Your strategy implies a stop-loss order of 3 pips and a take-profit order of 9 pips. One pip in a mini lot costs $1. Therefore, you should multiply $9 (9 pips of take profit) by 5 (number of lots). You will get $45.
To calculate the amount you risk, multiply $3 (3 pips of stop loss) by 5 (number of lots). You will risk $15. This is just one trade. Imagine you make six days per day. 50% of them will win, and 50% will lose. This is, you may receive $45*3=$135 but may lose $15*3=$45. Your final return is $135-$45=$90.
If you are a day trader, you don’t need to deal with a rollover fee that is added/subtracted from your position.
How much can you make as a beginner day trader?
If you are a newbie, you should apply a larger risk/reward ratio and trade micro lots. The amount you trade, especially if you use leverage, will affect the risks you bear. If you trade a standard lot of EUR/USD having $500 and a price moves five pips, you may lose $50 or 10% of your account. With a mini lot, to lose 10% of your account, the price will have to move 50 pips. With the micro lots, you will lose 10% of your trade if only the price moves 500 pips.
How much can a beginner day trader make? It doesn’t matter whether you are an experienced or a newbie trader. You are responsible for the return you get. If you find promises of enormous income, run away because no one can guarantee returns when dealing with financial markets.