The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation. Investors can expect to lose purchasing power of 2% to 3% every year due to inflation.
How much does a Trader make? The estimated total pay for a Trader is $269,448 per year, with an average salary of $132,208 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
In general day traders want to aim for at least a 50% win rate. A higher win rate gives you more risk/reward flexibility, and a high risk/reward ratio means that your win rate can be lower and still stay profitable. Profit Factor below 1.0 means that the trading system is loss-making.
While it is theoretically possible to earn $1000 daily through day trading, it is not common and requires a combination of experience, capital, discipline, and effective risk management. Many traders do not achieve consistent daily profits, and it's important to approach trading with caution and realistic expectations.
Many people have made millions just by day trading. Some examples are Ross Cameron, Brett N. Steenbarger, etc. But the important thing about day trading is that only a few can make money out of day trading and the rest end up losing their entire capital in day trading.
A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.
The 5-3-1 trading strategy designates you should focus on only five major currency pairs. The pairs you choose should focus on one or two major currencies you're most familiar with. For example, if you live in Australia, you may choose AUD/USD, AUD/NZD, EUR/AUD, GBP/AUD, and AUD/JPY.
A typical day trading profit per day is between 0.033 and 0.13 percent. This corresponds to a monthly profit of between 1 and 10 percent for successful day traders. However, only a few traders are successful in the long term - most make losses.
If a person trades for excitement or social proofing reasons, rather than in a methodical way, they are likely trading in a gambling style. If a person trades only to win, they are likely gambling. Traders with a "must-win" attitude will often fail to recognize a losing trade and exit their positions.
George Soros is perhaps the most renowned trader in the world, famous for “breaking the Bank of England” in 1992. His audacious bet against the British pound earned his fund over $1 billion in a single day.
$3,000 X 12 months = $36,000 per year. $36,000 / 6% dividend yield = $600,000. On the other hand, if you're more risk-averse and prefer a portfolio yielding 2%, you'd need to invest $1.8 million to reach the $3,000 per month target: $3,000 X 12 months = $36,000 per year.
It is possible to earn money with day trading and make a living from it and generate high income - but the chances are extremely low. A maximum of three percent of all traders achieve long-term profits; the vast majority lose large sums of money.
As of Jan 7, 2025, the average annual pay for a Day Trader in the United States is $96,774 a year. Just in case you need a simple salary calculator, that works out to be approximately $46.53 an hour. This is the equivalent of $1,861/week or $8,064/month.
The Sebi study revealed that between the financial year 2022-23 (FY23) and FY24, more than 10 million (1 crore) Indians tried their luck with F&O trading. About 93 per cent of these traders made an average loss of Rs 2 lakh each. These losses are often amplified by high costs, such as brokerage fees and taxes.
Understanding the average stock market return
The historical average stock market return, as measured by the S&P 500, generally hovers around 10 percent annually before adjusting for inflation, and about 6 to 7 percent when adjusted for inflation.
While day trading offers an entrepreneurial career route and a high profit potential, there exist some limitations and risks to the profession. These include high financial loss, emotional pressure, lack of access to certain markets, time commitment, and regulatory requirements.
The vast, overwhelming majority of day traders lose. They either lose early and quit, or keep trading despite their losses. As we'll see, only 3% of day traders make a profit. And only 1% do so predictably.
However, a widely accepted figure suggests that a successful day trader can pull between 1% to 2% of their account balance per day. For a $50,000 trading account, this equates to approximately $500 to $1,000 per day. Do keep in mind that these figures are not guaranteed, but merely a general estimate.
The fifty percent principle states that when a stock or other asset begins to fall after a period of rapid gains, it will lose at least 50% of its most recent gains before the price begins advancing again.
Definition of '80% Rule'
The 80% Rule is a Market Profile concept and strategy. If the market opens (or moves outside of the value area ) and then moves back into the value area for two consecutive 30-min-bars, then the 80% rule states that there is a high probability of completely filling the value area.
Day trading is difficult to master. It requires time, skill, and discipline. Many who try it lose money, but the strategies and techniques described above may help you create a potentially profitable strategy.
Here's my formula for estimating how much money you'll need: Daily Goal x 10= minimum account size. For example: If your goal is $100 a day, you'll need at least $1,000 in your account. For a $300 daily goal, you're looking at $3,000 to $5,000 to trade effectively.
While some can make a living trading stocks, the majority of day traders lose money over the long term. Education is critical to being a successful trader. You should also develop a trading strategy and stick to it.