Day Trading Success Rate: How Much Do Day Traders Make?

As someone who wants to get involved in investing and start building real wealth, day trading intrigues you. You’ve seen day traders in the movies and on TV, and it looks like they lead pretty glamorous – albeit stressful – lives. You want to know how you can get in on day trading for a living, or at least doing it as a money-generating side hobby for now.  

Before you start, you want to know the definition, the day trading salary, and how exactly you can parlay your interest into a fruitful hobby (other than scrolling Facebook) or a new career outside Wall Street or stock trading. You will discover whether day trading is right for you and how to go about being a successful day trader 

What Is Day Trading?

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Before you dive into day trading for a living, you first need to know exactly what the activity entails. Forget Google, everything to day trading is in this blog! Day trading is the buying and selling of securities on the same day, usually when the markets are open between 9:30 a.m. and 4 p.m. New York City (EST) time, MondayFriday. However, there are pre-market hours that you can also trade during, if interested. 

Day traders do day trading for a living by holding onto securities for a few minutes or a few hours and then selling them off for more than they bought them. One requirement of starting is they must have a minimum of $25,000 in their account before beginning to trade.  

To be successful as a day trader, you must know how to work the markets by looking at stock charts and analyzing where things are going. Day traders at the top firms have access to the best information possible, which is why they are able to do so well. They also have access to more funds than your average hobbyist or independent day trader, giving them much more leverage to experiment and see what works to build profits. 

If you’re just beginning as a day trader or coming from foreign exchangeyou need to know that you won’t make a normal day trading salary right away. It may even take you years to get there depending on how much of your time you dedicate to it. A few easy tips to dip your toe in the water with day trading are to: 

  • Tradebased ologic, instead of emotion. When you’re in high-pressure situations, you don’t want to use your feelings, but instead, make a logical decision. For instance, if you are anxious you could double down on losses and end up losing more money than anticipated. You could also think you’re on a “winning streak” and make riskier moves that will land you in hot water. Before sitting down to trade for the day, make sure you’re in a calm place. 
  • Come up with a stop loss amount. This is an amount of money that you’d be willing to lose before you stopped trading for the day. Typically, your stop loss should be no more than 3% of your entire portfolio. If you’re just starting out, 1% is even better.  
  • Take breaks. Most day traders aren’t sitting at their computers all day long, trading from 9:30 a.m. to 4 p.m. A lot of them get their trading done between 10:30 a.m. and 11:30 a.m., and then move onto other tasks for the day. Being at the computer the whole time could end in making bad decisions. 
  • Research before making trades. Again, if you’re just trading based off what you feel may be profitable, you’re not coming from a place of logic. Make sure you learn how to read stock charts. 
  • Paper trade before diving into the real thing. This will give you practice prior to you going into the big leagues and possibly help avoid losing money. TD Ameritrade offers a great platform for paper trading.

What Is the Day Trading Salary? 

If you’re wondering, “Is day trading profitable?” the answer is yes. However, it’s likely not going to be profitable as soon as you start out, and only the top traders bring in big bucks. Day traders that work for investment firms will start out making a base salary of $50,000 per year, while day traders at a retail investment firm could make $50,000 to $70,000.  

However, day traders must make profits that go well above their salaries or else they could be laid off from a firm. The above-average salary working for a retail investment firm is between $250,000 – $500,000 including bonuses. The average day traders with experience will earn between $100,000 to $175,000 per year. The average day trader will make a 20% annual return, and the above-average day trader will make a 50% annual return.  

A few notes of caution: 90% of day traders will fail within the first few years. In order to succeed, you will need to have enough cash on hand to trade with to make it to the top and beat out 90% of people on an everyday basis.  

One study from the University of California, Davis, Graduate School of Management looked at the everyday trade in a market over 14 years. The study revealed that less than 1% of all the participating traders turned a profit. To put it bluntly, the day trading success rate is low, but it can be done if you are persistent and willing to put in the time and resources to make a stable full-time or part-time career.  

Calculating Taxes and Fees into the Day Trading Salary 

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If you are a full-time, employed day trader at an investment firm, your employer will deduct taxes for you. However, if you are self-employed you will have to calculate your own taxes. 

Unlike a regular investor, you will not be able to capitalize on the long-term capital gains rate tax. However, you can deduct equipment and office space you use to day trade as well as your losses.  

When calculating the day trading salary, you will also have to take fees into consideration. A broker is going to charge at least $5 per trade as a fee.  

Let’s say you make five trades per day and you participate in 20 trading days per monthmaking 100 total trades per month. You’ll profit $3,750, but you’ll need to consider that $5 per trade and perhaps other commissions. You’ll end up paying $1,000 in fees, or 100 trades times $4 times two contracts. In the end, you’ll take home $2,750. If that math sounds good to you, then you’ll be set up for success as a day trader because you’ll know what to expect.  

Why Day Trading May Be Right for You  

Let’s say you’re confident that you could make a good day trading salary, and you’re ready to jump in. First, if you’ve set aside more than $25,000 in order to day trade, then you’re going to be off to a good start. Make sure that $25,000 is only for day trading, and not a savings of any kind. If that’s the case, you’re risking a lot more than you should and increasing the emotional stakes. Day trading markets are not casinos, so they shouldn’t be treated as such.  

You are attracted to day trading because you’ve owned a business, but you know how much of a headache it can be between loans, employees, providing benefits, etc. Unlike a regular business, all you need to do is get a working computer and space where you can sit and trade a few hours per day. There is no need to invest in a brick-and-mortar office or employees. Not having these responsibilities is a huge upside. 

You can also limit your losses before you trade by setting up that stop loss amount. With a business, you never know how much you’re going to lose. You could spend those hundreds of thousands of dollars and never make it back. The risk with day trading is much lower. 

You can control your own destiny with day trading– you’ll only become a great day trader if you decide to. You can make your dreams come true and build real wealth if you simply keep educating yourself and using your free time to practice on the paper trading market. 

If you don’t get emotional when life has its setbacks, you’ll make a great day trader. The best don’t panic when they are losing money, which can be often if you’re trading at high volumes. Instead, they get right back up and try again. If you are someone who gets worked up and can’t see the light at the end of the tunnel when you experience a perceived failure, then you should reconsider going into day trading.  

Being Successful with Day Trading with the 10-Minute Millionaire 

You know that you fit the profile of a great day trader, and you’re excited to get started. First, it’s crucial to keep up your education on the stock market and stock charts by visiting sites like NasdaqMarketWatchand TradingView. Individuals who have built true wealth are always educating themselves and keeping up with the newest developments in the investing world.  

It’s also crucial to have a mentor who can help you learn more about day trading for a living and the day trading salary. Cue D.R. Barton, Jr., a trusted financial analyst who has appeared on Fox Business, CNBC, and Bloomberg Radio, and is the author of a New York Times bestselling book called, “The 10-Minute Millionaire.” Now, he runs a newsletter of the same name, and with it, he’s offering help to thousands of subscribers who want to discover the secrets to being financially stable now and in the future.  

When you subscribe to The 10-Minute Millionaire, you’ll have access to the top day trading techniques and advice for making the best investments possible for your portfolio. You will learn day trading strategy and risk warnings to look out for to employ to maximize your profits and build your bank account in no time. The only thing you must do is subscribe. 

If you’re ready to earn a real day trading salary and ensure you are going to be successful with your new career, sign up for The 10-Minute Millionaire today. The profits are waiting for you. Are you going to be there to receive them?   

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