Escape the 9-to-5… become a Day Trader… they must make a lot of money by virtue of what they do!

Those looking to change their financial trajectory may choose to pursue day trading and would like to know much day Traders actually earn on a daily, weekly, monthly or annual basis.  Many ask related questions like “What is a day trader’s salary?”, “Can I generate $300 a day?”, or “Can I really make 10 or 20% returns per month?”.  Nobody really wants to say ‘no’ to these particular questions because the ones answering the questions want to take these people’s money.  Notice the language used in the prior sentence, it is important.  Those who do say ‘no’ in a more public setting do so for the purposes of self-promotion as if they are a unicorn in the marketplace (they are not) OR think the markets are a massive scam because they did not succeed.  If you are asking this question or the related questions, this article is for you because it is time that you receive a truthful response.

The truth can set you free, but it can also hurt. 

Ready… let’s dive in.

There are No Guarantees in Day Trading

Addressing Course and “Signal” Promoters

When anyone promotes a round number or even non-round number (for the purposes of enhancing trust because of the exact nature of the number), it is usually either a high point or a good number that tests well with generating leads and sales.  It’s a harsh reality, but the objective is to sell you on the idea of something that is above your lifestyle or something that could replace your current lifestyle.

Addressing Traders with Lofty Goals and No Sense of Reality

The truth is that there are no guarantees as far as returns when trading.  Period.  Nobody truly knows the percentage return that they will generate, but there are expected returns and track records to give some sort of direction and expectations.  Many traders have losing days, weeks, months or years.

Even Hedge Funds lose money.  Major financiers can lose money.  However, the professionals and wealthy investors do something that YOU do not do and those who are trading in the markets with a retail account fail to do.  What is it?  We’ll get to that later.

However, most do not take into account their own levels of risk aversion along with the amount of risk and Investment it takes to reach the lofty goals.  Of course, there’s also the sacrifice of time because most aspiring day traders think that the only way to trade is by sitting at a terminal and placing manual trades based on arbitrary rules.  Most day trade for the wrong reasons and are in the wrong position to do it.  Often, many find themselves in worse position than they started.

Setting benchmarks is important, but most who enter have zero idea how to benchmark.

• 1000 pips a week!!!
• 10% a month!!!
• 1% a day!!!
• Double my earnings every trade!!!
• One trade per day!!!
• $300 a day!!!

Does it all seem strange that it may sound so simple, but in reality it is very difficult and does not take into account the downsides?  It’s naivete and it floods social media and forums.  People sacrifice their money and time to chase this sort of a life down.

It does not mean that it is impossible to make a fortune in the markets and everyone’s definition of a fortune is different.  However, there is a blindness and a lack of understanding of what it takes to reach lofty expectations.  Time is also a factor and the impatience of the aspiring day trader works against them.

How Much a Day Trader Earns is Dependent Upon Many Factors

The exact amount a day trader earns is dependent upon many different factors.  The answer that the aspiring trader wants to hear is that most day traders make money and there is a foolproof system that will get them there.

• Level of Investment
• Investment in Research and Development
• Access to Data
• Instruments Traded
• Investment Allocations
• Trading Frequency

There’s a lot of harsh reality to be dealt out, but there’s reason for hope.  The reason for hope is that with the right programming, data, investment in instruments, and approach there’s an opportunity for profitability.  However, most do not treat the markets like it is Financial Technology and instead treat it like it is a casino game with all sorts of fun tools to play with that make you seem smarter than you really are at parties.  There’s a lot of work involved.  Consider how much money Hedge Funds and Investment Banks spend on quantitative researchers, analysts, developers, data access, and servers.  If you think just staring at a chart and hoping is a better method, you are fooling yourself.

This is literally in the job description for a Quantitative Trading Research Analyst, if you have the skills, you need to use them.  If you do not, you need to learn them or of a similar programming language so that you can accomplish the work.

Above is just one job description for a quant role, there are many others that are generally similar.  Invesco is not playing around and neither should you.  View this as an opportunity to gain an understanding of requirements when shaping your own strategies.

By this point, many day trading wannabes have likely clicked the Back button on their browser because they cannot handle an answer that goes beyond “Yes, you can and here’s an unverified trading strategy so you can buy a Ferrari and Instagram models.”  Unfortunately, these people missed the secret of success that the Financial Institutions and ultra-wealthy use to be profitable.

The Pathway to Profitability

Are the ultra-wealthy and Financial Institutions trading like the majority of retail traders?  No.

The secret to their success is that they have multiple sources of investment income.  They have a multi-asset and multi-strategy investment approach.  They are able to diversify their approaches and not have to rely on one path to prosperity.

In fact, the biggest secret is to not be a day trader at all.  Use a portfolio of algorithms to place trades rather than dedicating all of that effort and capital investment into one approach.  Diversified and hedged investors accrue wealth and reduce risk.  Day traders rely on sweat equity and hope that their unverified approach works.

A data-oriented approach that does not require screen time is the best approach.  It’s 2018, not 2005.  There’s no need to be a day trader anymore, unless you want to keep busy for the sake of doing so.  In the FX Market, day traders miss out on so many trading opportunities depending upon their time zone and commitments.  Anyone can place trades at any time and automating your approaches allows you to mimic the methods of a longer term investor with shorter held positions.

The post How Much Do Day Traders Make? Here’s the Better Question… appeared first on Freevestor.