Everybody would like to hear “thousands” or “millions” as an answer to one of the basic questions. How much do forex traders make a day? Any positive number means an invitation to forex market to ones who hesitate, particularly beginners who want to trade forex. However, the reality is absolutely different.
100 or 1 000 dollars a day?
To get the answer absolutely exactly in dollars or pounds, we need to know a lot of information about every trader.
- How much capital he has in a disposal?
- What is his risk management?
- How much he can or is allowed to lose over a day, week, month or a year?
- What are his limits on single position?
- What can be his maximum overall exposure?
- What currencies he actively follows and trade?
Well, a lot of questions and lot of different answers if you ask different traders. Every trader has its own approach, capital and risk management. And everyone has also different P&L results over a day, month or a year.
Traders? Who of them?
I am sure, that you are not interested in traders who are losing. The successful ones are in your focus. What return do they have on their invested capital in a day? (I guess, that now we can all agree that it is better to speak about the percentage of capital they earn in a day than the exact dollar number.)
My educated guess (educated thanks to the years I spent on the trading floor) is that there is no trader who has just winning days, with profit at the end of the day.
I definitely know that even the most successful traders have a lot of days finished with a loss. I would say that in average, even successful traders daily P&L balance has more red days than black ones.
The basic rule of set setting stop-loss and take-profit orders says, that take-profit should be bigger than stop-loss. Depending on the ratio trader use, the probability that stop-loss will be hit is bigger than take-profit.
Therefore, there are more losing days than winning ones in a life of a trader. But who cares about the daily profitability?
Short-term versus long-term view
To evaluate trader after one day of trading is tricky and unfair. Every trader needs longer period time to show his skills (even if he knows forex brokers with the lowest spreads).
Day trading is pure roulette and the professional trader will not give a damn about a day profit. What is important for every trader is to be profitable over a month or a year.
The same is important for their managers, owners of hedge funds, or their investors. Nobody would invest with one day star, who after one big splash will lose everything next day.
Patience, low volatility of P&L balance and steady results over a longer period of time will bring you a flow of investors and admirers.
The answer is …
The question “How much do Forex traders make a day” is absolutely irrelevant. Traders, especially forex traders have good and bad days. The successful traders are able to earn more during good days than losing during bad ones. The key thing is to be profitable in a long run.