Everybody would like to hear “thousands” or “millions” as an answer to one of the fundamental questions. How much do forex traders make a day? Any positive number means an invitation to the forex market to ones who hesitate, particularly beginners who want to trade forex. However, the reality is different.
100 or 1 000 dollars a day?
To get the answer precisely in dollars or pounds, we need to know a lot of information about every trader.
- How much capital he has at 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 a single position?
- What can be his maximum overall exposure?
- What currencies he actively follows and trade?
Well, a lot of questions and a lot of different answers if you ask different traders.
Every trader has its approach, capital, and risk management. And everyone also has 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 equity 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 know that even the most successful traders have a lot of days finished with a loss. I would say that, on 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 the take-profit.
Therefore, there are more losing days than winning ones in the life of a trader. But who cares about the daily profitability.
Short-term versus long-term view
To evaluate the trader after one day of trading is tricky and unfair. Every trader needs a longer period of 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 essential for every trader is to be profitable over a month or a year.
The same is essential 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 the 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 another question is: What the long term means for you.
Someone is trying to earn for a retirement in 20 years. Others needs results in 5 years or 1 year.
Or should we stay with the difference taken from interest rate markets? There everything under 12 months is called the short term.
How much do Forex traders make a day?
The question “How much do Forex traders make a day” is irrelevant. Traders, especially forex traders, have good and bad days.
The successful traders can earn more during good days than losing during bad ones. The critical thing is to be profitable in the long run.