Upon mention of a professional trader career, many tend to associate it with a high luxury lifestyle. But how much can a trader really earn? Is it a really profitable job?
First of all, the salary of a trader is not the same depending on the country. Also, it’s not the same when working for a big financial institution, a bank, or if you are an individual daily trader. But one thing is certain. It is a profession that is generally better paid than many other professions and offers great development opportunities.
How Much Retail Traders Earn From Trading?
Even though retail traders can’t reach the earning levels of institutional traders, individual traders have many odds on their side.
According to statistics and comments on various forums related to this topic, one can earn $1000 per month as a professional retail trader, which is a great sideline.
The most promising markets
However, not everyone is capable enough, disciplined, and able to develop the right strategy to consistently beat the market and ensure decent profits from trading.
Also, it depends on the types of assets and the market you choose. Lately, currency trade has become the most popular type of daily trading due to the increased volatility.
Volatility is the inherent characteristic of the Forex market. It entails the frequent change in currency prices, which represents more opportunities for profits.
Also, the market attractiveness for both traders and brokerage companies imposes fierce competition in the brokerage business. Now, every Forex broker aims to offer the optimal trading experience on their platform, from minimal fees to various assets for trading.
Calculate your net after commission profit
To roughly calculate the profits in trading, one must consider the starting capital, the number of trading days per month, the fees and commissions that may occur. From that, you calculate your costs per trade, deduct it from the total profit amount and get your net after commission amount.
But the reality is that a small percentage of individual traders achieve consistent and decent profits. There are many ups and downs in trading activity. And traders must be ready to cover their losses more or less frequently, depending on their luck and skills.
Statistics say that frequent traders, including day traders and stock traders, underperform compared to investors with buy-and-hold strategies. It’s often due to the fact many people start trading with no trading plan and with insufficient understanding of the market, be it Forex, cryptocurrency, commodities, or stocks. In a realistic scenario, you must always consider the possibilities of losses and find the strategies to cover them. In general, good traders manage to earn enough money to handle the ups and down on a yearly level.
Who Are The Highest-earning Traders?
The highest-earning traders are investors who manage millions of dollars on the stock market every day and carry out admittedly very risky but also very profitable transactions that generally pay off for the company that hires these financial geniuses.
But there is a real secret around the salary these traders actually receive, whether it is their fixed remuneration or their variable part.
Unlike individual traders, an institutional trader’s income consists of a fixed part and a variable part. The fixed salary and, therefore, the income base of great traders depend on their seniority and their experience. That’s why the most seasoned traders can negotiate very high base salaries.
In the US, while a junior institutional trader will negotiate a base salary up to 300k to 3 million per year, a more experienced trader will see fixed income take on much more interesting proportions. Some seasoned portfolio managers earn over ten million per year.
Professional traders’ income is quite vague since there are many factors in play. Besides your initial capital and trading plan, the most important among them are related to your traits as a trader. These comprise discipline, emotional control, realistic expectation, and good risk management. Besides, having a great broker by your side is always a plus. And can make a huge impact on your trading experience and decision-making process.
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