Forex day trading entails buying and selling financial instruments within one trading day.
As a forex trader, you use strategies that allow you to take advantage of intraday price movements to make profits.
A day trader aims at making profits and benefiting from price fluctuations within a short period. A day trader buys currencies or stock, holds them
for a very short period, and sells them again before the end of the business day.
So, do you prefer making a trade entry and exit within a day? Can you make accurate predictions of market price trends by end of the business day? Or do you have time all day long to analyze and monitor markets? Then you can make a forex day trader.
Are you a new trader? Have you done your research and want to venture into a forex trade? You must be asking yourself “how much money you can earn from day trading?”.
Actually, this is the reason you are reading this article right now. You probably have heard of how lucrative day trading is. The web too has a lot of posts on this.
Are wondering what the difference is and how much they earn? Then read on, as this article aims at giving you an insight to your questions.
To make maximum profits or income, you need necessary skills and qualities to put you at the top of the game such as;
Market knowledge and experience on forex trading
Day trading involves taking risks to get huge profits within one single day. This also means that if the business goes the other way, you are likely to make huge losses and be out business before you know it.
The key strategy in forex day trading is having complete and comprehensive knowledge and understanding of how the market works. Experts in the market will tell you to start with a demo account before going full-blown.
Here are two ways you can earn as a day trader; working for someone else such as a company or a bank or running as an independent investor.
Forex Trading for Someone Else
This can be trading for a firm.
Like any other type of job, salaries can vary greatly depending on several factors such as the firm you are working for, a position held or the job title, and even the country.
It is not easy to get hard numbers as to how much a day trader earns. Most traders do not reveal publicly how much income they get.
Trading for a firm can be a good option when starting your forex day trading career.
In this case, you are paid a salary, and based on your performance and competence, you can earn yourself a commission.
It is however not an easy job as you should be ready to have a proven track record and be very competent in a very flooded job market.
Trading for a company is often accompanied by many benefits such as;
The opportunity to use tools and strategies which have hopefully already proven profitable.
You get support from a firm like training and mentorship programs that can help you sharpen your skills further
There are likely to be more chances for growth in your career as you climb job ranks that will allow trading bigger.
Company jobs are often governed by laws and regulations and other befits such as reliable salary, health covers, and pension benefits.
Most importantly, you are not trading with your own money, which limits your risks when using companies’ money than investing your own money.
Disadvantages of trading for someone else
It is however not all rosy as there is the pressure to perform and make profits for the company. Many firms will need you to meet profit targets as your income is pegged on how much you are making for the company.
Trading for a company is also less flexible.
Forex Trading for Yourself
Being an independent day trader means investing your own money, earn your profits, and make an income out of it. Trade and keep all the profits to yourself.
This sounds very interesting, right? Plus, this comes with other advantages like;
Advantages of trading for yourself
You are guaranteed more flexibility. Thanks to online trading, you can work from anywhere and anytime as long as the market is open.
There is no limit as to how much you can earn. Yes. None. All you need is a good trading strategy that can make you stand out.
Disadvantages of trading for yourself
There is a downside to this, unfortunately.
Trading your own money means risking your own money. This maybe your lifetime savings. To be honest, this can create a lot of anxiety lead to a high-stress level.
Unlike working for a firm, you do not have guaranteed income as this comes with less security. Income is dependent on the market environment.
You do not have ready tools, strategies, or a developed support system which may require incurring costs to develop.
Average Forex Trader Salary
Yes, I wanted to put that in perspective first, but here we are. I know you have heard this phrase; numbers do not lie. Let us look at what numbers say;
According to Indeed, an average base salary for a trader in the US is $94,130 per year, from 237 reported salaries and a commission of $25,000.
This is information that was updated on Sept 09, 2020.
According to ZipRecruiter, the yearly trader salary is $61,225 on average per year. This was as of Sep 7, 2020. The salaries however very modestly but showing opportunities increase based on location and years of experience.
Average Professional Trader Salary Across the U.S.
According to Glassdoor, an update from Sep 12, 2020, shows a day traders base pay standing at £68,735 per year in the London area from 244 salaries.
Payscale quotes an average of $80,827 per year. There are also additional payments such as a bonus of $14,874, a commission of $16,500, and a profit-sharing of $5,087.
You will realize that there is such a big disparity in the range between high-income earners and low-income earners in the forex trade. What factor that influence traders’ salary?
The job title and position. Different positions have different roles including, being a junior trader, senior trader, market analyst or being a strategist.
While some of the senior traders earn very high salaries the market is flooded with a high number of traders earning very little bringing the average income down.
Traders’ performance and competence. Traders with higher portfolios earn more than those with lower portfolios.
The company you are working for. Companies have different salary scales according to their performance in the market.
From the infographic below, it is clear that HSBC Holdings have the highest average of $196k per year the top traders earning up to $288k.
Exact numbers of what traders earn may be blurry but available data and information can help conclude.
Forex trading can be a very lucrative career especially if you master the market and do it properly. You need techniques and strategies that will help you capitalize on market inefficiencies and make a good income.
Success in day trading will not come overnight. It will take a lot of patience, cost you a lot of capital, you will need to do a lot of training, and require you to be very disciplined.
Whatever you do, it will cost you blood and sweat to make to the top, but in the end, it will be worth it.
As an independent trader, your ability to be consistent making profit and the amount of capital you invest will greatly determine how much income you will make.
Whatever the case may be, a forex trader salary will always be great.
Trading forex on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Losses can exceed deposits.
Past performance is not indicative of future results. The performance quoted maybe before charges which will have the effect of reducing illustrated performance.
All website content is published for educational informational purposes only.
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