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How much do day traders make: Daily trader income

How much do day traders make?

How much do day traders make: Daily trader income! The question is impossible to answer. Few-day traders disclose their results to anyone but the Internal Revenue Service (IRS).

How much money can be made from forex trading? A question that always revolves in the minds of investors who want to enter the forex field, it is known about the field of forex or currency trading is an investment field that is easy to enter, as it does not require a large capital unlike other investment fields, you can start with a very simple capital that does not exceed $50 In your investment in the world of forex.

How much do day traders make

But there is no doubt that it is an investment field like any other field that may carry with it a lot of risks that may cause a lot of losses to investors, especially novice investors in this field. ?

» Learn more: Read our explainer on Top 7 Steps To Learn Successful Trading

Forex risk control

As we explained previously, the forex market is not free from risks, any investment may hide profit sometimes, and may hide loss at other times for investors inside, but the problem here is not in the possibility of anticipating losses, but in knowing how to manage risks in order to be able to avoid losses as much as possible, and achieve profits. A basic rule that you must follow while concluding your trading deals, which is not to risk more than 1% of your capital in each transaction that you make, in order to avoid large losses in the capital in the event that the transaction does not take place as expected.

An example of risk control

If you have a capital in your account of $3000, this means that one transaction that you conclude will be $30 or less, and this is because if you lose that deal, you will only lose 1% of your total capital, and this loss will not significantly affect your future investment.

You should be careful

You may think that losing $30 is a very small loss, but in fact, you will lose it in one trade, and throughout the day, and during day trading, you may conclude more than one deal, and this will lead to accumulating losses on you to find in the end more than you imagine, so follow The aforementioned rule, do not underestimate it.

» Learn more: Read our explainer on What are financial markets?

Intraday trading strategy in the forex market

Trading in the forex market contains many strategies, and the longer you have experience in this field, the more strategies you will acquire, but if you are new to this field, you only need to understand one strategy to work with, which is to measure the winning rate, and the risk ratio In every deal you conclude, here's a breakdown of them.

  • win rate

The win rate measures the trades that you can win out of the total trades you will win. For example, if you make 100 trades, and only 55 trades were made, then your win rate is about 55%. Mostly getting a win rate of more than 50% is ideal for most traders, it is true that there are traders who can achieve more than that, but as long as the trader does not go below 50%, he is in the safety zone.

  • Risk ratio

It means the percentage of the capital that will be risked, and this is to achieve a certain profit. For example, if the trader loses 10 points from the total losing trades that he concluded, but at the same time he won another 15 deals, he was thus able to achieve more profits than the losses he incurred, and this means that if the trader can only achieve profits by 50% of the total trades that he makes, then he is making profits. Achieving more profitable deals is one of the important strategies that traders follow in their daily trading.

  • Trading example

In the event that you have $5000 capital and want to trade it, here the decent profit rate for you is below 55% on the trades you make, so when you risk making deals, that risk should not exceed only 1% of the capital i.e. $50 on each A transaction you make. You should also know when to use a stop-loss order, as based on the previous example you should place your stop-loss order 5 pips from the trade entry price.

  • Leverage

Leverage in the world of trading and investment is something that is used a lot within the global stock market, but despite this, it is the main factor that makes the stock market world so suspicious by Arab Muslims that they do not want to enter it, and we have mentioned in previous articles a detailed explanation of what is the leverage Financial in the world of trading and investment, and how it can increase the capital of the trader too many times what he actually owns under certain conditions, and we have also clarified the question that revolves around it as to whether the financial leverage is permissible or forbidden? What is the opinion of jurisprudence in detail? What is the main reason for which it was prohibited?

» Learn more: Read our explainer on How does the stock Trading market works

Forex Trading

In the forex market you are trading a pair of currencies together, say, the US dollar and the Canadian dollar, on a capital of $5000 here you will risk 1% on each trade i.e. $50 per trade, and each pip will be worth $10 with a standard lot (100, 000 units of currency value) so you can have a stop loss of 5 pips, i.e. a stop-loss rate of $50 per trade, meaning that the winning trade is equal to $80 (8 pips x $10)

An illustrative example of currency trading

When executing 100 trades per month

  • If 55 trades were profitable: 55 x $80 = $4,400
  • If there are 45 losing trades: 45 x ($50) = $2,250
  • Gross profit is $4400 - $2250 = $2150 if there are no commissions (the win rate would probably be lower if there were commissions taken out)
  • Net profit is $2150 - $500, $1 = 1650 if you use a commission broker (if you don't use it, the profit rate will be higher)
  • Assuming a net profit of $1,650, the return on the account is 33 percent, $1,650 divided by $5,000. This is definitely a satisfactory return.

More loss than expected

The forex market will not always make you profitable, you may sometimes find many sudden losses waiting for you because when the market is moving slowly, the idea of finding good and satisfying day trades is out of reach, so slippage, or what is known as slippage is inevitable not that unlikely And if this happens you may incur more losses than expected even if you stop losses, this is common when the markets move quickly.

In this case, when you want to calculate your occupied profit you will have to reduce your net profit by 10% which is a high hypothetical percentage by which we estimate losses in case of slippage, this will reduce the potential net profit generated from your trading capital of $5000 to $1485 in the month.

In the end, the amount of profit that you can make from the world of forex depends on the amount of capital you are trading, but in any case, if you can maintain a profit rate of at least 55%, and you are making more profits than you lose on losing trades, then you can achieve returns of 20% per month Approximately.

» Learn more: Read our explainer on How to Trade the Market in 7 Steps


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