Over the past few years, more people than ever have become interested in day trading. Thank lockdown boredom and the rise of ‘meme stocks’ like GameStop and AMC.
You’ve noticed the hype, and naturally you’re beginning to wonder – how much can you make as a stock trader?
It’s a great question, and not one that’s easy to answer. Thankfully we’re here to bust some myths, look at the stats, and discuss ways to set yourself up for success.
First things first: there’s no exact figure
Stock trading doesn’t come with a salary. There’s no set amount of money that stock traders make a year – it can vary wildly from person to person.
Volatile markets can have an effect on yearly salary – causing big gains and drops – but the amount a trader makes really depends on how good they are at what they do.
It’s about how well they manage risk, how good their strategy is, and how closely they stick to that strategy.
Basically, when you trade, you really are in charge of your own destiny.
While it’s not easy to quantify, a few recruitment companies have taken a stab at giving a ballpark (or average) figure.
Stock trader income: what is the average?
According to Indeed Salaries, the average stock trader makes $80,086 per year – plus an average commission of $25k.
As for day trader average income, that’s a little higher.
Day trading tends to be more risky than long-term stock investment. Because day traders get in and out on the same day, they don’t get the benefit of riding out sudden shocks in the market. They need to make quick decisions instead of sitting back, waiting for long-term returns.
With big risks come big rewards. Recruitment company Zippia put the average day trader salary at $116,000.
Day trader average income can, in reality, be higher or lower
The important thing to remember about averages is that they fall somewhere in the middle.
Some people will make way less than the average, while others will soar high above it. Day trading earning potential can be insanely high.
You can find rumors all over the internet about day traders who made millions trading Tesla stock. And, in 2021, the trading platform Robinhood announced that one of its traders made $30 million in one day.
On the flipside, a lot of people don’t find success so easily.
An analyst’s Day Trade Review found that 8 out of 10 people lose money during their first year of trading. They also cite a study from Brazil, which found that only 1.1% of traders made more than the country’s minimum wage.
Not so glamorous.
As you can see, there’s a massive gap between successful stock traders and those who are less so.
But don’t let that dose of reality put you off. If you know what you’re doing, and have the right tools to help you, it’s definitely possible to make mind-blowing money as a stock trader.
Maximize your day trader earning potential by planning properly
So, what’s the secret to being one of the few who make – rather than lose – money in their first year of trading?
Yep, it sounds boring. And that’s probably why so many beginner traders fail to do it.
They get carried away by the latest meme stock, and dive in without a second thought. It’s one of the common mistakes beginner traders make – and it can spell disaster for your portfolio.
When you’re first starting out, creating a winning trading plan is the single most important thing you can do.
In fact, it’s not just important when you’re starting out as a trader, but throughout your career.
Anyone who has paid slight attention to the markets over the past few years knows that they can be unpredictable.
With your gameplans all safely stashed in your playbook, you can stay cool – and turn a profit – no matter how volatile things get out there.
Make great income as a stock trader by journalling as you go
You’ve got your plan in place. You’re following a tried and tested strategy. But there’s one more step to optimizing your income as a trader – and that’s journalling.
By paying close attention to what works and what doesn’t – as well as your own behavior – you can start to identify patterns.
From here you can update and improve your strategy, and fill out your playbook with gameplans for any situation.
After all, you can’t replicate a super successful trade if you don’t really understand how you did it.
Tools like TradeZella are designed to help you log details about each trade. Our in-depth trade analytics and drilled-down reporting make it easy to evaluate and fine-tune your strategy, while you evaluate.
You also get insights and feedback on trades, highlighting common mistakes you might be making. Kind of like having an experienced mentor by your side, telling you what might be holding you back from reaching your full potential.
With a plan and risk management strategy in place, plus all the information you need to make data-driven decisions, it’s much more likely you’ll succeed.
Don’t quit the day job – yet
Forget all of the bombastic influencers shouting that you can make 20% profit per month, etc.
When you first start out as a trader, it’s unlikely you’ll make massive profits right away.
Like any other skill, it takes practice, persistence and a lot of learning to get really good at it.
To begin with, it’s best to avoid any major decisions. Stick with your day job and make small trades on the side as you test and improve your strategy.
As you slowly get better, and your results become more consistent, you can start considering a career change.
Get started with TradeZella
While many people fall at the first hurdle, day trading can be financially rewarding if you do it properly.
Using a tool like TradeZella offers you the support you need to create plans, amend your strategy and analyze your decisions.
Join TradeZella and let us help you reach your goals.