Edition 1: Earning Potential of a Trader
What better way to begin than with perhaps the hottest topic of all, how much can a professional trader really earn?
It's a hefty question to answer as earnings can vary dramatically depending on experience, capital, trading style & asset class << these topics will all be covered in detail in future editions. I'll do my best to narrow it down to one type of trader focusing on one asset class.
I have spent the majority of my trading career as a "Techincal Forex Day Trader", (again, more on this in future editions), so I'm going to answer this question based on my personal trading profile.
The first milestone as a beginner trader is to achieve a 5% monthly average return on the trader's entire portfolio.
Note: When forex traders speak in returns like, "I made 5% this week", unlike crypto & stock traders who sometimes say things like "I made 45% last week!", the forex trader is speaking in terms of return on the entire account where the crypto or stock trader is likely referring to a return on one position.
45% return on any position is a great play, but if the position size was only 10% of your total account, the net return is only 4.5% and less than the forex trader's 5%.
Below is 3 examples of traders in varying situations, income & timelines.
Each of the 3 traders is returning 5% per month, which remember, is only the first milestone for a beginner trader. Returns can exceed that based on skill and experience in the markets.
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Trader 1, let's call him Jack, starts trading with $10,000 and is working full time earning $5,000 per month. As a savvy trader, Jack sets aside 10% of his earnings from his job and puts it into his trading account to help scale faster. If Jack continues to remain consistent with his savings & trading activity, in 5 years he will have scaled his account to $334,300, which equates to $16,715 monthly return at 5%. He's now in the position to comfortably quit his job & live on his own terms, not to mention having tripled his income along the way. |
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Trader 2, we can call Ellie. She's been moving and shaking having started her own business which generates her a $12,000 monthly return. She's been cleverly setting aside a comfortable nest egg and has a trading account of $100,000. Like Jack, she's also topping up her account every month with 10% of her income. In 5 years she will be sitting pretty with slightly more than $1.5 million in her trading account, which is returning her $75,087 per month at a 5% return. |
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Meet Trader 3, Nathan started trading at the same time as Ellie & Jack, but having next to no start-up capital he invested in his trading education by joining a school such as Pro Trader so he could craft his talents. Not only did this cut down Nathan's learning curve, but he was introduced to a Prop Firm which gave him start-up capital to trade, offering him an 80% profit split! His first 2 years he spent gathering more outside capital from 2 other prop firms and eventually accruing $1,000,000 funds under management. 3 years later (a total of 5 years, the same as Jack & Ellie), Nathan has scaled his capital to over $4m and is returning $218,739 per month. << Keep in mind he has an 80/20 profit split so his share is $174,991. |
As you can see, a trader's earning potential can vary depending on the path they choose along with countless other factors. What is great about trading, however, is YOU have full control over your situation. You're not banking on a boss, customers, employees or salespeople closing deals for you to get paid.
The ball is in your court and it's up to you to decide whether or not you want to commit to mastering the skill of trading.
One thing is for certain, become a professional trader and financial burdens will be a thing of the distant past.
