How Much Money Do Day Traders Make?
If you’re new to trading or have just been contemplating on getting into day trading, you may be wondering, “Can you really make money from this career? This seems like gambling. Is day trading real or… a scam?!”
Maybe you’ve seen people on social media posting big profits, and very rarely, any losses. All of this seems extremely surreal. Maybe sometimes overly glorified, but risky at the same time. That's why many people took their stimulus checks and started pouring them into the markets. They signed up on Robinhood and were ready to turn their $1000 into a million in six months.
In this blog I’m going going to discuss the topic of day trading profits and losses, known as PNL’s, specifically why seeing regular PNL and posting them could be a positive or a negative thing. And finally, the question of do I really make money day trading.
I'm going to be sharing some personal stories from my six years now going into a 7 years journey of day trading.
First of all, let's answer the number one question most people have regarding day trading:
Is this real or is it a scam and is day trading just gambling?
The short and sweet answer is, it's a real, and very profitable career for only less than 5-10% of the people. The rest of the 90-95% treat it like gambling, and they lose big, therefore that's why to most people, day trading calls it a scam.
I'm certainly not saying everyone should day trade. No it's the opposite. I think most people shouldn't day trade, because rather than treating it as a serious business and career, most people are lazy and will treat it like gambling. They see it as a quick way to turn that $1000 stimulus check into lamborghini money.
Wins & Losses in Trading
Believe it or not everyone loses in day trading. It's just that less people are willing to share their losses.
How much money do day traders make then?
The answer to that is, it depends. There are traders who make hundreds a day, thousands a day, and some who make 5, 6 and even 7 figures a day. Now before you go all crazy excited “omg you could make that much money? I need to quit my job now to day trade,” please listen to the full story here first.
To make that money in trading, you have to be comfortable with losing first. Losing money in order to make money is a concept that is very unique to this day trading career. Day trading is probably the only job where you can show up at your office computer, work very hard and give it all, and at the end of the day after 8 hours, you actually lose money.
While you see people post big profit screenshots on social media, it's important to know that while both you and I may want the same big wins, we probably don’t have the same kind of risk tolerance.
It takes money to make money in this business. Day trading is a business that requires you to leverage your capital, risk losing it, in order to come out ahead. To make that first $100 you may have to risk $20 to $50. To make those $1000’s you may have to risk $500. And to make that five figures $10,000 you might have to risk $4-5000.
Everyone’s wins and losses are relative in day trading. If you are making 100 a day consistently that's amazing. Then if you had a $500 profit day this week that's amazing. That's considered a big win relative to your account size and your experience.
For someone who is using 100 times your size, and making a couple thousand usually per day, their big win would be maybe a twenty-thirty grand win. About again at the same time, their small loss might be 2k, and a big loss would probably be in their five figures.
Don’t compare your chapter 1 to someone else's' chapter 20. Everyone's big wins and losses are relative to their share size. If you see someone else's big wins today, and decide to double or quadruple your size in order to make the same big profits, that’s probably not going to work out well.
Pros of posting personal PNLs
Some people may find that it keeps them accountable by sharing it to online social platforms. Maybe it helps you connect with other traders and grow a following. For some people who have day trading education programs, big profits would be a great marketing tool that would most likely lead to more sales and revenue.
All of those are fair reasons for posting your trading profits. It's a personal decision and everyone has to weigh the pros and cons themselves.
Think about it closely, do you learn more about setups and trading from charts like these, and perhaps recap videos with commentaries and executions, or a big fat pnl screenshot like this?
You should never blame your losses on other traders. Whoever clicked the buy and sell button, following someone's trade alerts or not, is entirely responsible for their own outcome.
In trading, the most precious thing after capital preservation, is your mental capital. You could probably tell that I'm an extremely optimistic and positive person most of the time. I do find that having a positive outlook in life overall, does make a drastic difference in your trading trajectory.
I'm not a guru, I still have losses in trading and I'm not 100% right all the time. And I share my chart executions and discuss my thought process in my recap videos. To me and from all the feedback I’ve received, these recaps are way more valuable than screenshots of PNLs. I just tell things as it is, no bs marketing like the lambos, only the reality.
Truth be told, it makes sense that 90% of traders lose money because their losses are the gains for the other 10%. The reason the general consensus among the public and the investing community calls day trading a scam, is because most people will lose 100% of their money.
Day trading is one of the only jobs or careers that I know of where you can show up for work, and lose money which is something to understand when day trading.
