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Do day traders make a lot of money?
How Much Money Can I Make As a Day Trader? – Here we’ll look at income potential for stock, forex and futures day traders.
Let’s face it, this is what traders and potential traders want to know–“How much money can I make as a day trader?” Obviously there is a massive range of income potential when it comes to day traders. It is quite possible that some people will still need to work another job, but manage to pull a little money out of the market each month through day trading. There are those who can live comfortably on what they make day trading, and there is the small percentage who will make a lot. There is also a large group of want-to-be traders who will fail, and never make any money.
How much money you make as a day trader is largely determined by:
Which market you trade. Each market has different advantages. Stocks are generally the most capital-intensive asset class, so if you trade another asset class such as futures or forex you can generally start trading with less capital.
How much money you start with. If you start trading with $2,000 your income potential (in dollars) is far less than someone who starts with $20,000.
How much time you put into your trading education. To create consistent day trading income—where you have a solid trading plan and are able to implement it—will likely take a year or more if you dedicate yourself to it full-time. If you only practice part-time, it may take a number of years to develop real consistency and attain the type of returns discussed below.
Your income potential is also determined by your personality (are you disciplined and patient?) and the strategies you use. These issues are not our focus here. If you want trading strategies, trading tutorials or articles on trading psychology you can visit the Trading Tutorials page, or check out my Forex Strategies Guide eBook.
Need more high profit gain and safe robots, here it is Portfolio of expert advisors for trading at Forex market with Metatrader 4 (14 currency pairs, 28 forex robots)
https://forexfactory1.com/p/EuHp/
https://forexsignals.page.link/RealTime
Income potential is also based on volatility in the market. The scenarios below assume a certain number of trades each day, with a certain risk and profit potential. In very slow market conditions you may find fewer trades than discussed, but in active market conditions you may find more trades. Over time, the average number of trades balances out, but on any given day, week or month you could have more or fewer trades than average…which will affect the income that month.
Now, let’s go through a few scenarios to answer the question, “How much money can I make as a day trader?
For all the scenarios I will assume that you never risk more than 1% of your account on a single trade. Risk is the potential loss on a trade, defined as the difference between the entry price and stop loss price, multiplied by how many units of the asset you take (called position size).
There is no reason to risk more than 1% of your account. As I will show, even with keeping risk low (1% or less per trade) you can potentially earn high returns.
The numbers below are based purely on mathematical models, and are not meant to indicate you will make this much. The numbers below are used to show the potential, but are not intended to reflect typical returns. As indicated in the first paragraph, most traders fail.
For all the scenarios below we will be using relatively small accounts, as that is what most day traders start with. It is easier to make high percentage monthly returns on a smaller account compared to a larger account. Therefore, it will become continually more difficult to generate these sorts of returns as the account gets bigger and bigger (this is a problem you all hope to have!). That said, as the account grows, your dollar income may continue to grow, even though your percentage return stagnates or declines.
Plug different numbers into the scenarios below and you’ll see different ways to trade (for example, you could reduce the number of trades and try for much higher reward:risk trades). Very small changes can have a huge impact on profitability. For these scenarios we assume a modest 1.5:1 reward to risk ratio, 5 trades per day and a 50% win rate.
How Much Money Can I Make Day Trading Stocks?
Day trading stocks is probably the most well-known day trading market, but it is also the most capital-intensive. In the USA you must have at least $25,000 in your day trading account, otherwise you can’t trade (see: How Much Money Do I Need to Become a Day Trader). To stay above this threshold, fund your account with more than $25,000.
Assume you start trading with $30,000. You use 4:1 leverage, which gives you $120,000 in buying power (4 x $30,000). You utilize a strategy that makes you $0.15 on winning trades and you lose $0.10 on losing trades. This is about a 1.5:1 reward to risk ratio.
With a $30,000 account, the absolute most you can risk on each trade is $300 (1% of $30,000). Since your stop loss is $0.10, you can take a position size of 3000 shares (the stock will need to be priced below $40 in order to take this position size, otherwise you won’t have enough buying power). To get those types of stats from a trade, you’ll likely need to trade stocks that have decent volatility and lots of volume (see How to Find Volatile Stocks for Day Trading).
A good trading system will win 50% of the time. You average 5 trades per day, so if you have 20 trading days in a month, you make 100 trades per month.
50 of them were profitable: 50 x $0.15 x 3000 shares = $22,500
50 of them were unprofitable: 50 x $0.10 x 3000 shares = ($15,000)
You net $7,500, but you still have commissions and possibly some other fees. While this is likely on the high-end, assume your cost per trade is $20 (total, to get in and out). Your commission costs are: 100 trades x $20 =$2000. If you pay for your charting/trading platform, or exchange entitlements then those fees are added in as well.
Therefore, with a decent stock day trading strategy, and $30,000 (leveraged at 4:1), you can make roughly:
$7,500 – $2000 = $5,500/month or about a 18% monthly return.
Remember, you are actually utilizing about $100,000 to $120,000 in buying power on each trade (not just $30,000). This is simply a mathematical formula, and would require finding a stock where you could make this reward:risk ratio (1:5:1) five times a day. That could prove difficult. Also, you are highly leveraged, and there is a chance of catastrophic loss if a stock where to move aggressively against you and your stop loss became ineffective.
How Much Money Can I Make Day Trading Futures?
To trade an E-mini S&P 500 futures contract you should have at least $7,500 in your futures trading account. That will allow you to trade one contract with a reasonable stop loss and still only risk 1% of capital.
Let’s assume you have $15,000 to start your trading account. Once again you only risk 1% of your capital, or $150, on any single trade.
Each tick–the smallest movement–in an E-mini S&P 500 contract results in a loss/gain of $12.50. If you risk up to $150 on each trade, that means you can trade 2 contracts and risk 6 ticks on each trade for a total risk of $150 (6 ticks x $12.50 x 2 contracts). Your risk is 6 ticks, and you will try to make 9 ticks, as that is a 1:5: reward to risk ratio.
A 9 tick win is $112.5 for each contract.
A 6 tick loss is $75 for each contract.
A good trading system will win 50% of the time. Assume you average 5 trades per day, so if you have 20 trading days in a month, you make 100 trades per month.
50 of them were profitable: 50 x $112.50 x 2 contracts = $11,250
50 of them were unprofitable: 50 x $75 x 2 contracts = ($7,500)
You make $3,750, but you still have commissions and possibly some other fees. Your cost per trade is $5/contract (round-trip). Your commission costs are: 100 trades x $5 x 2 contracts = $1000. If you pay for your charting/trading platform, or exchange entitlements add those fees in as well (recommended trading platform for futures trading is NinjaTrader).
Therefore, with a decent futures day trading strategy, and a $15,000 account, you can make roughly:
$3,750 – $1000 = $2750/month or about a 18% monthly return.
This is simply a mathematical formula, and would require finding five trades a day that offer this reward:risk. That could prove difficult. Also, you are highly leveraged, and there is a chance of catastrophic loss if a market where to move aggressively against you and your stop loss became ineffective.
How Much Money Can I Make Day Trading Forex?
Forex is the least capital-intensive market to trade. Leverage up to 50:1 (higher in some countries) means you can open an account for as little as $100. I don’t recommend this. If you want to make money, start with at least $3000. Only risk 1% of your capital.
Each pip of movement in the forex market results in a$10 gain/loss if you trade a standard lot (100,000 in currency). Each pip with a mini lot (10,000 in currency) is worth $1. Each pip with a micro lot (1,000 in currency) is worth $0.10. “Pip value” varies based on the currency pair you are trading, but the above figures apply to the EUR/USD, which is the recommended currency pair for day trading.
Assume your strategy limits risk to 6 pips, you attempt to make 9 pips on winners (on average) and you have a $5,000 account.
With 6 pips of risk you can trade 8.3 mini lots–which equals $49.8 of risk per trade. This is less than your maximum risk of $50 (1% of $5,000). Notice how highly leveraged this position is. The account has $5,000 in it, and the position taken is $83,000…that close to 17:1 leverage. If uncomfortable with this amount of leverage, reduce the position size.
A 9 pip win is $9 for each mini lot.
A 6 pip loss is $6 for each mini lot.
A good trading system will win 50% of the time. You averaged 5 trades per day, so if you have 20 trading days in a month, you make 100 trades.
50 of them were profitable: 50 x $9 x 8.3 mini lots= $3735
50 of them were unprofitable: 50 x $6 x 8.3 mini lots= ($2490)
You net $1245.
If day trading forex, use an ECN broker. With the CTFC regulations in the US, lots of brokers don’t accept US clients but for those based outside, do try eToro. ECN brokers offer the tightest spreads, which in turn makes it easier for your targets to be reached. Commissions with a good ECN broker will run between $0.2 and $0.5 for each round trip trade per mini lot. Therefore, commission costs are 100 trades x 8.3 micro lots x $0.5 = $415.
Therefore, with a decent forex day trading strategy, and a $5,000 account, you can make roughly:
$1245 – $415= $830/month or 17% monthly return.
Your position size is 8.3 mini lots, which is $83,000. Therefore, to attain that return requires at least 17:1 leverage. Your return on your own capital is very high, but your return on buying power (83,000) is a more modest 1% monthly return. Leverage is very powerful, and makes all the difference here.
This is simply a mathematical formula, and would require finding five trades a day that offer this reward:risk. That could prove difficult. Also, you are highly leveraged, and there is a chance of catastrophic loss if a market where to move aggressively against you and your stop loss became ineffective.
How Much Money Can I Make As a Day Trader – Final Word
All scenarios, and income potential, are assuming you are one of the few day traders who reaches this level and can make a living from the markets. At the beginning of article it was stated that a large group of day traders fail…only about 4% of people who attempt day trading will even be profitable. The very profitable traders are a smaller percentage.
Each market uses different capital amounts, so don’t think one market is better than another based solely on the dollar returns. The major distinction is simply that to get involved in stocks you need the most capital, and you need the least to get started with forex. Futures trading falls in the middle. All are great and profitable markets if you find a strategy that allows you to replicate the stats discussed above. The exact figures don’t matter…for example a $0.12 stop loss and a $0.18 target. With a 50% win rate, an average 1.5: reward to risk ratio and 5 trades per day the above results can be replicated. Have a higher win rate and/or higher reward:risk and the results could be better. Have worse stats, and the results will be worse.
Note that you can’t perpetually compound your account at these returns. Most day traders trade with a set amount of capital and withdraw all profits over and above that amount each month. To understand why, please read Why Day Traders Make Great Returns But Aren’t Millionaires. It contains important information about managing expectations and building wealth.
The scenarios are set up so you only win a bit more than you lose, and your winning trades are only a bit bigger than your losing trades. In the real world, that is typically how day trading goes.
The problem is that most traders can’t handle losing 40 to 50% of the time. They think they are doing something wrong and keep switching strategies. This constant flip-flopping of strategies results in losing even more often.
Maintain discipline, keep your wins slightly bigger than your losses, and strive to win 50%+ of your trades. Do this, and you may join the small ranks of successful traders.
Winning 50% of the time is not as easy at it sounds though, and you may not be able to find 5 valid trades per day in all market conditions, like in the examples. Expect variance in your income from month to month.
Need more high profit gain and safe robots, here it is Portfolio of expert advisors for trading at Forex market with Metatrader 4 (14 currency pairs, 28 forex robots)
https://forexfactory1.com/p/EuHp/
https://forexsignals.page.link/RealTime
kasper says:
If you have 300$ and buy 3000 shares thats 0,1$ pr share how can you make 0,15$ on that.. its 150%..
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Cory Mitchell, CMT says:
I think your misunderstanding has to do with position sizing.
We can’t day trade stocks with only $300…we are required to have $25,000+, so the recommended amount is at least $30,000+. If we risk 1% we are only risking $300 of that $30K. Read the position sizing article for in-depth coverage on that, then go through the scenarios in this article again.
The scenarios represent feasible situations in the market…assuming the trader acquires skill through many months of practice.
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Chandrakant Jangam says:
Hi Cory
I am from Canada and I read your blogs regularly since I started this full time well disciplined trading in May-2017.
Could you please advise whether I am going in to the right direction. Any suggestion to improve?
Here is my one year stat.
Total Trades = 173/ Year
Winning Trades = 140
Losing Trading = 33
Total on Winning Trade: $45,797
Total on Losing Trade = -$18,868
Net Earning in 12 Months: $26,932
I lost all my losing trade in Inverse ETF of Gold, Oil, VIX, NASDAQ and TSXOIL.
My all winning trades are in Natural Gas Inverse and Bullish ETFs.
Thanks and Happy Trading.
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Anil says:
Hi Chandrakant Jangam looks great , but what kind is your initial investment ???
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Chandrakant Jangam says:
Sorry… I forgot. My initial amount for trading is CA$95,000.
Thanks
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Chandrakant Jangam says:
PS: My initial trading amount is CA$95,000.
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Ken says:
Hi Cory,
I like reading your posts and I do appreciate your experience but please help me to understand and maybe if you can give me a better advice of how am I going to make a profit at the end of the day. Assuming you are making $7500 net on trading stocks as stated you will still need to pay the average 25% taxes for capital gains to uncle sam plus the minimum of $5 broker fees for each trade, with this expenses and based on the 50% winnings traders You will make only $875 a month and I will explain,
Here is my final math:
25% taxes on $22,500 is $5625
100 trades times $10 (round trip-broker fee) = $1000
As you can see it’s $6625 in expenses so if I’m lucky to have those 50 winnings trades I will ended up with only $875 as my real profit. How can I truly realistically can make $5k or more (after all the mention expenses)
Thank you for your help
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Cory Mitchell, CMT says:
No. You have made some errors. Go through the section again. Losses and commissions are already factored in.
I have already deducted commissions (at a very high $10 per trade). That is how we get from 7500 down to 5500. Those number also already included losses. You don’t need to deduct them again.
You will pay taxes, but only on the net (which included profits and losses…not only wins). So you would pay tax on $5,500 per month in the stock example.
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Khan says:
Hi Cory. Thanks for the article. Here is my situation and trading strategy. I want your expert opinion on my strategy. I am a full-time employee, working from home, and do this trading on the side.
Total cash in investment account: $100,000
Total cash available for trading: $60,000 (keeping the remaining $40,000 in liquid for any rainy day).
I try to BUY 100 shares (or any number of shares up to max. of $17,000) of VISA, FACEBOOK, APPLE, GOOGL, NVIDIA, NETFLIX, SQUARE, HOME DEPOT, DISNEY, JOHNSON&JOHNSON, MICROSOFT, TESLA, MASTERCARD, SHOPIFY, PAYPAL, and AMEX only if they are 10% below their 3-month high (because then I still have some up-swing margin to take profit and I am not buying at its peak price).
I figured that I would like to make $500 profit per trade.
So as soon as the price of those 100 stocks goes up by $700 (which means $500 is my profit and $200 is capital gains tax and commission/fees), I execute the SELL.
(Question 1) Do you think this is a profitable strategy? I usually have to wait for 2 weeks for a $170 stock price (such as Apple) to goes UP by $7 to $177 so that I can make $700 on my 100 shares.
(Question 2) Should I continue doing this? Or should I lower my profit threshold, and execute a SELL as soon I make $100 or $200 , and this will give me more profit since now I can do more trades and don’t have to wait for the stock to rise too much?
(Question 3) Or should I use a % option to execute my SELL, i.e. if I buy a stock (HOMEDEPOT at $180), should I then sell it as soon as it goes up by 5% ? What should be my target % increase to execute a SELL ?
(Question 4) Even if the market crashes, and I am stuck with these quality stocks, I will not mind riding the down wave. I have never executed a SELL where I have received a loss. Right now, I have some SNAP shares and MATTEL shares, which are 40% down, but I am holding on to them. Is this the right thing to do? Or should I execute a SELL if my shares are below a certain threshold? What can be that threshold in my preferred stocks of GOOGL ($1100), AAPL ($170), VISA ($120), SQUARE ($42). Should I based the threshold on a % basis or a dollar amount basis?
(Through trading quality stocks as mentioned above, I want to grow my $60,000 in savings, so that, while on my current job, I can support my family and still generate some extra money to help my aged parents and to invest in a technology startup business idea).
What is your expert opinion? I would truly appreciate a detail response with practical trading examples as what you will do if you are in my shoes. Thanks once again!
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Cory Mitchell, CMT says:
This is a day trading post. You are talking about investing or swing trades.
Overall, only the charts can tell you if your strategy is viable or not. Test it out, look at how the strategy has performed in the past. This should be done before a real trade is ever placed.
I have no idea how your strategy will perform. I test out every strategy I trade. It is your job to do the same. Most of your questions can be answered by simply looking all the trades you would have taken over over the last 30 years. Looks at the charts, and see which is the best approach for you.
There are a couple major problems that I see:
—you are assuming these stocks will perform well forever. It is likely they won’t. Look at history. Sometimes it takes it takes 20 years for a stock to climb to back to where it once traded, and sometimes the stocks never recover, or go bankrupt. You need some sort of exit plan. You need to decide what that is. Holding a losing stock for 10 or 20 years hoping it eventually makes you 700 is a not an efficient use of funds. It works ok when markets are rising, but you need an exit plan for when the market falls. This is because…
—700 on 17,000 is a 4% return. Typically declines are 10% to 20%. Crashes are typically 30% to 60% and occasionally more than 70%. The reward does not justify the risk. Again, this will work well when all these stocks are rising, but if all collapse and you have all your money in them, you could be showing a loss of 50%+ on all your money. No matter how well a strategy does in the short-term, if you hold losses you are always susceptible to losing a significant amount of capital if things go wrong.
I believe your look at history is too brief and you assume price will immediately recover prior high levels. After some crashes, it has taken more than 25 years for the market to get back up to prior levels. That is a long time to wait for $700. You must control risk, somehow.
It is very good you have a plan. It just needs some tweaks…in my opinion. And of course, this is just my opinion. I provide information on how I (and other trader’s) trade on this site. How you trade is up to you.
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Anonymous says:
He isn’t assuming stocks will do well forever, he is small flux flipping. Your response he assumes good performers now do not crash or dip in time is meant more for warren buffett type investments.
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Jaime says:
I really like your site. I was a trader for a couple of years, a few years ago, and I had a winning strategy at first, then deviated and went into a market I wasn’t familiar with and eventually lost it all. If I had stuck to quality investments and not penny stocks, I would have made way better money, but I got greedy and went for high risk/high reward biotechs. I will never make that mistake again.
What I plan to do now is maybe invest about 20k and just pick up small <5% profits a few times a month (hopefully at least 2 a week). I think with this strategy i could regularly make enough to generate higher returns and just trade/work from home. Keep up the good work! I will be checking back.
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Anil says:
HI CORY THANKS FOR YOUR ARTICLE , HOW WOULD THIS BE APLICABLE TO DAILY TRADE OPTIONS , FOR LETS SAY A 10,000$ ACCOUNT COULD YOU SEND AN EXAMPLE
THANKS
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Cory Mitchell, CMT says:
I don’t day trade options. And I don’t know many retail traders that do. Most hold options trades for at least a couple days.
You can still work out your profit potential though. It is likely about the same as the other markets. Notice how they are all the same in percentage terms? One market isn’t necessarily better than another.
What affects profit is: reward-to-risk, number of trades, and win rate. So if those stay similar to the figures described in the article, your results will be the same (or pretty close) no matter what market you trade. Commissions then become a factor. Any variation in those major factors affects profit. Input numbers based on your own experience to see what your expected result will be with options (expectation and actually being able to do it are two very different things, though).
Consider what your average reward:risk is and win rate is. You should have a good idea of this from demo or past trading. Consider your position size so you can calculate what your average win and average loss in dollars will be. Multiply these by the wins and losses as shown in the article….this also takes into account how many trades you are taking each day and each month. Deduct commissions.
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Anil says:
Cory thanks for your prompt reply & suggestions, i normally trade weekly and monthly options , however
i had noticed that these could pherhaps be done as you mentioned 1 or 2 days , taking options which expire on the nearest weekly expiration or next week at the most,(with not much extrinsic value ) i have done some paper trading with mixed results , however after reading your article was not sure what would be the appropiate brackets for taking profits and losses with this type of trading , indifferently of depending on my cost .
exit at 0.50c per contract if profits are made ? or exit at a loss of 0.20 cents pe contract pherhaps ?how do these ratios look??( i normally would enter trades early, first thing as the markets open and exit as soon as possible.)
Thanks once again all the Best
Anil
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Mishone Feigin says:
Hey! How’s this strategy been going? Are you just trading with the 20K or are you leveraged? At what ratio?
What sector of the market, if not penny stocks, say stocks at $40 per share or less, are you trading? Average trade size?
Thanks so much for your thoughts. Really helpful!
Cheers,
Mishone
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Emran says:
Hi Cory,
I am very appreciative of your detailed write ups on trading. The information you shared are truly enriching.
If I may ask you regarding the recommended per trade risk 1% in detail, let’s say I have an initial capital of $5000.
Applying 1% risk per trade would mean $50 for position A. For subsequent opening of trades, do I apply 1% risk on Balance or Equity? How many number of trades could I possibly open? What is a drawdown and how do I manage my drawdown well?
Thank you.
Rgds,
Emran
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Cory Mitchell, CMT says:
Typically when day trading I focus on just one trade at a time. But you could have multiple trades open potentially. I would continue to risk 1% (or less) on each.
You control your overall risk by using a DAILY stop loss: So just as you have a stop loss on each trade, you also want to cap how much you lose each day. For example you may cap yourself at losing $150 (which is 3% of the $5000 account balance). If you are losing more than $150 on the day, you close out the positions and stop trading for that day.
But USUALLY with day trading you aren’t going to have a lot of positions. One, two, maybe three at a time, although I guess this would depend on the trader. Typically I only have one at a time.
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Emran says:
Thanks for your fast reply.
If I like to manage a drawdown of less than 40% of my entire account with multiple trades and roll over next days, each trade with 1% risk, so typically I need to open no more than 40 trades at any time mathematically? What kind of trader is this called ? Will it increase my probability level of winning too?
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Cory Mitchell, CMT says:
That sounds like a bad idea, to be honest. A 40% daily drawdown is WAY to much. You have 2 bad days and your entire account is gone. Very unlikely you would lose all 40 trades…but still, you get my point hopefully.
Focusing on one or two trades at a time provides more than enough profit potential, as the article shows. Keep daily risk to about 3% or less.
Also, your odds of being able to find and trade 40 HIGH-QUALITY trades at one time, as a solo day trader, is very low. So having 40 day trades at a time isn’t really even a realistic consideration….and you wouldn’t have enough leverage to do it anyway (and you wouldn’t want to be that highly leverage).
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Emran says:
Once again, thanks for your honest advice.
If to say, I open Max 3 simultaneous trades of different currency pairs (Max 3%), with a risk to reward ratio of 1:2, if I don’t get to hit my target profit, would I carry over next day or simply close with a small profit?
Cory Mitchell, CMT says:
This would depend on your strategy. But usually day traders close positions before the end of the day. With forex it doesn’t matter too much, except that volatility dies off and the price starts meandering around pretty aimlessly after the US closes. Then it becomes more a gamble of whether your stop loss or target will get hit first. And we don’t want to gamble….if the price isn’t moving as convincingly as when we opened the trade, we should close it. So better to just close out the trades if the target isn’t hit. If you are holding overnight, that is more swing trading…which is a different trading style.
More on day trading forex is discussed here:
Michael Larsen says:
September 1, 2017 at 09:01
Hi Cory,
Thanks for a great and informative site. I purchased your E- book and read it – It is good.
The mail point and learning I picked up af blowing up several accounts mainly in the Future markets is to max. risk 1%!!!!! – This is at great rule and cannot be repeated enough time!!!!!!
However, trading e.g. a 1 min chart it is difficult to calculate the positioning size (due to time constrain) as entry point is not always know before the 1 min bar elapsed. – Do you have suggestion here – trading a fixed amount can give you from 0,3% to 3% risk depending on volatility and time of the day the trade is made.
Any suggestions?
Thank in advance
Michael
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Cory Mitchell, CMT says:
Thanks for the feedback.
Actually, you should be able to get a very good estimate of your stop loss and entry before you get into the trade. I do not let one-minute bars elapse. As soon as a trade signal occurs in real-time (at least while day trading) I take the signal. That means you always can see the bars prior, or a pattern to indicate the stop loss and entry, before getting into the trade. Just need to be on it, and watching that chart…as the price moves, always be thinking about where your trade setups could develop, how far the price could move (target, and is the trade worth taking) and where the stop loss would be.
You won’t know your exact entry point, because of possible slippage etc, but with knowing the stop loss level and entry point (within a fractional pip) you can take a very accurate position size for that particular trade. To be safe, reduce the position size slightly in case of slippage (which would increase the risk and therefore reduce the position size).
The other option is set a position size based on your “typical” stop loss distance. This way, on most trades you know you will be in the ballpark of your correct position size. Then only adjust it if there is a trade where the stop loss distance is quite a bit greater. For this method I would recommend setting the default so you are risking less than 1%, so that even if your stop loss distance is a bit bigger than usual you are still risking 1% or less.
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AP says:
HI Cory,
Is it possible for people to make 5 trades if they are trading only for 2-3 hours a day?
AP
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Cory Mitchell, CMT says:
Will of course depend on the asset they are trading, how volatile it is (price moves are what create opportunities), what their strategies are and what time frame they are trading on.
Using a 1-minute or tick chart in the GBPUSD or EURUSD, ES futures or a few hand-picked stocks, finding at least 3 trades isn’t an issue most days (and I usually only trade about 90 minutes), and some days produce many more. But it possible that on some days there may only be one or two opportunities. But that is pretty rare. 5 trades, with that risk/reward, is quite doable in that time frame.
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Quinton says:
Hi Cory
I purchased your book and find it very informative as for me trying to learn forex trading might as well be trying to learn another language! In reading your book and following your videos and articles online do you think there is enough volitility in the market these days to make money at forex trading for newbies? I’m in month 1 of my 6 month learning account but find the market volitility is down to 80 pips on the eurusd. (Still getting my butt kicked daily lol) Should a person look at another pair to day trade with more volitility? (Gbpusd?).
Thanks!
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Cory Mitchell, CMT says:
Hi Quinton,
The EURUSD has not been as good for day trading lately. That doesn’t mean it can’t be done, but traders need to be VERY selective with their trades as there are fewer opportunities.
Yes, trading the GBPUSD is another option.
I recommend sticking to day trading just one pair at a time, but if the one being traded isn’t moving well, then by all means look for opportunities elsewhere. And the GBPUSD is viable alternative to the EURUSD at all times. So if you end up liking that pair better, you can stick with it.
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Quinton says:
Hi Cory
Thanks for the prompt response! I know you can’t make a video for everything and I know being a month into training that I am not seeing every consoidation correctly but I would like to see your take on being very selective and what to watch for in low volitility on the eurusd chart. Either way thanks for getting me started and I’ll keep practising!
Quinton
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José Monteiro says:
Hi Cory, information in high level here.
I day trade my own account in Brazil, futures in Real/Dollar and Ibovespa Index. I´m a discretionary trader that rely only in order flow. Sometimes I think to trade others markets around the world but one thing stop me trade forex. Never tried Forex because, in my little research, they don´t have Level 2 and Market depth. I´m lost if I don’t know how many contracts negotiate in each price level and can´t see agressions in bid and ask side, Is this correct? Anyway to use futures in CME like a base to scalp and day trade? Best Regards from Rio de Janeiro, Brazil.
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Cory Mitchell, CMT says:
Hi Jose,
Some forex brokers do provide level 2 data (I have it, but don’t use it normally). But it is not the same as the stock or futures market. Forex is fragmented, as it is not a centralized market. So you will see different things on the Level 2 depending on which broker you are using. Some brokers have bigger liquidity pools that others.
You could potentially use futures level 2 as a guide, but some of futures don’t have a lot of volume either (depending on which currency pair you want to trade). If trying to trade off just level 2 in forex, i suspect there would be a bit of a learning curve, but it is likely possible. I personally mostly rely on my charts as opposed to level 2, so that is about all the insight I can offer.
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José Monteiro says:
Cory, thanks for reply. I setup a demo account in FXOpen but there is not a oil instrument in MT (XTIUSD) . I will email they to check this and test this hypothesis. I don’t know too if liquidity is great in this instrument too.
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Cory Mitchell, CMT says:
They do offer XTIUSD (oil) trading via CFD, along with a number of other products: (that said, trading actual futures is typically better because of the smaller spread, but the CFD is good if looking for lower margin requirements…especially if holding positions overnight).
If it is not showing up, it may hidden. In MetaTrader, click View MarketWatch. Right click in the MarketWatch window and select Symbols. Scroll down to CFD Oil Spot. Click on it and make sure that XTIUSD is selected. While in there you can also select gold, silver, natural gas, etc, under the various headings.
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José Monteiro says:
March 12, 2017 at 14:32
“(that said, trading actual futures is typically better because of the smaller spread, but the CFD is good if looking for lower margin requirements…especially if holding positions overnight)”.
I agree 100%. Margins requirements are heavy in USA Futures lol, I didn’t see brokers with less than U$ 1000,00 per contract. U$ 4.500,00 overnight.
I tried insert new symbol but demo servers apparently doesn’t has CFDs, only ECN FX Group 1 and Crypto Coins. I will check this later with FXOpen.
Again, thanks a lot.
Bob says:
February 16, 2017 at 01:26
Hmm, thanks for this article, as an opinion, I’m more an intermediate timeframe trader thinking holding stock for months/years, I’ve always considered day trading. I think I find my style less time consuming and can still make the same amount give or take, monthly. But I still think there is great potential in there for day trading if you can utilize your strategy into automation and robot ai trading.
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Taji says:
Hi Cory,
First off thank you for this article as well as the other articles you’ve written on this site! This article was definitely informative and well put together. I’m a business owner and a mother of two who’s looking to learn about the forex market in order to become a bit more financially independent and have more time with my family. My husband already day trades futures, but not forex. I have a thinkorswim paper money account and have been diligently learning for about 3 months.
Which online brokerage companies do you recommend that lets you open an account with $1000 or less, and also low fees? I know that’s a small amount to start with, but until I get the hang of trading real money (with all of it’s psychological pitfalls) I’d like to start small. Trading with paper money is great for working out strategies and understanding the rules and general trading mechanics, but the real psychology gets thrown in when there’s real money on the line.That’s my reason for wanting to start with a smaller amount. I’d really love your feedback!
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Manuel says:
Hi, thank you for the wonderful article. You said something that alarmed me a little bit
“Also, you are highly leveraged, and there is a chance of catastrophic loss if a stock where to move aggressively against you and your stop loss became ineffective. You could face a significant lose or even lose your entire account where the price to move even several percentage points against you (unable to exit at planned exit point).”
Could you please elaborate why a stop loss would become ineffective? I realize the trade might trigger below my set point but why would it FAIL altogether? Thanks!
(as you can tell, I trade stocks with my full 4:1 leverage everytime )
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Cory Mitchell, CMT says:
I discuss “catastrophic losses” and when stop loss may be ineffective (or gets you out at a vastly different price than expected), here:
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Manuel says:
Thank you!
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Chris says:
Hello Cory,
If my objective was to make/net anywhere between $3,000-$5,000 a month day trading what would be the fastest route to do so of the following? Practice in a demo for 8-12 months logging in the 800 plus hours you have mentioned that it takes for a person to start seeing some profit. After successfully seeing consistent profit in the demo trade futures or forex with $5,000 starting out. Or practice in a demo trading stocks for 8-12 months. Once consistently profitable in the demo with stocks seek a trading firm that can lend me their capital to trade stocks. Assuming that after the 8-12 month practice I am able to see a 10% maybe 15% monthly return on whichever market I select. Are these percentage returns possible within this time frame of practice? Are better percentage returns possible within this time frame of practice? What are your thoughts on the second approach? And based on your experience do trading firms require or prefer people with college degrees? Thanks.
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Cory Mitchell, CMT says:
Firms are fine. I prefer trading on my own, but firms do have the advantage of helping you develop better discipline (someone looking over your shoulder) and you may be able to gain some insight from the traders around you. But this comes at the cost of them taking some your profit (or getting a return some other way)…at the beginning this cost is typically offset by access to more capital and reduced trading fees. So it is a viable way to enter the industry. Most day trading type firms don’t require college degrees…they are looking for work-ethic (self-motivated), entrepreneurial spirit and a certain psychological profile. Depending on the firm, they may train you (more typical of brick and mortar firms with a physical location), or they may only be looking for traders with a successful track record (more typical of firms who only operate online and allow traders to trade remotely).
If you go on your own, with 5000 I would go with forex. 5000 is on the lower end of what is ideal for futures.
The returns are totally dependent on the work put in. But as you can see from the simple math…if you have a viable strategy, and are disciplined and practiced enough to follow it, great returns are possible.
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Tspora says:
This is such a good site, thanks, it’s the first place I will come to when I actually get round to real trading! I’m reading books too and other sites but I am constantly rereading them because I just don’t easily get their logic or explanations. But here, it just makes sense in the way everything is explained. And you reiterate some basic tenets time and again which is great for us newbies. You make a great teacher, thanks.
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Cory Mitchell, CMT says:
Thank you! Your feedback is much appreciated
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Aaron Wilds says:
Cory,
I am self employed and in my early 40’s I have a few thousand in a mutual fund and some money in life insurance etc. I have a tdameritrade accout. Do you have or know of a good course that can teach someone like me how to start off with say 5,000.00 and make money..500.00 – 1000.00 each month pretty consistently?
I’m trying to find a way to grow my money with minimal risk each month over the next 10 years so by the time I’m 55 or so I have turned that 5,000.00 into 100,000 or more…if I made an average of just over 400.00 per month for the next 10 years I’d have over 50,000 dollars in this account. Factor in buyer power and regular contributions over the same ten years wouldn’t my actual cash value in the account be more like 100k? or higher?
I just need to do this..I need training and someone trustworthy who is not just trying to sell me a bag of goods….
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Cory Mitchell, CMT says:
Long-term goals are good. But I personally don’t like to think in dollar amounts. Most traders find a return they are comfortable with and that is what they make (it MAY be a dollar amount, or a percentage amount, or a certain number of pips in the forex market). So until you start learning some strategies and making some trades yourself, it’s hard to tell what kind of return you will make. Everyone is different…even if they are trading the same strategy. Some people are more aggressive, some people are more conservative, some people can trade all day, some people can trade for an hour. But 10% per month is reasonable…but not easy. Expect to work hard for at least 6 months to a year before you start to see income. Several months will be spent in a demo account trading fake money and making sure you can actually make a profit. If can’t make money in a fake account (following the exact strategy you will use for real $) then there is no point trading real money. Even once you know it strategy it takes time to learn all the variables to watch for, and to develop the confidence to place trades exactly when they need to placed (not a second before or a second after).
You have some things to work on first. I assume you are interested in day trading? With $5000 you can’t day trade stocks (in the US), futures require at least that much, so you are pretty much left with currencies/forex. I would read through some of the free forex content in the Tutorials drop down menu for a basic understanding of the market and some general strategies to get you started and practicing in a demo account. I don’t offer personal mentoring, but I do respond to comments on all the articles posted on the site. I have compiled a Forex Guide (), so that combined with the loads of free content and being able to ask questions in the comments should give you good based to start from.
Cheers,
Cory
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Jay French says:
Thanks for the comprehensive overview! Just one quick question regarding the day trading section: Wouldn’t trading equities up to 2300 shares a day (for a total of 20 days) violate the freeriding trading policy? In other words, can I apply all of my buying power for each of the 20 trading days and still sell all my positions at the end of each day and not violate the policy?
If I am understanding the day trading scenario correctly and we are assuming that we are trading up to 2300 shares each day, we are using most of our 120K buying power for each day – 2300 shares x approx $50/share (maximum) = 115K.
If we sell all our positions that day, our buying power will reset to 120K the next day however, we should not be able to sell any additional positions until the T+3 settlement rule kicks in. So, instead of having 20 trading days, we would only have about 6 trading days for a total of 30 actual trades (6 x 5 trades a day).
Please let me know if I am not understanding the freeriding rule correctly because it would awesome if I could max out my buying power each day! Thank you for your time.
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Cory Mitchell, CMT says:
It is best to check with your broker (or the broker you intend to trade with)…so you and them are both clear on how you wish to trade and can handle any issues now before you begin day trading.
I have never experienced a problem with this. Day traders often make MANY trades in the same (and different) stocks each day. As long as those trades are closed at or before the closing bell, there shouldn’t be an issue. Most day traders use all, or most of, their capital in a day…or even WAY more, if you add up the value of many trades which could be taken in a day. As long as you have capital (and margin) to cover all your trades, you are fine. Your broker will net your trades and you get the profit or loss on the trades added/subtracted from your capital (this is all tracked in real-time in your trading account/software). As long as your positions are closed before the closing bell, no need to worry about settlement too much. BUT AGAIN…check with your broker so you are in full compliance with any day trading rules they may specifically have (some brokers impose additional restrictions, etc). Overall, it shouldn’t be an issue.
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David Woods says:
Hi Cory,
Is it possible to have an experienced day trader create a platform, to simply trade with someone else’s money, and that someone pays a percentage of profit.
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Cory Mitchell, CMT says:
Yes, there are several sites and platforms, and even brokers, that suport this type of functionality. In forex they are typically called PAMM accounts.
Then there is the more traditional hedge fund structure.
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Gillian Price says:
Hi there
Great article.
I am in the UK and looking for a platform for a begunner for for ex market and eventually will use the same platform from a demo version to real version after some months. Maybe investing 10k gdp.
Can you please advise what platform I should use in the UK ?
Many thank’s again.
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Anonymous says:
October 25, 2016 at 03:57
On your example of the $2750/month return on futures trading, is this amount taxable? if so, what’s the tax rate on average?
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Cory Mitchell, CMT says:
Taxes and tax rates will depend on where you live, and if trading is your primary income (how often you trade). It’s recommended you look at ‘taxes and day trading’ articles related to your specific circumstance.
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Phil says:
Hi, I was wondering why you do not mention day trading options. less expensive than stocks and lot of leverage.
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Cory Mitchell, CMT says:
Options are a great market. I just don’t day trade options (will swing trade them though). I prefer the mentioned markets for day trading.
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Nikki says:
What is the max amount of contracts you can trade at one time on the futures market?
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Cory Mitchell, CMT says:
The CME imposes position limits on traders….that would be the actual max:
FOR DAY TRADING: You would likely experience problems before these limits though. Your broker may impose a day trading limit on your positions, and if they don’t, you will experience liquidity issues the larger your positions get. In the S&P 500 Emini you can easily trade 10 to 30 contracts at a time. As you start getting bigger (and even in the 10 to 30 contract range) you will start to get partially filled on your winning trades but always receive all the contracts on a losing trade. So how many contracts you trade without negatively impacting your own performance will depend on the strategy, the futures market you are a trading, whether you add or remove liquidity and whether you accumulate/dispose of positions at multiple levels or just one. But in a liquid contract like the S&P 500 Emini you can easily trade 10 to 20 contracts. 30, you are becoming a bigger player and will likely notice performance degradation (again, will depend on the variables mentioned prior). Above 40/50 contracts, how you manage your positions (getting into and out of them) is as much a factor as the strategy you use…position management becomes a strategy in itself.
SWING TRADING: positions size is less of a factor when holding your trades for multiple days because you have more time to accumulate and unload positions. Here, it is your capital that will cap your position size.
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Mark says:
I want to start trading but not not got a trading account yet, but my question is when I do set a trading account up what is the lease amount of money I can put in my trading account where I can start making a good amount of money. thanks
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Cory Mitchell, CMT says:
Its takes a long time to “make good money.” Expect to put in a year or more of research and practice before you can make ANY amount of money consistently each month (see this article: )
How much capital you need varies by market, and whether you want to day trade or swing trade. Since this is a day trading article, I will assume you are interested in day trading. For how much money you need to day trade, see:
Open a real account only after you have proven to yourself that you can profitable in a demo account for several months in a row.
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sam says:
is it possible to eventually make a living with starting capital of $5000? or have most full time traders started with much more? I don’t need a time frame I’m just curious to know if it’s even possible.
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Cory Mitchell, CMT says:
You can eventually make a living off that. If you live in a cheaper country, you can even make a living off just the $5000. If you make 20% a month (less than described above), you either make $1000/month, or you can continue to grow your capital until you reach an income level you are comfortable with. This does take time though—expect to practice for at least 6 months to a year before you start to see profitable returns in a demo account. Then another few months to acclimatize yourself to trading with real money. And most trades fail…more than 95% of those who attempt it. So it is possible, but not common.
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sam says:
I have a $5000 account to start with. Is it possible to one day make a living from trading or does this only happen when people start with 20, 30, 40k+ since they can make more?
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John says:
Good write up. I haven’t been able to replicate these results in my own trading, but I can see how these figures are possible once a person finds consistency and develops a solid plan for catching fluctuations.
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Anonymous says:
btw, the reason why I suggest in stocks one can make more when daytrading is because of more abundant opportunities with news driven and/or momentum events, no? For example, this guy averages 2%+ / day on a small account because he can get on the right side of momentum. This is different than pattern and momentum trading on FX or futures, which seems less predictable (more computer algo dominated) and less opportunistic to me.
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Cory Mitchell, CMT says:
I prefer boring any day. I trade the trends that occur, and step aside for news events (only entering after into normal trend trades). My bread and butter is being able to trade everyday boring moves. That’s just me. For some people, there may be more opportunity in some markets than others, but for me, I do the exact same thing no matter what market I trade, so the results are pretty much exactly the same. I do trade big momentum moves as they occur in forex, stocks and futures. Some days are bigger, but that is just what the market provides, and not a function of the market I am trading. All markets provide ample opportunity (way more than any trader can take advantage of).
Of course, each person trades in their own way, so if they have a strategy that works on stock-based news events, but nothing else, then they should trade stocks. But I can only speak for me. I focus on boring everyday trends, which makes how I trade fairly universal across markets, and not much changes when I switch from one market to another…except that stocks require a lot more capital for the same return I get elsewhere.
Don’t dismiss a market just because you don’t know how to trade it, or haven’t met someone who trades it (called availability bias). Your objections are hearsay, from people who haven’t mastered that market. I should also point out that I could care less if I am trading against all algos. That is a journalist-created demon, which really doesn’t affect a solid and adaptable trader in the least. It’s all just buy and selling…just like it always has been.
If you talked to forex traders, they will say that trading forex is great. If you talk to futures traders they will say trading futures is great. All these markets exist because people succeed at trading them (while the mast majority lose). Whether you trade stocks, forex or futures, your odds or success are the same (low!), but that doesn’t change the fact that there are loads of traders in each that make money consistently.
By all means trade stocks if you like them. But forex and futures are also viable options. Put 6 months to a year of hard work into any market, and your odds of success are the same, and your income likely will be as well. Have traded all three markets, profitably, for multiple years, I can say that without question. The only difference is the capital you need to trade them (and a few details like trading hours, etc). I mostly focus on forex because it is the easiest market to get into for the everyday person who doesn’t have a lot of capital to work with. But that said, trade what interests you most.
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Anonymous says:
Once again, genius remark. Thank you. I wasn’t fully aware of my bias until now.
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Anonymous says:
Awesome explanation…..
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Anonymous says:
Very good points made here. Thank you.
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Anonymous says:
Cory,
I agree that the good traders stay silent. Thanks for your knowledgeable response. I just still disagree with your analysis of returns possible in FX and futures. No way anyone can consistently pull out 15-20%+ per month. If they could, they would be managing a successful, small hedge fund and the world would know about it. The only place anyone can consistently pull out those returns with reasonable R/R is with small accounts in small to midcap equities. Or MAYBE a combo of FX, futures, and equities, but primarily in equities. I just think you should be steering newer traders away from FX and futures if possible since it is way harder to find trades with context and tempting to overtrade. Technical trading alone in FX and futures can still lead to big drawdowns. And how could any new trader expect to compete with algos anyway?
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Cory Mitchell, CMT says:
July 24, 2016 at 00:06
Agreed, returns like this are limited to smaller accounts…typically under $100,000 for futures and forex which are highly leveraged markets (at least in my case). I discuss this in Why Day Traders Make Big Returns But Aren’t Millionaires: . In my case, since I mostly focus on forex (and occasionally futures) I actually don’t have much use for more than $70,000 when day trading (but I use more because I am swing trading/investing etc.). Day trading with more than that and my % profits stay the same or start to drop as more capital is added. So you are correct, as soon as large sums of money (hedge fund) are involved, the returns drop because it becomes harder to find liquidity and great trades with more capital …but my focus here is the individual trader, who CAN make seemingly high returns.
Day trading most of these markets since 2005, the forex market has by far been the most lucrative for me (in terms of % returns). There is so much money passing back and forth that based on my strategies it seems to be the easiest to day trade. Stocks I also like, but the lack of leverage can SOMETIMES make ideal position sizing impossible (as I always risk 1% of my capital per trade). Futures are also good, and another market I really like because of the inherent leverage in them.
But I disagree on steering traders away from futures and FX. If you know what you are looking for, these are more lucrative markets, because much less capital can be utilized effectively. Having traded all these markets–and I only day trade for 2 hours a day, in the US morning–I typically find the same number of trades in each, and the reward/risk on the trades are typically the same. So with pretty much everything being equal, I choose forex or futures because they are more accessible to the person starting out with a smaller bankroll.
The Small or midcap equities doesn’t matter…if you are risking 1% and using a similar risk/reward parameter on your trade, it doesn’t matter if you trade a penny stock or a $500 stock. YOu lose 1% or make 1.5% or 3% either way.
I don’t really understand the drawdown argument. Every trade is capped at a 1% risk (slippage has never been an issue in 11 years of trading because I don’t trade during news or against momentum), and daily risk is capped at 3% (not discussed in this article but discussed in Daily Stop Loss: ). So you need to be losing all trades and not winning any to see any significant drawdown…and since our winners are bigger than losers it takes less winners to make back the loss. So with a good strategy drawdowns are minimal, and in a worst case scenario it is a VERY slow capital drain, but if this is happening the trader can hopefully work on finding the issue that is causing the drain in capital before it becomes significant. Once a trader has practiced a strategy thoroughly and is implementing it well, a more than 10% drawdown should VERY rare given the protocol discussed in this article.
This stuff is not fantasy…it just works with enough practice.
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Anonymous says:
Cory, thank you again for your diligent response. You are clearly passionate about this industry and about helping others. It is evident in your patient thought and articulate delivery. Less successful traders than you who would have quickly dismissed my first question and then arrogantly summarized my commitment and character.
As I am sure you can sometimes gauge, your skeptics include aspiring traders who have become disenchanted by “educators” promising quick, easy profits. Some of these traders worked very hard and still failed. Although they must realize it requires 10K+ hours.
I wish I would have engaged some good mentors early on. Most of my trading knowledge was built by observing and reading about every good trader I could find. Then, after about 6 years (I was with a full-time job), I implemented a strategy to generate consistent income from equities (80% winning days). Almost doubled my money until I got burnt out and lost control of my emotions. A bad trade w/ no stop started me on tilt, and in two weeks, I had managed to lose all profits. From that experience, I learned that good health is just as important as any trading strategy. I know it sounds wacky, but I believe in adrenal fatigue, and I think adrenaline does often flow during trading. But there are ways to effectively manage it.
I did this while working a full-time job. It was always interesting trying to speak intelligently on an incoming call while managing an erratic position. Fortunately, I made that first hour of the day up to my boss
Anyway, my family kind of lost faith in trading as income after that, or whether it was even healthy. Every good trader knows this is just another final step in the process to success (assuming you’ve learned how to effectively manage emotions). After that experience, I even designed a strategy, position management and risk management application for IB API. $8K in programming expenses later, I couldn’t use it as little money for an account. ha.
But given that a vet like you says there are opportunities in every market, I believe it. I have recently taken an interest in futures. I’ve found a few trustworthy mentors. I know you mentioned Daytrading Academy. My only concern with them is that I have not seen the lead traders offer any live trading statements (to tradingschoolsorg for example). Probably because they’re so busy teaching!
Thanks,
Look forward to transferring some of my skills in equities to futures using a gentle approach that starts in demo!
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Cory Mitchell, CMT says:
Here is an article that discusses what you are talking about…adrenaline fatigue…although this article refers to it as self-control fatigue. A very real, physical/mental obstacle.
Self-Control In Day Trading: The Biological Factors
As for The Day Trading Academy…I have taken their course (I had already been a trader for 8 or 9 years, but knew some traders with the DTA and wanted to see what they were learning). I thought it was a great program. Although they trade in a similar fashion to me, so I liked that.
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Mark says:
Hi my name’s Mark and I did trading, I had to send identification, such as my Driving Licence and a utility bill, and once I sent them in I could start trading I payed £250 to start it up but my trading adviser left me to it, and never helped me, I contacted him a few time to asked for help on some aspects of how to trade but he never got back to me so I took a chance and went alone but I lost all my money I put in which now as made me very weary of starting it back up. I think it was Forex I was trading with. So my question is how do I trade if I want to start trading again and to earn an income all so how much can I earn per month, or does it go off how much I put in my my trading account thanks and kind regards Mark Wheatley.
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Cory Mitchell, CMT says:
It takes time to learn how to trade. It is not something where you can deposit some money and hope to make a consistent profit. Also, the advice of a broker will likely never make you money. They are brokers/sales people, not traders (at least the people you would be talking to). I would also recommend starting with more than 250. Start with at least 1000 (assuming it is forex, for other markets–stocks, futures–you need way more) and keep risk on each trade low…only risk 1% or less of capital on each trade.
IF you don’t know what market you were trading, then more research should have been done prior to trading. Spend at least 3+ months in a free demo account, learning about the market you want to trade and refining a strategy. The demo trading should reflect as accurately as possibly how you will trade in the real money account. Your demo account should be showing a profit each month, for several months in a row, before you open another account with real money. Your income potential will vary. Expect to lose money the first few months once you open the live account (after months of demo trading). Trading real money is psychologically tougher than trading a demo account, so it can take some time to adjust. After that, your income is up to you. It could be tiny, negative, or could be 10%, 20%…. per month. Income is totally dependant on the amount of work, and the QUALITY of our practice, that we put into our trading.
There are lots of free tutorials on the site, under the trading tutorials menu. There is also the Forex Strategies Guide which provides a more thorough overview of forex trading.
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Anonymous says:
Hi Cory. Your dedication to trading is admirable. That said, I have to call BS on your numbers of what’s possible. They are grossly exaggerated. Please show us brokerages of any trader that can consistently generate even 20%+ / mo over a 2 year period. They mislead anyone who wants to be in the profession.
Also, the potential in futures and forex is way lower due to the talent of those competing. Also more volatility opportunities in stocks.
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Cory Mitchell, CMT says:
Don’t take the stats out of context. This is what you can make, not what you will make. Maybe 1% to 4% of traders (who are really dedicated for more than a year. This stat doesn’t include the thousands of people who decide to day trade on a whim) will make it to this level. Most people who attempt trading are never even profitable…that is clearly stated with several links provided in the article to actual stats.
This level is reserved for those who dedicate themselves not only to understanding the market, but understanding how to practice and how to control their personal tendencies. I have multiple articles on the site stating your chances at day trading success are slim based solely on the numbers. But if you are one of the ones who relentlessly dedicates themselves to honing their craft, then the math above simply works. This article is what you are striving for. It is possible, but it is reserved for those few put in the most work. The other 96%+ will always doubt.
I have published statements and provided proof in the past on this site. No one cares, because seeing isn’t doing. The doubters still doubted and bitched in the comments, and those who know it can be done or are successful traders themselves just nod, but know it is a useless fight trying to convince someone who doesn’t believe. There is no upside in taking on that fight, so I no longer publish stats [the exception is my paid investment newsletter (not day trading) which is up 39% YTD, plus a 5.75% dividend yield]. Even if you decided it was possible, you would still need to put in the thousands of hours it takes to reach the level discussed in the article. And very few people that have determination. The people who work their asses off get there, and the other 96% don’t.
The few percent who do make it don’t listen to the opinions of those who say it can’t be done. Those who say it can’t be done never reached that level, and aren’t exactly credible sources on what it takes to make great returns. Although their opinions may be useful for what not to do.
I feel it is important to tell people what is possible, otherwise the bar stays low. And in the financial industry it has been set VERY low. It has convinced people that a 5%-10% per year is a good return on their hard earned money. That is just not good enough for me, and so I found ways to improve on that. Of course not everyone can make high returns…high returns are always limited the those who work the hardest (so if don’t want to do much work, then 5%-10%/year is what you should/will get). This goes for professional traders as well.
All markets are good day trading markets. One isn’t better than another. I personally prefer the forex market, but futures and stocks are also great. Volatility is nice, but doesn’t matter. I like volatility and enjoy trading in it more, but ultimately position size is the equalizer; in quieter markets a larger position can create the same risk/reward scenarios as a more volatile market.
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mo says:
Realistic scenario, is that you will make no money for the first year or two. I say this because you should not be even using real money for the first few years. The real issue is you need a mentor and coach. Finding that is uber difficult. Most teachers make their money from teaching because they failed at trading. Any trader worth his weight in salt would not need a dime from a student. A good trader can pull money out of the market at will. A certain elite group. The rest are schmucks. Don’t look for them on twitter or any web site, we do not advertise. we do not need it or want it. The proof is always in the pudding. screencast.com/t/xH8IBTnCt, thats one week work. Mind you I have been trading for 10 years. 4 with a teacher.
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jr says:
Teach me
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WallStBluff says:
THE ANSWER IS 0
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JJ says:
I cringe every time someone tells me that because they can make, say, a 100% return a year from day trading and therefore, they’ll be able to increase their wealth 1000 times in a decade, by, as you say, “perpetually compounding” at those insanely high returns. It only works until they blow up on a single trade or forget to set their stop loss one fateful day, especially when trading futures or forex on leverage.
I’d recommend parking some of that day trading profit in a buy and hold portfolio or some real estate while dedicating a fixed % of one’s net worth in the day trading account (that amount determined by one’s risk tolerance.)
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Derek says:
I cringe every time someone says “buy and hold”. I cringe when someone doesnt stay 100% cash by the end of the day in volatile markets.100% a year is very conservative for small accounts.
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Zion Akakoh says:
Hello Cory,
Thanks alot for this eye opening information on forex trading. please review the below conditions of my broker (Alpari Nigeria). Is it ok;
This account gives you ECN technology without the add-on commission. Instead, commission is worked into the spread, which should make it easier to keep track of your trading performance.
Trading Terms:
Trading Platform: MetaTrader 4
Minimum Deposit: 300 USD / 300 EUR / 15,000 RUR / 300 GLD
Spreads: From 0.1 pips
I am interested in the swing trading.
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Cory Mitchell, CMT says:
For swing trading a bit bigger spread (and no commission) is fine. You want to look at the “conditions” for each pair though (on the “conditions” page of your broker’s website). The EURUSD spread should ideally be about 1 pip or smaller. EURJPY should be about 3 pips or smaller. EURCAD 4 pips or smaller.If you are looking to swing trade, the smaller the spread the better, but that should give you a good idea. If the broker is offering those types of spreads, it should be fine for swing trading. A tiny bit bigger is also ok, but if they are charging a much higher spread than those discussed above, you may want to consider another broker.
If you do decide to day trade, you’ll want that EURUSD spread below 0.5 pips.
For comparison, my spread in the EURUSD is 0 to 0.4 pips, EURJPY is about 0.5 to 1 pip and my EURCAD spread is 0.5 to 1.5 pips typically (I do pay a commission though…about $2.5 per $100,000 traded).
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suzy says:
hi, when you say leverage, do you mean cfds and margin trading? What if you dont trade using leverage, is there enough profit to become a day trader?
Thanks
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Cory Mitchell, CMT says:
You can still make money day trading without leverage, but you’ll need more capital to make a decent income, or you’ll settle for a lower dollar return. Leverage isn’t required, but it helps.
The best way to find out is to practice in a demo and see and what your actual returns are like. Do this for at least a few months; trading the same way and the same amount you would trade in a real account. That will give you best idea of what your expected income could be from day trading. Many people struggle with day trading, so practicing and gaining consistency in a demo account before using real money is a worthwhile process anyway.
Cheers,
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Ardeshir Mehta says:
Thank you, Cory. You’ve been *most* helpful.
Cheers.
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Ardeshir Mehta says:
Thanks for the excellent advice, Cory. I also realize that volatility these days is low compared to what it was a few years ago. But even making profits half as large as you say above would be absolutely *fabulous* for me. As I said, I can afford to put as much as $50,000 into my trading account. So I am really looking forward to reading your upcoming book and trying out a few of your recommended strategies – first in a practice account and then in a real money account. (I use OANDA as my broker, and with OANDA I can trade even individual units, and am not restricted to mini lots or micro lots. And just FYI, I trade the EURUSD pair exclusively.)
Cheers.
PS: Is there any indicator that gives a precise idea of how much daily volatility there has been in the past week, month or year? I am just using my naked eyes and *estimating* the volatility, but if there were an indicator that gives actual figures I would very much like to use it.
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Cory Mitchell, CMT says:
Ardeshir, you can get a load of information, such as average daily volatility, average volatility by hour of day, average volatility by day of week, and historic volatility comparisons on the Forex Daily Stats page: . Some other stats as well (correlations aren’t currently working; I’m working on that).
You could also add an Average True Range (ATR) indicator to your chart. Set it to 14, and when looking at a daily chart, that will give you the average price movement per day over the last 14 days.
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Ardeshir Mehta says:
Thank you, Cory. Yes, I understand now.
To put it another way, with $5,000 in my account and 30:1 leverage, I’d have $150,000 to trade with, and so I could easily set a trade worth 5 mini lots (equal to 5,000 units of the base currency – in the case of EUR/USD, that would be 5,000EUR). The TRADE itself would be even larger than my entire account, but the RISK I would be taking taking if I were to lose any single trade should be only $50. Right?
If I am right, could I please ask you another question? You wrote:
“Assume your strategy limits risk to 10 pips, and you attempt to make 17 pips. You find on average though at the end of the month that losses are actually 12 pips and winning trades are 16 pips.”
… and:
“A good trading system will win 60% of the time. You averaged 5 trades per day, so if you have 20 trading days in a month, you made 100 trades.”
My question is, where can I find such a strategy / trading system? I should very much like to try it, since it looks so very promising. I can easily afford to put $5,000 into an account. In fact, I could afford ten times that much. I have been trading for over a year and half now, and although I am successful, I am less than one-twentieth as successful as you are saying I COULD be.
Cheers.
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Cory Mitchell, CMT says:
Correct. Except 5 mini lots would be 50,000, not 5,000. A mini is 10,000, a micro lot is 1,000. Either way, you’re getting the idea. If you deposit $5000 you only risk 1% of it per trade, even though cost of the trade may actually be larger than what is in the account. See Position Sizing in Forex:
As for your other question: Finding 5 trades a day, equivalent to the above, is tough in our current environment (becoming less so, and there is always the option to trade multiple pairs or pair which just have a lot more volatility). While volatility is creeping back up, it is still below what it was back in 2012 and parts of 2013 for pairs like the GBPUSD and EURUSD. So when volatility is higher, consistently over 120 pips per day then the above scenario becomes more realistic. A lot of days we are only seeing 70-90 pip movement in these pairs, so finding 5 trades to make 17 pips on isn’t as easy. Basically, when you look at 1 minute chart, you want to be able to see the price making runs of at least 20 pips before seeing a pullback, with some regularity (either direction).
So right now, it’s more like 1 to 3 trades per day (assuming only trading during the most volatile 3 or 4 hours of the day). But this changes over time. Back in 2009 when pairs where moving 400 or 500 pips some days potential was higher than what I have laid out here. So expectations MUST change with volatility. When a pair is moving 150 pips a day there is theoretically twice the potential as when it is moving 75 pips per day (currently, we are more toward the latter case). We can’t force money out of the market, we can only take what it provides…sometimes that is more and other times less. I will add a tidbit about that into the article.
All this–adapting to volatility, only trading during certain hours, which pairs to trade, how much money to trade with, and the strategies to use–are all coming out in my new book. Should be available in the next few weeks on the website.
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Ardeshir Mehta says:
Hi Cory,
In your bit about “How Much Money Can I Make Day Trading Forex?” you do not mention the amount of leverage that would be needed to make the kinds of returns you are talking about, so I calculated the leverage myself. It turns out to be 1:1000 ! Isn’t that mad dangerous, and possibly not even available?
You wrote,
“Each pip with a mini lot (10,000 in currency) is worth $1”
… and:
“With 10 pips of risk you can trade 4 or 5 mini lots–which equals $40 to $50 to respectively.”
So 4 or 5 mini lots equals 40,000 or 50,000 in currency, and as a result, to trade 40,000 in currency with $40, or 50,000 in currency with $50, you need 1:1000 leverage, right?
Or am I wrong here?
Cheers.
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Cory Mitchell, CMT says:
It may seem that way, but actually no. How much a trade costs to put on, and how much is made are two different things. In fact typically a trader won’t need more than 50:1 leverage: How Much Forex Leverage?:
I can buy a mini lot (10,000 in currency) and make $50 by making 50 pips, and that is the same no matter if I put up the entire 10,000 (no leverage) or put up only 500 (20:1).
Where leverage matters is in your percentage return, not your absolute dollar return. If you have a $5000 account with no leverage you can’t even trade a mini lot. But if you have a 30:1 leverage account that gives you 150,000 in “buying power”. So you can buy multiple mini lots (for 10,000) each. If you buy one mini lot you still only make $50 on 50 pips…as would someone with 5:1 leverage or 1000:1 leverage. The leverage level just determines how much capital you need in your account to trade a certain position size.
Does that make sense? Basically leverage determines how much you need in your account to take a trade…and is a separate issue from the actual dollar amount return of a trade.
Hope that helps
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fabio says:
Hi Cory
I am a college student and i want to learn Forex .. what would you recommend to(course) learn for beginner..
which will a good online broker for beginner Forex?
Thanks
Fabio
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Cory Mitchell, CMT says:
Hi Fabio,
I have written an ebook which covers the basics of forex trading and provides multiple day trading and swing trading strategies:
Other than that, you can go through the Trading Tutorials page and read individual articles. While this approach is fine, articles don’t provide the full picture like the book would.
As for brokers, it will depend on where you are located and your trading style (if you want the option of scalping then FXOpen is recommended), but here are a few to check out:
Oanada
FXOpen
HotForex
TD Ameritrade Thinkorswim
You can find more information on choosing a forex broker here:
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Cory Mitchell, CMT says:
Hi Steve,
I used different account amounts to show that you can generally start trading forex and futures with less capital than would be required for day trading stocks.
Also, I used slightly different strategy examples for each market. Based on the different variables used in the calculations, the article isn’t meant to showcase which market is better or more profitable, rather simply to show making a living in any of these markets is possible.
To answer your question though, yes I believe there is more profit potential in the forex and futures markets than in the stock market. This is largely attributed to the use of leverage in the forex and futures markets which can magnify returns (and losses). Forex and futures markets can also be traded 24-hours a day, which in my opinion allows risk to be controlled more precisely–especially if you do decide to hold positions overnight–because (unlike stocks) there aren’t any gaps in the price from one day to the next (except on weekends, but that can’t be avoided in any of these markets).
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Steve says:
Hi I love your explanations I just have two questions: First, When you compared how much money you can make a month in different markets, you started stocks with $30,000 and Forex with $5,000…. proportionally this should have Forex most profitable because if you started a Forex account you could possibly make $11,520 a month.(1920×6). Therefore my first question is, is the forex market the most profitable if I plan eventually invest large sums of money? I am a college student and as I career search I find myself especially attracted to investing so I want to know what market I should plan to invest in as an occupation for the rest of my life
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Cory Mitchell, CMT says:
ETFs are great. If you aren’t a day trader but looking to trade ETFs you may want to consider Thinkorswim then. The reason being that there are a number of ETFs you can trade commission free with Thinkorswim. There is a full list of commission free ETFs (with select brokers) available here: . As you’ll see there are few other brokers who also offer commission free trading select ETFs.
And the platform is pretty good for most traders purposes. You can try out Thinkorswim for free using a “papermoney” account:
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Cory Mitchell, CMT says:
Depends on where you located and how you plan to trade. Interactive brokers is a very popular choice. So is thinkorswim (TD Ameritrade), but Interactive Brokers is likely the better choice…especially if day trading when costs need to be kept low. There are other brokers of course. To see what lots of people are saying about their brokers and how they rate them, a good source is:
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quentin says:
Thanks for the feedback I heard of them before and I currently trade forex as a trend follower I’m not into day trading however I am looking to diversify my trading by trading etfs as well what are your thoughts on that?
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quentin walker says:
Hello Nice Website, I am a forex trader and I am looking to explore trading stocks, what are your reccomendations on what broker to use?
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hira says:
hello my name is hira
i am a beginner at forex can i personally interact with you through email chat!
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Cory Mitchell, CMT says:
Hi Hira,
Please ask your questions here. That way everyone who reads the article can benefit. Thanks
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