How much money do day traders make?
Learn the background and see how much a crypto day trader can earn using the simple risk control strategy described here
The most frequently asked question is: how do traders make money, and how high is the income from trading? A lot of people are interested in these details. There are even several myths about trading: about risks, super profits, easy earnings, and so on. But in fact, real trading is a set of exact rules and strategies, as well as smartness and ability to orient in the financial and economic situation.
So to form a whole picture, we suggest examining the question: how much do crypto traders make on the example of the most popular intraday trading?
How do traders usually make money? What is the "feature"?
Let's start with the definition: what is trading? Trading is the process of buying and selling a selected type of asset to make money from the change in the asset's value at the time of the transactions. All transactions are made through the exchange, which is the primary platform for making money.
It is optimal to trade highly volatile assets whose value is subject to significant price fluctuations, increasing the probable earnings. Highly volatile markets include the forex market, securities trading, and cryptocurrencies. Cryptocurrencies are the most volatile asset and, therefore, the best choice for a trader. Cryptocurrency trading platforms are also exchanges. They differ in terms of the set of features, the number of trading pairs, analytical tools, leverage, speed of depositing and entering funds, feedback, and verification for the user. For example, you can take EXEX, which is very convenient for making money day trading: it has x100 leverage and a large selection of cryptocurrencies.
What are the opportunities to earn on day trading crypto?
There are several options for trading, which mainly depend on the time frame of the transaction:
Trading bots and high-frequency transactions.
Last less than a second, traded only in automatic mode, the number can reach several hundred per day. Profits are made on account of a high number of successful deals and their frequency.
Trading from a second up to 5 minutes. It also can be carried out automatically or with the help of a trader. The number of operations can be up to hundreds per day. High involvement of the trader in the process is required. Profit also depends on the high frequency of completed operations.
All operations are executed during the day. There is no rollover to the next day or even more time frame.
This type of trading is characterized by operations based on reversing the asset's rate cycle.
Operations are based on price changes within a certain time that can be stretched over several months.
Long-term investing (HODL).
Assets are bought with the expectation of future price growth, the time frame is a year or more.
If we analyze the existing types of trading, the best strategy for a trader is Day Trading. Day Trading is a less risky strategy as there is no rollover of open transactions. This reduces the risk of unexpected liquidation in case of high volatility at night. This trade is safer as a trader analyses the price movement in a short time interval, increasing the probability of optimistic forecasts. The number of trades is not too large, which reduces the trader's attention to operations. Day trader salary is the most risk/profit weighted in comparison to other types of trading.
What is day trading potential? How to implement it?
The potential of Day Trading is quite large compared to other strategies. It is less risky, and using small price movements can be a profitable game if you play it right. To do this, you must adhere to the top 5 tips for intraday trading.
Don't chase big profits. Use small price movements in asset values and lock in a better percentage of profits below. Do not wait for higher profits.
Take the process seriously. Not all traders are focused and serious enough during day trading. Sometimes it seems that losing small amounts is not that important. However, Day Trading is only profitable in the long run, and the cascade of liquidations can eventually add up to a big minus.
Use analytical tools. Candlestick charts, trend lines and triangles, volume, liquidity, and volatility analysis.
Constantly educate yourself. Even if you have reached a certain skill level, do not stand still in your knowledge. The financial market, and especially the cryptocurrency market, is very volatile. There is always something new and unexplored. Always be on the lookout for these updates, they will eventually make you more profit.
Follow risk management. This is the main rule not only for beginners but for experienced traders as well.
How does risk management help you make money on trading?
Risk management is a prerequisite for day trading and, in principle, any type of trading. Risk management, first of all, provides tight control over open deals.
The first thing a trader must do to decrease risks is to diversify his portfolio. It is never acceptable to day trade the full amount of an investment portfolio. This is reckless, the same as jumping off a cliff without a parachute.
Create several funds that each have a different purpose. For example, a portion of all investments can only be held for HODLs with a time horizon of over 1 year for returns. Another portion should provide average day trader income to have consistent earnings. You should also create an insurance fund - funds that you will set aside from each profit and that will accumulate. With possible use for passive income.
The next risk management step is using special insurance orders - stop loss and take profit. These are manually set limits on the execution of transactions, which allow buying or selling the selected asset when a certain price level is reached. This is the main way of managing the trader's position in the market, which minimizes trading risks.
Stop-loss is a loss limitation, a pending order, which reduces the probable financial losses in case of a long position in the event of market decline. The stop-loss level is lower than the market price of the asset. If it decreases to the value specified in the application, the deal is closed automatically at the market price.
Take profit is a deal from the opposite, fixing of profit, the order to close a position at the specified level at favorable price movement.
Trading strategies: what is it and why?
There are several types of day trading strategies. How much money can you make day trading crypto? The trader's experience influences more, of course, but the strategy is also an important condition of success.
- Scalping. This is both a general trading strategy and an integral part of intraday trading. It is provided by a succession of short deals (5 minutes or less). Is day trading profitable? Yes, especially during periods of high volatility and market activity.
- Caught in the Knife. It is a risky trading strategy at the beginning of a trend reversal. A successful trade will make the average day trader's income much higher. But the risk of loss also increases manifold.
- Trading on the news. This is the most planned of intraday trading strategies. The key events that influence the market are known in advance. These are the opening of trading on the stock market, the speeches of the head of the Federal Reserve System, and the upcoming quarterly reports of the giant companies that invested in Bitcoin. It is possible to trade Shock News, the main thing is to have the right time to orient yourself.
- Copy trading. Copy trading implies copying trades of a favorite trader. Often such functions are offered by stock exchanges. To copy them, the user analyzes several types of trades to copy them and chooses the best ratio between trading profits, risks, and experience.
An example of a day trading strategy. How does it work?
How much do day traders make? Enough if you stick to the trading strategy and have the strength to maintain discipline. A day trading strategy allows anyone willing to keep their head down to earn. Otherwise, strategy can only bring results.
How to trade correctly?
You need to determine 3 characteristics: the asset, the time to buy, and the time to sell.
First: what should we buy? A large amount of capital allows day traders to trade on small price movements. However, to choose an asset for trading, we advise to analyze the liquidity, price volatility, and trading volumes. The most successful in this regard will, of course, be the largest cryptocurrencies: Bitcoin, Ethereum, XRP, and so on. They will provide high liquidity and volume of interest.
Question: when to buy? We look for the answer by means of technical analysis, order book review, and research of favorable news for the market. This stage will require all your experience in trading. But if you could read the chart, the result should please you.
The time of sale should come when the optimal asset price is reached. Your profit target should also allow you to make more money on winning trades than you lose on losing trades.
As with the entry point, determine exactly how you will exit trades before you open them. The exit criteria should be specific enough to be repeated and tested.
Day Trader Salary
Day Trader Salary is impossible to estimate and calculate. Everything depends on a complex of factors: experience, market activity, and the amount used. That's why there is no exact figure. It is considered that 3-5% of the trader's deposit for the day is a good result.
How much can you make day trading crypto?
It's another hot question. Many people think that it's a lot of money right away and without any experience. Maybe it's if you are lucky and in the 1:1,000,000 people with such luck. Generally, traders earn erratically, and there are periods of high earnings and periods of loss. As we said, staying calm and having a consistent approach to trading is important. Average earnings, in this case, will be much higher than in other specialties.
How to Get Started in Day Trading?
Start simple: Study the theory. Take a good look at your prospects: Is this trading strategy for you? The second step is to start trading. In the first stage, you should use small amounts, gain experience and only then move on to riskier trades.
How Many Trades Can a Day Trader Make in a Day?
How much can you make from day trading? The number of deals closed in a day depends on it. On average, a day trader makes 4-6 trades per day session. Sometimes this figure is lower, or you need to close something at all. Keeping and increasing investments is more important, and rushing does not help.
What is the average success rate among day traders?
One more question is close to philosophy. What Is the Success Rate Among Day Traders? A successful day trader is a trader who increases his/her deposit by 5-20% over a month. This figure might seem to be insignificant. But day trading is about stability. Even 5% can be a decent income. Moreover, this is not a limit. There is no limit, and everything depends on experience, assiduity, market activity, and time a trader spends trading.
What Are the Financial Risks of Day Trading?
The financial risks of day trading do not differ from those of other strategies. Many liquidations, news shocks, and traders' technical mistakes lead to losses. However, unlike other strategies, Day Trading is safer as a trader controls trades during the day and does not leave open positions during the night session.
Day trading is convenient, productive, and accessible. There are almost no limitations to using this type of trading. How much can you make a day trading crypto? It's all individual, and with diligence and professionalism, this can be a good income and a place to realize your potential in life.