How Much Can You Earn Trading? - A Realistic Perspective

Yes, you can get extremely rich off of trading. But then how come so many people become extremely poor instead by trading? Well, having skewed expectations of trading is certainly a big reason, so here is what to realistically expect.
by Yoaquim Boom
October 7, 2022

swing trading

Key Takeaways

  • Trading isn't a get-rich-quick scheme, it will cost a long time to learn.
  • Being a trader will require immense patience and durability.
  • You're gonna lose, so it's better to get being a winner out of your mind.
  • Technical factors like your trading capital and risk management strategy are going to be pivotal to your trading earnings.
  • Only 5% of all traders are successful, are you gonna put in the work to cut it and be in that 5%?
  • You have to understand your edge. What is your place in the market? What are you good at? Knowing the answer to these questions will enable you to be many times more profitable.

The Easy Answer

The easy answer is 95% of market participants fail, so realistically 95% of you reading this can make nothing. But there are many nuances to the art of trading and making money in the markets, therefore you should probably keep reading.

Another simple answer would be that the average successful trader makes 10% on their account year-over-year, but how do you even become average?

Investing vs Trading (Knowing what you want)

The reality of trading is complicated. One thing is for sure, it’s not a get-rich-quick scheme. If you think you’re gonna be successful immediately without effort, you’re extremely mistaken. 

You have to ask yourself what you want and why you even want to trade. If you think it will be quick money in comparison to investing, you’re wrong. In investing you’re waiting for the returns, while in trading you’re waiting to learn, both take time. 

Most people are going to be better off investing in companies for the long term or investing in firms such as Warren Buffett’s Berkshire Hathaway which manage your investments. 

Investing in hedge funds and leaving your money under their management is an easy way to get returns in the markets too. Trading isn’t the only way, and it probably is the most difficult one. 

We’ll get more in-depth on the level of difficulty trading has in the Losing section of this article. 

The Monetary Factors 

Trading Capital

The amount of trading capital you trade with has a massive influence on how much money you can make per trade. Trading capital refers to the amount of money you have available in your brokerage account. 

If you start trading with $2,000 your income potential (in dollars) is far less than someone who starts with $20,000.

Risk management

Managing risk will be absolutely central to your survival in the trading market. Whether you trade forex, stocks, or crypto you’re going to have to manage your risk optimally. 

Managing risk is largely done by putting stop losses at a level of risk you can mentally and financially handle. 

Something to distinguish between is position size, account size, and risk. The position size is how much capital you use to buy a certain number of shares. Your account size is the total amount of capital in your brokerage account. And your risk is the amount of capital you may lose on a given trade.

Position size, account size, and risk all influence one another but are not the same thing, read more on that here. 

A generally good risk management rule is to allow yourself to lose no more than 1-2% of your account per trade. 

Take the following example: you have a $1,000 account and your risk management strategy allows you for 1% risk per trade. If you then were to place the entire $1000 account on a singular trade, your stop loss should be 1% under your entry price, which means that was the trade to go against you you would stop out at a $10 loss. This trade would be following a 1% risk-per-trade risk management strategy.

Find your own trading strategy and focus primarily on your risk management if you want to keep your account funded long enough in the markets to actually learn how to trade. 

A more in-depth article on risk management and trading plans can be found here

Creating and Knowing your Edge

Which market you trade in greatly influences how much money you can make. Therefore experimenting and picking which market you like and your personality is optimized for gives you an advantage in trading. 

Each market has different advantages. Stocks and Forex are generally more capital-intensive asset classes, so if you trade another asset class but in different ways. 

Some stocks require a certain amount of money to purchase 1 share, like a share of Tesla, which costs $305 at the time of writing. Therefore, if you want to trade Tesla shares you will need a minimum of $305.

Forex on the other hand makes smaller moves, therefore to capitalize on those small moves you will need bigger position sizes for decent returns. 

You also have to spend time researching the stocks or crypto assets you want to invest in. And for forex, you will have to keep up with international news since that can massively affect the prices of currency pairs. 

Stock Trading

Stock trading involves buying and selling shares in companies in an attempt to make a profit on the changes in price that occur for stocks of a company. 

Unfortunately, stock trading isn’t optimal for all global market participants due to the time in which the stock market is open. 

The stock market is only open from 9:30 a.m. to 4 p.m. Eastern time. For this reason these 24h markets are much more accessible to trade in some areas of the world. 

Forex Trading

Forex trading refers to Foreign Exchange trading which is the trading of international currency pairs. Out of the three types of markets that will be listed here, the forex often is often the least volatile marketplace to trade in. 

For the same reason trading forex often yields the least financial gains for small accounts. Although, the forex market makes the most ‘predictable’ and small moves it for the same reason yields the least financial opportunity for small-scale market participants. 

The forex market is a 24/5 market making it accessible to traders at all times throughout the week, it closes during the weekends. 

Crypto Trading

Trading the crypto market is easily the most volatile and the most difficult place to learn to trade. Trying to learn to trade in the crypto market will mean constant liquidations just for the sake of liquidations. 

The volatility also provides the quickest gains out of all three markets, and therewith the quickest losses in all three markets. 

Crypto assets have a small market cap and therefore can move very quickly. Generally, the volatility makes cryptocurrency trading the more difficult market to trade.

Even more accessible than the forex market, the crypto market is a 24/7 market making it accessible to traders at all times.  


Time Frames

Switching between different trading time frames has many advantages and knowing which time frames are best for your method of trading is especially useful. 

There are a few classic trading methods that are most commonly defined by the time frames on which they trade and the amount of time they hold on to a trade. 

These different types of trading include swing trading, day trading, and scalping. 

Swing Trading

Swing trading is a form of trading where you are trying to profit from market moves that last anywhere between 1 day and several weeks. This is quite a long-term strategy that tends to use the 1W, 1D, and 4H charts. 

Swing trading may also be referred to occasionally as Active Trading which is defined as an investor who places 10 or more trades per month and attempts to time the market more accurately at more relevant High-Time-Frame levels. 

Day Trading

A day trader is a type of trader who trades intraday, meaning within the day. This often means a day trader needs a large account and makes many trades in a day to make the most of their trading day.

Day trading is quite vulnerable to high brokerage fees. Since you make many trades you tend to have to pay significant fees on each trade, so find a good broker. 

You also have to beware that if you palace a few bad trades in a row it can affect the many trades you will be placed for the rest of the day negatively. Emotions are often heightened for day traders since the sheer volume of trade means more trades will go against them, just as more will go well. 

Day traders often use the 1D, 4H, 1H, and 15m charts to place their trades. 


Scalping is a form of day trading that focuses on even smaller moves than traditional day trades. 

Scalp trades are significantly shorter and utilize extremely small moves in percentage terms. 

Scalpers tend to use the 4H, 1H, 30m, 15m, 5m, 1m, and occasionally even the 60-15 seconds charts to find optimal entries and exits for their trades. 


Different types of chart patterns to trade

Knowing what types of setups you can trade well will give you a great edge on the market. You have to know your strengths and weaknesses. 

If you like consistency and clarity, you may want to trade ranges. If you like longer-term trades with clear exits you may want to trade trends. And if you like quick in-and-out gains you may want to trade breakouts. 

So, there are not just different time frames traders can optimize for, but also different trading styles. 

Range trading

Range trading refers to trading between pre-determined (often horizontal) support and resistance levels. The supports and resistances of ranges can often become very strong be traded numerous times before they break.

Scouting ranged charts with obvious horizontal support and resistance levels is quite easy, this may be the easiest way to trade for beginners. 

Trend Trading

Trend traders attempt to isolate and extract profit from strong momentum-driven trends. 

Trend traders attempt to find momentum and ride the momentum of an asset up or down. If you have a good feel for momentum this is a good way to trade. 

Breakout Trading


A breakout is a trading setup that forms when an asset moves out of a resistance or support level, this can often lead to a big move, especially when the breakout comes in tandem with increasing volume.

Some traders specialize in breakout trading and scout only for setups that may be breaking out of any type of breakout formation, this includes ranges, ascending triangles, descending triangles, wedges, pennants, and the list goes on. 

Average Trading Returns

As we’ve covered most traders don’t make an immense amount of money quickly if they make any at all that is. But suppose you are successful, these are the returns you can expect as an average market participant.  

Generally speaking, only about 5 percent of day traders are very profitable. If you take account for the traders that just don’t lose money (break-even) the success rate sits at around 6 percent. Only 1% up from those that are successful. 

Beating the market is just too difficult for most people. For those that are averagely successful in trading the markets a 10 percent return rate year-over-year is what can be expected. 

Although investing in the stock market the average rate of return for the stock market has also been about 10 percent. Making the results of trading and investing for the average participant very similar. 

The Personal Factors

A large part of trading depends on your financial conditions and personality variables. Some of these conditions and personal variables include capital, trading expertise, time frame, risk management skills, and patience. 

One thing is for certain, you’ll need a personalized trading plan that works for you. Trading plans cover many of the things above and will enable you to better manage your trades and emotions. An in-depth article on how to create a trading plan is provided locally here on boomish.


In order to create consistent day trading income where you have a solid trading plan and are able to implement it, you will likely still have to gain much experience before you can become consistently profitable and do trading full-time. If you only practice part-time and see it more as a hobby it often takes a number of years to develop real consistency.

On top of the long-term training that trading requires, it generally will just take a lot of your day. You will have to constantly monitor your trades and makes sure the market is reacting as you had planned. 

If you fail to keep updated you will likely lose money, therefore it is difficult to trade profitably if you’re distracted and do it part-time. 


There are two levels of patience required for trading, directly related to the fact that there are two time-consuming aspects to trading. 

First, there is the long-term learning process you are going to have to deal with, which often involves a lot of losses, is this something you are willing to endure?

Since you’re not immediately profitable, people will certainly doubt your choices, and you may even begin to doubt your own choices or capability in trading.

Will you be able to withstand the long days of painful trading you will put yourself through as you begin your trading career?

Then there is the simple aspect of patience in trading execution. You’re going to have to be an extremely patient person as a day trader, constantly waiting for the right opportunity at all times. 

It’s not a game of just picking the right trades, but also a game of picking the right trades at the right time.

Practicing patience and endurance will be crucial to becoming the profitable trader you dream of being. 


Trading is extremely competitive, the industry cut-throat, and only the best survive. You will constantly hear success stories while you are still making small bucks, losing money, or being absolutely stagnant in your career. 

As a day trader, you will be battling all the best traders on the markets. They will be attempting (indirectly of course) to cut your trades short to create better opportunities for themselves etc. You’re playing a game against the best of the best. 

All market participants are battling each other, and for each winner, there has to be a loser. Sometimes you may be the winner and sometimes you may be the loser. 

Essentially, you’re gonna lose money as a day trader no matter what and you’re gonna have to understand that going into day trading. 

Stop focusing on how much you’re losing, and start focusing on how much you’re WILLING to lose. How much are you okay with losing per trade without losing your mind? That is what risk management is for. 

Remember that learning to trade takes time, and therefore you’re bound to lose. Everyone loses, even the best of the best. They just know HOW to lose. 

Here is an example of just how common losing is in trading. 

According to many studies, over 90% of traders lose their entire account within a year. 

One such study of the Taiwanese stock market encompassed everyday trade in that market over a 14-year period. 

The study revealed the whopping statistic that less than 1 percent of all participant traders over the 14-year period made a profit. 

So if this tells you one thing, it has to be that most traders will fail, and that’s a fact (not to be disheartening!). 



Trading will evoke many doubts in you about yourself and the choices you make. You will often become fearful of things related to your trading decisions which often leak out into your life overall. 

All the fears you will feel can be conquered with hard work and determination but it is often a long learning process. 

Here is an article on all the different trading fears and how to overcome them.


In conclusion, you can realistically earn a decent amount of money trading, but it will be in exchange for your time and often mental state. 

Go and experiment, test your luck and skill in trading, just don't forget the number one rule of trading, risk management. We'll leave you with a quote from legendary investor Warren Buffett.

Rule No.1: Never lose money.
Rule No.2: Never forget Rule No.1.

Warren Buffett