What is the average salary for a forex trader

How much money can traders make on the stock market per month?

How much money do traders actually make per month on the stock market when dreams are left out? Even if the range is naturally large and the merit of the trade depends on its strategy and the market situation, orders of magnitude can be outlined.

The quantification of a trading strategy involves more than just the documentation of entry and exit orders. Various statistical evaluations are necessary to correctly assess the performance of a strategy.

It is generally advisable to always be informed about some key figures of your own strategy:

People may perceive it as an extraordinary coincidence to have been “stopped” several times in a row - the statistics only show a number of losses.

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The crucial question: How much can a trader earn per month?

The question of monthly earnings - whether expressed as a percentage or an absolute amount - is the crucial question in trading. The answer naturally depends on various parameters such as the account balance, the risk invested per trade, etc.

In addition, the earnings are of course based on the strategy used. Regardless of the wide range and many influencing factors, an answer to the "question of all questions" should be given here that is as concrete as possible.

The starting point for the consideration is my very short-term strategy “Highspeed Daytrader” (members of BrokerDeal receive a 20% discount on the first 3-month subscription). With this, a monthly performance of 10% can be achieved. But how is this value determined?

This is how the monthly profit of a strategy is calculated

To determine the performance, you don't need much more than an Excel table in which all transactions are recorded, including the costs billed. In futures and stock exchange trading as well as in commission-based CFD trading, the costs consist of the explicit transaction and financing costs; in commission-free CFD trading, the transaction costs in the form of spreads are already included in the prices.

Many software applications have interfaces that can be used to export data from the transaction history to the Excel spreadsheet program. At MetaTrader this is e.g. B. possible via reports.

The following figure shows the evaluation of several trading days on which the “high-speed day trader” was used. The days are allotted to the period from 05.01. until January 19th, 2015.

Calculate daily performance

Average daily profit is not included in the table.

The start-up capital was € 15,000.

At the end of the period a profit of € 805.80 had been achieved - this corresponds to a profit of 5.37%. In relation to seven trading days (that is how many days there were trading in the relevant period) this corresponds to € 115.11.

For this, there are various other statements about the nature of the trading strategy used in the evaluation. The proportion of profitable positions is relatively high at almost 70%, while the average loss in deficit trades is almost twice as large as the average profit in profitable trades.

Due to the number of trades made and the fact that the most profitable trade does not account for too much of the total gross profit, the data have a certain validity and can therefore be used as a basis for calculations.

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Calculation: more trades = more profit?

Based on an average daily profit of € 115.11, an expected profit of € 2302.20 could be formulated for a period of 20 trading days. Measured against this, a monthly profit of 10% or € 1,500 would be realistic.

Can this profit be increased by changing the trading strategy?

This is actually possible with restrictions and under certain conditions. In the seven trading days considered, a profit of € 805.80 and thus € 2.59 per trade was achieved with 311 trades. If the average profitability of the transactions can be maintained with an expansion of trading activity, the profit can be increased.

Measured against this, the number of trades would have to be increased by 268 by the end of the one-month period, since € 1,500 / € 2.59 result in 579 and only 311 trades were completed. If, as a result of the expansion of activity, the average profit per trade deteriorates from € 2.59 to € 1.813 for the part of the additionally completed trades, there would be a number of 383 outstanding trades to achieve the profit target.

The profit per trade is therefore a key figure for day traders.

Two characteristics of profit per trade are particularly important

First: the height. Second: The development of the average profit with variations in the number of trades. The latter can only be determined with relatively great effort.

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Reaction to negative average profits

If the average profit per trade is negative - i.e. if losses are made - a quick change in strategy is necessary. If the average loss is only noted, it only reports when the incapacity to act occurs due to insufficient capitalization.

Changes to the strategy can then be of a fundamental or gradual nature. In the event of fundamental changes, the logic of the entry and exit signals is questioned and another indicator is used. In the case of gradual changes, an attempt is made to achieve better performance within the framework of the existing entry and exit logic - for example by providing a trend following strategy with a sharper filter and thereby reducing the number of trades.

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Yours Heiko Behrendt - Head of the Highspeed Daytrader Trading Service