Most people would love to make money day trading forex or crypto and earn $10,000 or $20,000 per month salary. With that size of wage, you’ll be catapulted into the top 2% of earners. Your financial future will be secured and you’ll be able to live a pretty comfortable life. But is this a fantasy pipe dream or can you make it a reality and make money day trading in 2022?
Do forex and crypto traders make money day trading for a living?
Most beginning day traders are dreamers with an unrealistic expectation of riches to come. Consequently, most traders struggle, they certainly never get to earn the sums they want and they usually lose a great deal of money. The broker statistics are unfortunately very clear – nearly all traders lose. Despite this fact, thousands of new traders enter the markets every year. The vast majority just give their hard-earned money to the broker, never to get it back.
Why do forex and crypto day traders fail?
Failure in trading, whether forex, E-mini futures, index, or crypto, is due to many factors including a lack of training and a lack of trading discipline. However, the greatest factor that leads to the downfall of nearly every trader is the underfunding of their account. Day traders’ broker accounts are just too small.
Time to face the truth – if you fund your account with $1,000 or $5,000, or $10,000 you just won’t be able to earn enough to be able to make your trading worthwhile. This size of account will certainly never pay you a wage. Consequently, you’ll end up risking higher percentages of your account and you’ll quickly find your losses mount until you eventually burn your account. And if you’re like many previous day trading account burners, you’ll go away for a while, then brush yourself down, fund a new account and try again, only for the same thing to happen again.
The numbers are stacked against the small account day trader
Trading is primarily about the management of risk, and this is the area in which most retail traders fail. The data we have access to from brokers is unequivocal: winners do not make it big by taking a few big trades, they bet smaller sums more often. This means their account never suffers a big loss. But if you are trading a smaller account you are forced to risk a much higher percentage and you will almost certainly make a big loss at some time. These bigger losses eat into your capital and make it much harder for you to bring the account back to breakeven – a 20% loss requires a 25% gain, a 50% loss requires a 100% gain. The mathematics is constantly acting against the trader playing on their trading psychology and forcing them to make bigger and bigger errors.
Pretty much all trading educators recommend that day traders don’t risk more than 2% of their account on any one trade. Note the use of “more than” here, the fact is that successful big money traders are usually risking less – much less. They trade at 0.5% or 0.25%. Now if you trade 0.5% on a $10,000 account that’s just $50. A trade win on a 1:2 risk/reward ratio will reward you with just $100. Not exactly going to pay the rent and fund the new sportscar is it?
So how are you going to pay yourself $10,000 a month salary when each trade wins you just $100?
Example: To make $10,000 salary per month on a $10,000 account with 0.5% risk, trading a 1:2 risk reward strategy with a 60/40 win rate will require you to execute 250 trades in 20 trading days.
Now you may say, “I’ll just compound my account up and soon I’ll have that big day trading account.” But reality is not that easy. Compounding does NOT work. Read this article to find out why.
How well could you trade a large account?
Can you imagine the psychological freedom of trading at 0.5% risk on a much larger account? On a $500,000 account, you’d only need 2 winning trades at 1:2 risk/reward to bank yourself $10,000! All you then need to do then is keep repeating that relatively simple feat month after month. That’s how you can make money day trading forex or crypto.
If you are a reasonable forex day trader with an average size $5,000 account, think about how you’d feel if the gain of each of your trades were multiplied by 100. And if you’re a reasonable E-mini futures day trader with an average account size of $50,000, how would you feel if your gains were multiplied by 10?
Proprietary traders have a great advantage over the average day trader in that they have access to a much larger funded trading account. It’s now possible for good forex, E-mini futures and crypto day traders to also get a funded trading account. At Funded Trading Plus, we can give good traders access to a large funded trading account. We have unique trader programs that could give you access to up to $1 million trading capital. Best of all, you keep 80% of the profit that you generate. Find out more about our Funded Trading Programs here.
Your Turn – Do you want to make money day trading in 2022
Please comment on this post, note anything you think this post is missing and we’ll update it. Here are some questions to help you:
Why did you start trading forex, futures or crypto and what is your dream?
Can you see yourself making $10,000 a month day trading forex, futures or crypto in 2022?
How would making $10,000 a month trading forex or futures change your life?
How can we best help you to make money day trading in 2022?