How Much Money Can I Make From Trading?

The amount of money you can make trading will depend on lots of different factors. Unfortunately this is an unanswerable question. However, we can break down some of the key factors that affect how much money you can make from trading.

Your Trading Skill

Skill level is arguably the most important factor in trading profitability. After all, unless you have a high skill level, you won’t be profitable anyway.

Having high skill leads to more consistent profits. You’ll be able to better predict market movements and understand when trades have positive expectancy. You’ll also know how to limit losses and maximise returns. 

For example, if a beginner trader and an experienced trader both take the same trade, an experienced trader is more likely to structure the trade and the trade management in a way that increases the odds of making higher returns.

Trading Capital

Although I’ve already given trading skills the biggest factor, once you’re profitable, it’s your access to trading capital that will have the biggest impact.

As the saying goes “you need money to make money”, and trading is no different.

Let’s say you make 50% in a year, which is a great return anyway, here’s how different amounts of capital can change your profits:

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Two traders with the same skill level can have drastically different earnings if they start with different amounts of capital. The trader with $100,000 can earn a full-time income, while a trader with $5,000 would likely see only part-time earnings.

In the past this was more of a restriction, but funded accounts have made capital more accessible in recent years.

Your Trading Style

Your trading style can also have a big impact. One example is different time horizons:

• Trader 1 has lots of time to trade. They often open trades which last hours up to a few days.
• Trader 2 has much less time available for trading. They focus on trades which are open for days up to several weeks.

Trader 1 who focuses on shorter-term moves may be able to make returns quicker than trader 2 who trades over longer periods. 

How Much Will You Earn?

At this point it can often be tempting to go through a compounding calculator. However, this is a mistake. They often show trading making millions within a few years, but market liquidity will become more of a problem as you trade bigger position sizes.   

There are also plenty of other factors we haven’t taken into account here, but if you want a somewhat realistic view of the next year, you can use your past data. But I’d only do this if you have a large sample size. And keep in mind, market conditions could change at any time and impact your trading.