An important factor that can influence earnings potential and career longevity is whether you day trade independently or for an institution such as a bank or hedge fund. Traders working at an institution don’t risk their own money and are typically better capitalized, with access to advantageous information and tools. Meanwhile, some independent trading firms allow day traders to access their platforms and software, but they require day traders to risk their own capital.
Other important factors that impact a day trader’s earnings potential include:
- Markets in which you trade: Different markets have different advantages. Stocks are generally the most capital-intensive asset class. Individuals can start trading with less capital than with other asset classes, such as futures or forex.
- How much capital you have: If you start with $3,000, your earnings potential is far less than someone who starts with $30,000.
- Time: Few day traders achieve success in just a few days or weeks. Profitable trading strategies, systems, and approaches can take years to develop.