Income of a Day Trader: How Much Money do Day Traders Make on Average?

The quest towards financial independence brings millions of people to financial markets every day. Every one of them asking, how much money can I really make? The answer to that question is a bit more complex.

Although day traders operate in an extremely meritocratic environment, where income is theoretically unlimited, the statistics can be quite discouraging.

Day trading is closer to a high-performance sport than an average salaried profession. It compensates skill, discipline, and risk management, and competition is fierce.

In this article we will touch on the income potential of a day trader and explore the harsh realities faced by new traders. We will take a look at earnings data, costs, and the key factors that determine whether you earn a living or lose money on this high-stakes trading methodology.

Let’s Talk About Profitability: Statistics on Day Trade Income and Earnings

The statistics on day trading profitability are, without a doubt, brutal. Academic research and broker data consistently show that trading is hazardous to those come to the markets unprepared.

According to major academic studies analyzing stock traders worldwide, the vast majority of participants fail to generate profits consistently. A landmark study of equity futures found that 97% of individuals who persisted for more than 300 days lost money. Only a tiny fraction of less than 1% of people earned a bit more than a minimum wage. 

When we discuss proprietary firms, where traders and those who trade with firm capital operate, the stats are similar. Pass rates for evaluation accounts range in between 5% to 10%. This means the majority of day traders never even reach the stage where they can withdraw profits. 

But don’t feel demotivated just yet. For survivors, the rewards are significant. The top tier successful traders captures the vast majority of market alpha. Understand these day trading success statistics is crucial. Every single trading day, the market does the job of transferring wealth from the impatient to the disciplined and skilled. It is definitely not easy to be among the latter, but not impossible either.

Average Income of a Day Trader: How Much Money do They Make?

Before exploring how much money the average day trader brings home, we must distinguish the amateur from the professional.

Data suggests that the average annual pay for a day trader in the U.S. is approximately $96,700. But this figure is heavily skewed towards the top 1% of earners. 

The bottom 25% of day traders lose money. They typically struggle to break even after costs. The top-tier independent day traders often report earnings exceeding $185,000 per year. But the mathematical expectations of a day trader’s income is actually negative when we add in all the failed beginners who risk their money every year. 

Proprietary Traders

When it comes to proprietary firms, some of them offer an income structure. Many traders here can receive a base salary plus performance bonuses. Online prop traders, who trade remotely from their home or wherever they choose, can see an average payout of around $4,000 when they successfully withdraw, although elite whales in this space can withdraw up to $20,000 per month.

At the end of the day, day traders make what their skill allows them to make. There is no ceiling, but there is no floor either.

What Are the Main Factors Behind Day Trading Profitability?

You might be asking yourself how come one day trader make $500,000 a year while another blows up their account? There are several factors separating profitable traders from the losing majority. 

• Capitalization: The amount of capital you start with is the primary determinant of success. Risk management teaches us to risk no more than 1% of our trading accounts per trade. A trader with a $5,000 account risking 1% will risk $50, which makes it much harder to achieve their goals. They would need an astronomical return, which is unrealistic. A trader with an account balance of half a million dollars will risk $5,000 under these same circumstances, which makes their income target much more realistic and achievable. Unfortunately, the account size dictates the difficulty levels and chances of success for those interested in intraday price action.
• Market Volatility and Volume: Day traders make money from price movements. Volatility is the main driver behind most day trading strategies. Without volatility and trading volume, price doesn’t move fast nor far enough to cover the commission, costs, and spread. 
• Win Rate vs. Risk/Reward: Beginners obsess about winning every time. Profitable traders focus on the risk-reward ratio. You can lose money on over half of your trades and still be profitable. If your winners are three times larger than your losers, you’re in a good position. It is a game of mathematics, instead of precision. 
• Technology and Strategy: In 2025, you are not only competing with other players, but also against machines. While manual trading still works, integrating algorithmic trading strategies allows for faster execution and emotionless discipline, which can stabilize earnings and put you way ahead of your competitors. The best traders in the markets have the resources and the knowledge to implement tools that will give them great advantage in the battlefield during market hours.

The Costs of Becoming a Day Trader: From Commissions to Fees

Day traders usually have to deal with three main kinds of costs. These are:

1. Commissions and Fees: Although there are trading platforms with zero commission plans, the costs are still there. Professional day traders often use direct-access brokers that charge per share. These fees, combined with exchange data fees, eat into earnings. These costs can be way higher than $100 per month. 
2. Hardware and Software: To assess market conditions and stay ahead, a trader must have a robust workstation. The costs of real-time data feeds, news terminals, and charting software can range anywhere from $200 to $2,000 per month.
3. The Cost of Spread: Every time a day trader buys at the ask and sells at the bid, they pay the spread. For high-frequency scalpers, this invisible tax amounts to thousands of dollar every single year.

Day Trading Taxation 

Besides costs and fees, we still have to factor in taxes. If not managed correctly, taxes can decimate your income as a day trader. 

In the United States, day trading income is generally taxed as short-term capital gains, which are taxed at your ordinary income tax rate, which can be up to 37%. This is much higher than the long-term rate enjoyed by investors. 

U.S. stock traders must be aware of the wash sale rule, which disallows losses if you repurchase the same stock within 30 days. This can lead to a tax bill on phantom profits. Those trading futures can meet a more attractive scenario where 60% of gains are taxed at the lower long-term rate (Section 1256). 

In countries such as Brazil, the scenario can be even stricter. Day trading operations are taxed at 20% flat, with no exemption threshold, unlike swing trading, which has specific monthly exemptions, thus being a more attractive option for Brazilian retail traders.

Types of Day Traders and How They Earn Money

Income potential varies based on experience and the specific niche of strategies you pick. 

Scalpers

These traders rely on small price movements occurring in a matter of seconds. They execute dozens or hundreds of trades per day. 

They earn money through high trading frequency and lower profit per trade. They largely depend on volume and low commissions to make money. One bad trade can wipe out a whole day of profits. 

Momentum Traders

These are mostly stock traders hunting for the biggest movers of the day. They require highly liquid assets and enter when volume spike. 

Their earnings can be a bit more inconsistent. They can make a month’s worth of income in one hour, or lose money rapidly if momentum fails or change unpredictably.

Technical Traders

These traders live by the chart. They are familiar with the best indicators for day trading, such as the VWAP and the RSI, and look for repeatable patterns in price action. Their income comes from statistical probability.

Institutional vs. Retail

This is one of the largest disparities. Institutional traders operate on a whole different level. They are working at large banks and institutions focusing on market making and flow. Their earnings are more stable, because they often receive a fixed salary and bonuses.

How Can I be Among the Day Traders Making Money in the Future: Notes on Risk Management and a Path to Profitability 

The journey to replace a salary with day trading income is long and difficult. Since it is so difficult, risk management is a must, not a tip nor an advice. Without strict risk management, you have no chance to become profitable. Day trading without discipline is hazardous to your wealth. 

A realistic timeline would look something similar to the below, but each person has their own goals, risk tolerance, and time, so don’t take it so strictly. This path can be longer or shorter, depending on you:

• Year 1: Expect to lose money. This is the cost of educations. Beginners will learn market mechanics and pay their dues.
• Years 1-3: In this stage, the trader begins to break even. They stop blowing up accounts, but still struggle to grow equity. Your discipline will be tested here. These years can either make you or break you.
• Year 3+: Successful traders emerge at this stage, They now have a defined setup, solid risk management, and a trading plan. 

To become a day trader, you must treat it as carrier, not as a hobby. 

Conclusion

How much do day traders make? The answer depends heavily on which side of the statistic you fall on.

For the majority of day traders, the answer is negative. They lose money. 

For the persistent minority who treats this as a serious business, day traders make a scalable income that can far exceed traditional employment, ranging from $100,000 to millions per year. 

Trading can be terrible for your net worth if you approach it without respecting reality. It requires a deep understanding of market structure, unshakable discipline, and commitment to risk management. 

If you decide to start on a day trading journey, focus on education and continuous learning. Do not focus on the money, focus on the process. The future belongs to those who can master their decision-making in the heat of the moment.

FAQ

Can I Become a Day Trader with $100?

While possible, it is unlikely you will be successful due to risk management rules. A small account forces you to take on excessive leverage and risk too much per trade. Most profitable traders suggest starting with at least $30,000 for stocks, or utilizing funded prop accounts.

Why do Most Day Traders Lose Money?

Most fail due to a lack of discipline, poor risk management, and undercapitalization. They treat the market like a casino instead of a business.

How Many Trades Per Day is Normal?

It varies a lot. A scalper might make 50 trades a day, whereas a trend trader might open only 1 or 2 positions. Overtrading is a common mistake that can easily erode your profits in day trading.

Is Day Trading Considered Gambling?

If you’re someone who buys and sells randomly, without studying hard to understand what is actually going on, then yes. But for a professional with a statistical edge and a robust trading plan, it is probability management.

Do Day Traders Hold Positions Overnight?

No. By definition, a day trader is someone who closes all positions within the same trading day to avoid overnight risks.