Many traders will claim some form of passive income. But, just like in any field, there is a place for active earning in any profession. Trading is a very active industry, and people working in it have a lot of options for profit-making. For instance, one could take an interest in a certain sector of the market, and use their trading skills to make a significant profit. Even if a trader’s profit margin is a small percentage of their overall profit, they may take an interest in the results they receive in that sector. Or, they may be interested in specific market conditions, but do not have a strong enough understanding to make money from them. Some, like a trader, who is able to buy or sell a few stocks might be able to make a fair amount of money as a result, despite the lack of experience.
However, even if a trader’s profit margin is not as high as one may expect, their earnings must be considered. The average margin of a trader is around 3% per year (which seems low, especially with a market of 2 billion dollars each day. For a trader who trades every day, it would take them over 10 years to make this much. However, the average profit margin of a stock market is typically much greater — around 20% of earnings. What this means in practice is that your trader isn’t going to have a high profit margin, but they could still make a good amount of money in the short term if they put some energy into it. In a long term horizon, a trader could make even more money, but it would take longer than in a short term one. In a nutshell, traders who put in the effort for an active trading career, will most likely reach high amounts of profit over the long run as a result.
How many times a day do you typically trade?
Most traders will have a day a week where they trade very few stocks. It is common to start trading at around 9am (US/Pacific) and close at 4pm (US/Pacific) on Sunday. If you were a musician, this would be in the early morning hours. Traders are generally only interested in trading a specific stock to the exclusion of all others. This is known as the “1-1 rule” (which is actually a shortened version of the 1-2 rule). Traders who only trade some stocks, will tend to be at their peak earning potential — they will not be earning as much, but they can still have a
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