How much money do traders win?

A lot of people think it is easy to make a living as a trader or that at least those who win make a lot of money.

Both things are correct, but not from the point of view people really see.

The fundamental true about the world of trading is that the majority of traders lose money and the few who win end up being a small minority, almost insignificant.

In fact, the great majority of traders lose a lot of money, as much as the gamblers of any kind.

However, the myth of winning traders is so spread that the public believe it, especially with the pejorative meaning associated to it by which people think that trading and speculating in the markets is a sort of evil activity in which the evil traders make a lot of money.

Nothing farther from the truth.

According to mas psychology the simple fact of doing some speculation is something bad that only some kind of bad people can achieve.

The masses, especially those who critic the trading activity the most never think they are “bad”.

Surprisingly a significant part of the public end up betting in some kind of financial product or sport, or poker.

In a way they preach in the streets and bet at home.

Quite incoherent behaviour but that is how the world is working.

The truth, the sad truth is that almost all traders lose in this activity.

Then, who does win doing trading?

Those who make a living out of trading are the owners of capital and all the merchandisers that populate the market. In the end this world of trading is the same as the rest, a world where “image” is predominant.

The real traders who make a living out of this thing is the uncountable number of brokers and dealers that exist In the markets

When people think of evil traders they are mislead thinking that it is “regular people” doing trading the ones making a big money there but the case is the opposite: the big money is made by the brokers.

Although it does not mean that the brokers have to be evil per se, in theory.

People trade (and bet) because they think that by doing that they can improve their situation.

Eventually it will happen like the lottery or slot machines business, that it is them that win, not the people.

However, not to talk only about bad things I will try to say something positive.

The best chance you have for making a living out of trading would be to try to create a product related to it, whether it is a course, trading signals or design automated systems.

Another group of traders who can do quite well are those who go away from the short-term trading activity and start doing some sort of medium or long-term investing.

People like those spoken about in the famous trading book, “Market Wizards”.

People like Tudor Jones, Bruce Kovner, Jim Rogers, Weiss, Seykota and many more.

Although, unfortunately these are just quite a few and the majority of them worked for funds, hedge funds or brokers where these traders managed others people money.

This should give us a tip that the traders are not capable of generating a huge annual return, like the people think “supposed traders do”.

We are talking about 10 to 20% of returns per annum, which is very good itself, but very far from the numbers needed to build up a millionaire account out of 500 usd.

In other words, forget about making 200% every month.

You can win, but more in the line of one digit or two at the most and annually.

As we see, this numbers will take us closer to the long-term market return considering the S&P 500 as the reference. Something that should make us think that the most sensible thing to do would be doing long-term investing.

This is why those who want to become traders would better relax a  bit and start studying the market deeply.

Regarding the original question: How much can a trader win?

The answer is: a lot, in fact, however not everybody can end up managing a hedge fund like Bruce Kovner.

Nowadays there are some interesting options with social trading but even so things are still complicated.

The world of trading is very complex.