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Average income
- Thread starter jasrlew
- Start date
Any time you try to measure income from trading you will have a problem because of survivorship bias. At any given time there will be some average of what current traders are making, but that will be skewed to the upside because the winners hang around and the losers drop out. So whatever mean (or median) income you find will actually be much lower. If we assume that the statistic of 90% of traders failing is true, then it would probably be safe to say that both the median and mean incomes are negative for trading.
That's not to discourage anyone from trading if that is their passion, just a reality check. Seems like a lot of people hear something like (totally hypothetical, I don't know the actual number) "well the average trader makes $100k per year" or whatever and then the newbie says "well, I've always been better than average" and thus makes the assumption that the average figure will be an easy accomplishment. In actuality, its the average income of the 10% that have survived. And to top that off, the average is a constantly moving number as changes in market condidtions can help even the worst traders or hurt even the best.
That's not to discourage anyone from trading if that is their passion, just a reality check. Seems like a lot of people hear something like (totally hypothetical, I don't know the actual number) "well the average trader makes $100k per year" or whatever and then the newbie says "well, I've always been better than average" and thus makes the assumption that the average figure will be an easy accomplishment. In actuality, its the average income of the 10% that have survived. And to top that off, the average is a constantly moving number as changes in market condidtions can help even the worst traders or hurt even the best.
Any "average" you look for will be misleading. Beware of "survivorship bias" where you only average those still trading after a (long) period of time.
If you took all traders that started, say even 3 years ago (5 would be better), assume that only 5 or 10 percent still trade today (along side a whole bunch of newbies). Those remaining 5% should have high profit averages, but the average of the original group from 3 years ago to today would most likely be in the high negative (losses) category.
What might be more interesting to ask is, of the traders in prop firms today, how many have been consistently trading for at least 5 years, and of those, what is their average annual income and/or percentage return on tradeable personal capital?
Just my 2c worth.
Rob.
If you took all traders that started, say even 3 years ago (5 would be better), assume that only 5 or 10 percent still trade today (along side a whole bunch of newbies). Those remaining 5% should have high profit averages, but the average of the original group from 3 years ago to today would most likely be in the high negative (losses) category.
What might be more interesting to ask is, of the traders in prop firms today, how many have been consistently trading for at least 5 years, and of those, what is their average annual income and/or percentage return on tradeable personal capital?
Just my 2c worth.
Rob.
You all have brought up some good specifics to ask. It was more curiousity than anything else. I know the low and high ranges from losing money to maybe being close to filthy rich, but when one looks at doing this full time it might be good to know those percentages that make it versus those who truly do it for a living. Thanks for the replies guys.