It is true that Day trading is one of the very few professions that can give massive returns. On the other hand, it is also the profession in which a very large group of traders fail to make money.

**The 4 Factors That Influence How Much Money Can Be Made From Day Trading**

How much potential returns you can make from day trading depends on the following four factors

** The Type of Market:** The market that you trade can vary – be it stocks, futures, or forex. Each market has its own set of distinctive advantages. For instance, it is cheaper to start trading in Forex or Futures when compared to stocks, as stocks are capital intensive.

** Your Initial Investment:** This is basically how much money you invest in order to start day trading. The more you can invest initially, the better would be the returns. For instance, a person who starts trading with $3000 will have a lesser income potential than a person who starts day trading with say, $30,000.

** Your Trading Knowledge: **If you plan to make consistent returns from day trading, you must invest a lot of time in your trading education. If you dedicate to trading education full-time, it would most likely take you a year or more. On the other hand, if you can spare only part-time, it may take you a few years for developing consistency in returns.

** Your Personality and Strategies: **The trading strategies used by you, as well as your personality – whether you are patient and disciplined – also impacts your return potential.

**How Much Money Can You Make As A Day Trader?**

Based on certain mathematical calculations we can arrive at the *potential* money that you can make as a day trader. For those calculations, here are the basic assumptions.

- The risk-reward ratio is assumed to be 1.5:1
- The win rate is assumed to be 50% – which means that 50% of trades are anticipated to be profitable while the remaining 50% is anticipated to be not profitable.
- The number of trades per day is assumed to be 5
- The leverage is assumed to be 1:4
- The initial investment amount is assumed to be $35,000

**Calculations**

With a 4:1 leverage and an initial amount of $35,000, your *buying power would be $140,000* (4 x $35,000). The maximum you can risk on each trade is $350 (1% of $35,000). At 1.5:1 risk-reward, assume that you make $0.15 on winning trades while you lose $0.10 on losing trades. At an average of 5 trades a day and 20 trading days a month, you roughly make 100 trades per month. As the stop-loss is $0.10, you can take a position size of 3500 shares.

Now, a good trading system is assumed to win 50% of the time. This means that

Profits Made = 50 x $0.15 x 3500 shares = $26,250

Losses Made = 50 x $0.10 x 3500 shares = ($17,500)

The net value = $8750 (excluding commissions and fees).

Assume that the cost per trade is $20. Then, your commission cost = 100 trades x $20 =$2000.

This brings your total money for the month to a total of $6750 ($8750 – $2000), which is nearly 19.2% monthly return.

However, be warned that highly leveraged trades can sometimes cause massive losses.