How Much Do Professional Traders Make – Forex & Stocks

When you picture finance traders, stock traders or Forex traders, you probably picture something along the lines of Jordan Belfort in Wolf of Wall Street or Bobby Axelrod in the TV show Billions. These traders live like kings among men and certainly live like kings, like how they are portrayed. But how much do professional traders make? 

These guys are living like they earn hundreds of millions of dollars per year trading, and even the people under them seem to live a life beyond mine or your wildest dreams, but how accurate is that?

Do these traders really earn as much as we think they do, and are the lives in these TV shows and movies realistic? 

This is the question that we are going to try and answer for you, as we have had plenty of people ask this question. 

Average Forex Trader Salary

The average salary for a professional  forex trader in the United States is $77,593

The salary range varies greatly because of many factors that include  Bonuses , profit sharing and commissions on top of the base salary. You can check out the ranges down below.

  • Salary:$28k – $167k
  • Bonus: $4k – $86k
  • Profit Sharing: $5k – $25k
  • Commission: $0 – $26k
  • Total Pay: $37k – $304k

Trading for a Hedge Fund vs Trading for Yourself

There are different types of traders out there in the world but the main ones we are going to focus on are the ones that make up the majority, and these are: 

Traders working for a company, and traders working for themselves. 

If you are one of the lucky few that are fortunate to work at large hedge funds or investment banks, then you are actually paid a base salary with performance based bonuses on top of that base salary. 

Some of the benefits for working as a salaried trader include the following:

  • The company tools, software, and strategy are at your disposal. These software packages and tools do not come cheap, and there is a reason for this. The reason being is that they provide the most important information in the fastest time.
  • The training and mentoring programs are by far the best, since you will be learning from the pros.
  • You won’t be risking your own money, you will be putting the hedge fund’s money on the line.
  • If you show promise in your trading you can move up the ranks and manage more money, thus getting paid more.

But there are also some downsides to, such as:

  • If you don’t reach targets set by the hedge fund, you could possibly be demoted or even worse lose your job.
  • Trading is way more than a 9 to 5 so if you can’t handle long hours it probably isn’t for you.
  • The possibility of having to deal with difficult clients is a probable fact.

On the flip side there are those traders that work for themselves, either by choice or maybe they are forced to. 

Either way these traders also have benefits working for themselves, which include:

  • You typically have more flexibility when working for yourself, since you don’t have anyone to answer to but yourself. This means you get to choose your own working hours. 
  • You keep what you earn. Whereas with a hedge fund if you do well you only get a small percentage of your profits to keep for yourself.

Downsides for these traders are the likes of:

  • Since you are risking your own money, you stand a greater chance of having higher stress levels.
  • Since there is no base salary you are relying on the income you make from trading. But if you have a bad month you might not make enough money.
  • You will have to source your own datastreams and news outlets to provide you with the latest information, which can be rather costly.

How Much Do Professional Traders Make – Hedge Funds Salaries VS Home Trading Salaries

I think we can all agree that traders who work for hedge funds will earn a hefty sum more money than those who work for themselves, but what do the numbers actually say about this? 

Well for the traders that are employed by hedge funds, their yearly salaries can vary substantially depending on the specific job they are doing, the company they work for and even their location.

Hedge Fund Salaries

But if we take a look at Glassdoor, the Average Base Pay for a trader in the United States is over $100,000. 

Let’s take a look at some examples of different companies and what salaries they offer:

United States

Company

Average Base Salary (USD)

Citibank

$148,146

HSBC Holdings

$196,024

J.P. Morgan

$92,795

UBS

$94,507

Goldman Sachs

$119,548

According to Glassdoor, the average base salary can range anywhere from $90,000 to nearly $200,000. 

This obviously isn’t taking into account bonuses and commissions. Now let’s see how these numbers compare with a different location, like London

United Kingdom

Company

Average Base Salary (GBP)

BNP Paribas

£86,423

Barclays

£115,846

Citibank

£56,951

Goldman Sachs

£79,581

Morgan Stanley

£109,109

Here we can see that the average base salaries for traders in the United Kingdom range from as low as £56,000 all the way up to £115,000. 

Again this isn’t taking into account any bonuses or commissions that can be added on top of their base salary.

Home Trading Salaries

Since there is no data for home trader salaries, we can assume that it can be an extremely wide range, possibly from a couple of thousand to tens of thousands of dollars per year. 

There is simply no base salary for a home trader because they trade their own money. As well as making money, they also face the risk of losing their own money too.

Influencing Factors on Salaries

Whilst the base salaries for traders in both the United States and United Kingdom are pretty impressive, there are certain factors that can influence a base salary for a trader, such as:

  • Seniority
  • Performance
  • Company they work for
  • Location

A lot of people that join hedge funds or investment banks will typically start off as an analyst, and will stay in that role for 4 to 8 years. 

Analysts help the junior and senior traders, and after that they can progress up to a junior trader. 

Now according to some sources, junior traders typically earn approximately $300,000 to $3,000,000 per year, whilst the senior traders have the potential to earn over $10,000,000 a year. 

However, it should be stated that these figures are based on performances.

Conclusion

Whilst it is hard to get the exact figures for what professional traders can make, there is plenty of information out there to come to conclusions.

For instance, traders that are hired by hedge funds or investment banks, the average salary for a trader in the United States is roughly $100,000 per year, plus any bonuses they may receive. 

Though this can increase or decrease based on their own performance.

For the professional traders that elect to work for themselves with their own money, their own salary is based on the average monthly profits, as well as starting capital. 

The more capital they have to start out with, the more profits they can potentially see. Furthermore, if they start off with low capital then profits might not be as high or frequent compared to someone with a lot of startup capital, so that needs to be taken into consideration. 

It is vitally important to understand the risks involved with trading, since you can lose more than you initially start with.