# How Much Money Do Traders Make?

When someone gets interested in trading, one of the first questions they want answered is, ‘How much money can I make trading?’

I first got interested in trading after a friend of mine told me about some guys he knew in Africa that were making \$300/day trading forex (foreign exchange or currencies). After doing a bit of research, it sounded like a great way to make some extra money.

We can do some basic math to figure out what kind of returns we can make in a given market if we know 3 things: the mathematical expectancy of each trade, the trade frequency, and the average \$ risk per trade.

Another word for mathematical expectancy is average profit. As an example, let’s say you had a trade where you could risk \$100 with a 60% chance of making \$100. Your expectancy (or average profit per trade) would be 20% of \$100 or \$20. 20% average profit is realistic for a decent trader, although some traders do much better than that.

(\$100 * 60%) – (\$100 * 40%) = \$20 or 20% of your average risk.