*Here are scenarios for how much money you can make as a swing trader, based on how often you trade, the risk/reward ratio of your trades, and the capital you start with. *

There is a massive range of incomes for swing traders. Most swing traders will still need to work another job to fund their lifestyle, but may be able to pull a secondary income out of market each month. There are swing traders who live comfortably solely based on their trading income, and there is the small percentage of swing traders who make a very high (and consistent) income. There is also a large group of want-to-be traders who will fail, and never make any money.

How much money you make as a swing trader is largely determined by:

*How much money you start with*. If you start trading with $2,000 your income potential (in dollars) is far less than someone who starts with $20,000.*How often you trade*,*how often you win*on those trades, and the size of your*profitable trades relative to your losing ones*.*How much time you put in to your trading education*. To create consistent swing trading income–where you have a solid trading plan and are able to implement it–will likely take six months to a year (or more) if you dedicate yourself to daily practice.

Your income potential is also determined by your personality (are you disciplined and patient?) and the strategies you use. These issues are not our focus here. If you want trading strategies, trading tutorials or articles on trading psychology you can visit the Trading Tutorials page, or check out my Forex Strategies Guide eBook.

Income potential is also based on volatility in the market. The scenarios below assume a certain number of trades each month, and each trade has a favorable reward-to-risk profile (don’t trade if you don’t have a favorable reward:risk). In very slow market conditions (price is barely moving) you may find fewer trades than discussed, but in active market conditions you may find more trades. Over time, the average number of trades balances out, but in any given month you could have more or fewer trades than average…which will affect your income that month.

When swing trading, the market you trade–stocks, forex, options or futures–doesn’t matter too much. All have their own advantages. One thing you will notice though is the amount of capital you need to start trading each market.

Start with as little as $2,000 for forex swing trading. For stocks and options start with at least $10,000. For futures swing trading, start with $20,000+. These are the minimums I would recommend swing trading with. Your income, in *dollars,* is tied to the amount you trade with, even though smaller and larger accounts can typically expect similar percentage returns on their trading capital each month. For example, if you make 10% a month trading a $2000 account, your income is $200. If you make 10% a month on a $60,000 account, your income is $6,000. Same percentage returns, very different dollar amounts.

Now, let’s go through a few scenarios to answer the question, “How much money can I make as a swing trader?”

For all the scenarios I will assume that you never risk more than 1% of your account on a single trade. Risk is the potential loss on a trade, defined as the difference between the entry price and stop loss price, multiplied by how many units of the asset you trade (called position size).

There is no reason to risk more than 1% of your account on a single trade. The maximum you should risk is 2% (1% or less recommended). As I will show, even with keeping risk low (1% or less per trade) you can earn a solid income from swing trading.

For the scenarios below I have used different markets, and different starting capital amounts. The numbers are not meant to indicate that one market is better than another. Rather, the various scenarios just show the income potential under various conditions. Use the scenarios to create your own income projection using the market you (want to) trade, the trading capital you have, the win rate of your strategy and the risk/reward of a typical trade you take.

*T**he scenarios below assume you have a strategy that works, have practiced it and mastered it. Therefore, these scenarios are projections for experienced traders. During your initial year swing trading, don’t expect to make these types of returns; you will very likely lose money in your first year.*

### How Much Money Can I Make Swing Trading Stocks with $20,000

Stocks typically trade in 100 share lots. If you don’t use leverage, you will need to trade stocks priced under $200 per share. If you want to trade more than 100 shares, or hold multiple positions, you’ll need to trade stocks which are priced much less than $200/share.

If you risk 1% of $20,000, you can risk up to $200 per trade. Assume you want to buy a $50 stock, will place a stop loss at $49 and a target at $53. Your trade risk is $1 for each share you own (entry price minus stop loss, or $50-$49). Therefore, you can buy 200 shares at $50. If price drops to $49 you lose $200. If price rallies to $53 you make $600.

Buying 200 shares only uses $10,000 of your capital (200 x $50), so you still have $10,000 to use on other trades.

Assume you find 5 trades a month that provide this type of trade setup.

Assume you win 60% of your trades.

Your reward:risk ratio on this trade is 3:1. If the trade is a winner, you make $3 for every $1 you risk.

These scenarios have been selected because they are reasonable. With a decent strategy that produces 3:1 reward:risk ratios, and wins about 60% of the time, you should have no problem finding about 5 trades per month.

Your monthly return is as follows:

If you place 5 trades a month, and 60% are profitable, on average you will have 3 winners and 2 losers.

3 trades are profitable: 3 x $600 = $1800

2 traders losers: 2 x $200 = $400

Monthly Gross Income = $1400 (attained from $1800 – $400)

On the high-end you will pay $10 per trade, or $20 to enter and exit a trade. Commissions costs are therefore: 5 x $20 = $100.

**Monthly Net Income = $1400 – $100 = $1300. **

**That’s a 6.5% monthly return, or 78% yearly return (uncompounded).**

*See the Variations section below for ways to increase or decrease this return.*

### How Much Money Can I Make Swing Trading Forex with $5,000

In the forex market, prices move in pips. If you are swing trading, typically you will be using a 20 to 80 pip stop loss, depending on the pair you are trading. The smallest position size you can take in forex is 1000 (called a micro lot), which is buying 1000 worth of currency. When trading 1000 worth of currency each pip movement is worth $1 (for the EURUSD or GBPUSD which are common swing trading pairs, although pip value does vary by pair). That means if you buy 2000 worth of currency (2 micro lots) you will be making or losing $2 per pip. Using the same scenarios as above, we can use this information for calculating expected profit from a swing trading system.

If you risk 1% of $5,000, you can risk up to $50 per trade. Assume you use a strategy that places a 50 pip stop loss and 150 pip target.

For each trade you can take 1000 worth of currency (a micro lot). If you lose 50 pips, you lose $50. If the price reaches your target you make $150. You have a $5,000 account and you are only utilizing $1000 of it, so you can take multiple positions (in different currency pairs) at one time if you wish.

Assume you find 5 trades a month that provide this type of trade setup. You may personally find more or less, this is just an example.

Assume you win 60% of your trades.

Your reward:risk ratio on this trade is 3:1. If the trade is a winner, you make $3 for every $1 you risk.

Your monthly return is as follows:

If you place 5 trades a month, and 60% are profitable, on average you will have 3 winners and 2 losers.

3 trades are profitable: 3 x $150= $450

2 traders losers: 2 x $50 = $100

Monthly Gross Income = $350 (attained from $450 – $100)

Many forex brokers are commission free, and this is an OK way to go if swing trading. If you also day trade, trade with an ECN broker. Mine charges $2.5 per $100K traded. In total you are trading $10,000 for the month; $5000 to get in and $5000 to get out. Your commission cost will only be $0.25….or basically nothing.

**Monthly Net Income = $350 **

**That’s a 7% monthly return, or 84% yearly return (uncompounded).**

*See the Variations section below for ways to increase or decrease this return.*

To learn how to swing trade forex… including basics to get you started (order types, currency pairs to focus on, defining trends…), 20+ strategies and a plan to get you practicing and successful, check out the Forex Strategies Guide for Day and Swing Traders 2.0 by… me, Cory Mitchell, CMT.

### How Much Money Can I Make Swing Trading Futures with $30,000

Futures move in ticks and points (a certain number of ticks make up a point). The tick value for each futures contract is different. One of the most common futures contracts for day trading or swing trading is the E-mini S&P 500 (ES). You can trade other contracts, but our example below will focus on ES, and its tick value.

Each tick of movement is worth $12.50, and there are 4 ticks to a point. So each point of movement will either make you, or cost you, $50. Each contract requires that you have $5225 (more with some brokers, this figure is from the NinjaTrader Brokerage) in margin. This has nothing to do with your profit or loss though, you still make or lose $50 per point.

If you risk 1% of $30,000 you can risk up to $300 per trade. That means at most your stop loss can be 6 points away, because 6 points x $50/point = $300, which is your maximum risk. With a 6 point stop loss you may be doing some day trading, because in volatile conditions, the S&P 500 can move 6 points in a hurry.

Assume you set targets on your trades at 18 points (+$900), so your reward:risk is 3:1.

Assume you find 5 trades a month that provide this type of trade setup. It is quite likely you will find more than 5 trades per week, since 6 to 18 points of movement isn’t very much in the ES contract. It typically moves between 15 and 30 points per day (depending on whether it is in a low or high volatility phase).

Assume you win 60% of your trades.

Your monthly return is as follows:

If you place 5 trades a month, and 60% are profitable, on average you will have 3 winners and 2 losers.

3 trades are profitable: 3 x $900= $2700

2 traders losers: 2 x $300= $600

Monthly Gross Income = $2100 (attained from $2700 – $600)

On the high end you will pay $10 per trade, round trip. Commissions costs are therefore: 5 x $10 = $50.

**Monthly Net Income = $2100 – $50 = $2050. **

**That’s a 6.8% monthly return, or 82% yearly return (uncompounded).**

*See the Variations section below for ways to increase or decrease this return.*

### How Much Money Can I Make Swing Trading Options with $10,000

You likely now have a good idea of how win rate and reward/risk ratios play out in determining your income. Options are a “derivative”–their value is derived from an underlying market, such as a stock or futures contract. For a strategy on trading options, and a basic rundown of what they are, see Debit Spread Options Trading Strategy.

With a $10,000 account you can risk up to $100 per trade (1% of 10,000).

If you expect to make $300 for every $100 you risk, your reward to risk is 3:1. If you win 60% of your trades and make 5 trades a month your income is as follows:

3 trades are profitable: 3 x $300= $900

2 traders losers: 2 x $100 = $200

Monthly Gross Income = $700 (attained from $900 – $200)

On the high-end you will pay $10 per trade, or $20 to enter and exit a trade. Commissions costs are therefore: 5 x $20= $100.

**Monthly Net Income = $700 – $100= $600. **

**That’s a 6% monthly return, or 72% yearly return (uncompounded).**

*See the Variations section below for ways to increase or decrease this return.*

### Considerations and Variations On How Much You Can Make

If you could take 10 (valid) trades a month, instead of 5, your income would double. If you take less than 5 trades a month, your income drops accordingly. This assumes you maintain the 60% win rate and 3:1 reward to risk. Increase the win rate, or increase the reward:risk (while maintaining the same win rate) and your income will increase. If win rate or reward:risk drop though, expect a decline in income.

Risk 2% per trade, instead of 1%, and your income also doubles. Risk 0.5% per trade and your income is cut in half. This assumes all other statistics stay equal.

For simplicity, these scenarios assume that you would enter and exit positions within the month. That may not necessarily be the case. If your trades last 2 months, then this income would be spread out over two months. If your trades typically only last a week or so, then the scenarios are accurate, assuming you can replicate the conditions above.

You can also play with the position size and the stop loss level, while keeping the reward:risk the same. For example, in the forex scenario the price needs to move 150 pips to reach your target. If you want trades to only last a few days (so you can get into more trades) you could create a strategy with a 30 pip stop loss and a 90 pip target. These trades won’t last as long, so you can find more of them, and all else remaining equal, increase your income.

In the stock scenario above the price needs to move $3 to hit your target. If you want short-term trades, use a $0.50 stop loss and a $1.50 target (just an example–each trade is unique and should be handled as such). With the small stop loss (smaller distance from entry point) your position size increases, but your income stays the same…just a different way of generating it.

*Note that you can’t perpetually compound your account at these returns*. Most swing traders trade with a set amount of capital and withdraw all profits over and above that amount each month. To understand why, please read Why Day Traders Make Great Returns But Aren’t Millionaires. It contains important information about managing expectations and building wealth.

### How Much Money You Can Make Swing Trading – Final Word

All the scenarios assume a 3:1 reward to risk ratio, 60% winning trades and 5 trades a month. The income potential in each scenario is only affected by account capital, and to a minor extent commissions. Notice that all the percentage returns are very similar for each market. Once you know how to trade, one market isn’t necessarily better than another. It’s just preference, and what suits you.

Your statistics could be very different than the scenarios presented above. Based on your demo trading, insert your own win rate, and your own reward-to-risk ratio.

The scenarios are setup so you only win a bit more than you lose, and your winning trades are only a bit bigger than your losing trades. In the real world, that is typically how swing trading goes. Successful (and consistent) traders don’t try to hit home runs on each trade. They trade a simple system that gives them an edge (like above).

Maintain discipline, keep your wins slightly bigger than your losses, and strive to win 55%+ of your trades. Do this, and you can make a good secondary income from swing trading….and possible a livable income once your account is large enough.

Winning 60% of the time is not as easy at it sounds though, and you may not be able to find 5 valid trades per month in all market conditions (although 5 is a conservative estimate).

Expect variance in your income from month to month, as your monthly income will oscillate above and below your average.

Follow me on Twitter @corymitc and check out our Facebook page.

Hello Cory,

I wonder if there is a financial ceiling. Do brokers refuse/ fail to fill your orders above a certain lot size? Thank you.

Brokers shouldn’t be an issue (unless you are dealing with an unscrupulous one) but the market is. There is only so much available to buy or sell at any single moment (to buy there are only so much being sold at various price levels, and vice versa to sell). I discussed ceilings in this article: https://vantagepointtrading.com/archives/17125 While that article discusses day trading, the same concept could be applied to swing trading, or any trade where you only buy once at a single price (but swing trading and investing allow for taking multiple trades over time and at different prices, which allows the trader to take much larger positions).

This is typically not a problem most individual traders will face.

Hi Cory,

Nice and very helpful, Could you please give review about the trading software such as: Market Club, Vantage Point, TradeMastersUSA. Thanks

Looking forward to it, thanks for helping out new traders to be profitable while learning the ins & outs.

Cory,

Thank you very much for all of your good articles & for sharing your knowledge, is it possible that you post a weekly “Swing Trading” list as you do with day trading?

Much appreciated,

I will consider that. I had actually been thinking about it recently…so good to know there is some interest 🙂