A trader salary is a percentage of an employee’s hourly wage. This is normally paid into a bank account which is then used by the trading team to pay for expenses such as office space, stock trading software, computer time, coffee, groceries, clothes and more.
Tips are deducted in order to give the employee a small profit.
A typical trading team salary will range around $90,000 to $150,000. This includes benefits and office space expenses.
A trader making $100,000 has an annual salary of $40,000, plus $5,000 for stock trading costs. The remaining $5,000 ($50,000) goes into cash benefits for the trader’s family.
This would take the trader’s annual salary to $150,000.
The chart above shows how much each employee takes home each year based on their industry and experience.
What is the stock market?
The stock market is a very large business owned by large corporations like IBM, Citigroup, Intel and more.
The company has a market capitalisation and will sometimes buy shares at a huge premium as a way to profit from their market dominance. The value and price may fluctuate wildly but is usually quite low.
It is a key indicator of the economic condition in an entire country because when a company is big, they have access to foreign markets, making them a good bet in a financial crisis.
However, during a recession, companies are often pushed out of their markets.
In this case, the stock market may be down due to a lack of demand for items such as oil and food products.
This affects the stock market indirectly by making the cost of goods and services cheaper and makes companies less competitive.
What is margin?
Margin is the financial term for the risk the investor feels on the side of the investments he/she makes. The more risk they take, the greater the return.
Margin is not risk free. For instance, when buying stocks, the investor may take more risk if the price is declining than if the price is up. This creates opportunities for the company to make cash flows up.
But, as the risk of losing money is higher, the return may be lower. If they take an amount of risk, the profits and cash flow will be higher. Conversely, if a company took the same amount of risk, the profits would be lower.
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