Here are the real odds of becoming a successful day trader. This data is based on the success rate I witnessed while day trading at a physical proprietary trading firm office for 6 years, and also from conversations with other proprietary trading firm operators. A proprietary trading firm is one that fully or partially supplies traders with capital, and in exchange, the firm takes a cut of their profits (business models vary, but that is the basic idea).
Given training, money, and experienced traders to help them out, the day trading success rate for trainees becoming consistently profitable traders was extremely low. For traders with little money, little help, or little time, the odds will likely be even lower, or the journey will be longer.
While the statistics you are about to read about may seem grim, I don’t look at it that way. To be good at anything takes work, and most people don’t really work that hard at trading (or they focus on the wrong things…discussed below in How to Become a Successful Day Trader). If you do put in the amount and type of work required, you’re more likely to succeed.
And here is a video discussing the differences between those who succeeded at day trading, and those who failed.
Have you ever daydreamed about quitting your 9-to-5 job to become a day trader? I know I have. The allure of working from home in your pajamas, making quick decisions that lead to fat profits, and being your own boss is pretty tempting. But can you actually make a living day trading? Let’s cut through the Hollywood fantasy and get to the cold, hard facts.
The Brutal Truth About Day Trading Success Rates
Let’s not sugarcoat this – the odds ain’t in your favor. According to research and industry data:
- Only 3% to 20% of day traders actually make money
- That 20% figure probably comes from the dotcom bubble era (when even a monkey could pick winning stocks)
- Up to 97% of day traders lose money according to a study by the Brazilian Securities Exchange Commission
- The average day trader’s net annual return is about -$750 (that’s a LOSS, folks)
- Less than 1% of profitable day traders from one year remain profitable the next year
Yikes. Those aren’t exactly encouraging statistics. But before you completely abandon your day trading dreams, let’s look deeper at what day trading actually involves and what separates the winners from the losers.
What Exactly Is Day Trading Anyway?
Day trading is buying and selling financial instruments within a single trading day. Unlike investors who might hold positions for years or swing traders who hold for days or weeks, day traders close out all positions before the market shuts down for the day.
Some key characteristics of day trading:
- Positions held for seconds, minutes, or hours (never overnight)
- Multiple trades per day (sometimes dozens or hundreds)
- Focus on small, quick profits from price movements
- Heavy use of technical analysis rather than fundamentals
- Often uses leverage to amplify potential gains
Here’s a simple example You spot a stock gapping up on positive earnings news You buy 500 shares at $50, hoping to sell at $51 for a $500 profit You set a stop-loss at $49.50 to limit potential losses. After several minutes, the price hits $50.75, and you decide to take a $375 profit before momentum fades.
Why is Day Trading So Friggin’ Hard?
Look, if it was easy, everyone would be doing it successfully There are several massive challenges that make day trading particularly difficult
1. Short-term price movements are nearly impossible to predict
While long-term investors can rely on economic growth and trends, day traders are trying to predict price movements that are often driven by random news and emotions. It’s like trying to predict which way a leaf will blow in the next 5 seconds.
2. You’re battling your own psychology
Even with a winning system, human psychology is a MAJOR obstacle. We get greedy, fearful, overconfident, and make terrible decisions under pressure. Some common psychological traps include:
- FOMO (fear of missing out) causing impulsive entries
- Holding losing trades hoping they’ll recover
- Taking profits too early on winners
- Revenge trading after losses
- Overconfidence after a winning streak
3. You’re competing against professionals with better tools
Modern markets are dominated by algorithmic and high-frequency trading firms with:
- Virtually unlimited resources
- Advanced technology
- Teams of PhDs and mathematicians
- Microsecond execution speeds
As a retail trader, you’re essentially bringing a knife to a gunfight.
4. Transaction costs eat into profits
Even if you make good trades, you still have to overcome:
- Trading commissions
- Bid-ask spreads
- Slippage (price movement between order and execution)
- Short-term capital gains taxes (higher than long-term rates)
Day Trading vs. Long-Term Investing: A Reality Check
Let’s compare these two approaches honestly:
| Aspect | Day Trading | Long-Term Investing |
|---|---|---|
| Time horizon | Seconds to hours | Months to decades |
| Decision drivers | Technical indicators, momentum | Fundamentals, economic trends |
| Trade frequency | High (multiple daily) | Low (occasional) |
| Capital requirements | High ($25,000 minimum) | Can start with any amount |
| Tax implications | Short-term capital gains (higher) | Long-term capital gains (lower) |
| Success rate | Less than 5% succeed | Most succeed over 10+ years |
| Stress level | Extremely high | Relatively low |
When you look at it objectively, long-term investing benefits from economic growth, compounding, and time in the market. Day trading relies on exploiting tiny inefficiencies and price movements that are increasingly difficult to capture.
What It Actually Takes to Make a Living Day Trading
If you’re still determined to try day trading (and I get it, some people just need to learn the hard way), here’s what you absolutely need:
1. Significant Starting Capital
The pattern day trader rule requires at least $25,000 in a margin account just to get started with stocks in the US. But realistically, you need much more than that because:
- You need a buffer for inevitable learning losses
- You need enough capital to generate meaningful returns
- You need to withstand drawdown periods
If you’re trying to make a living, you probably need at least $50,000-$100,000 to start, and even that might be tight depending on your living expenses.
2. Deep Market Knowledge and Skills
You need to understand:
- Market mechanics and order types
- Price action and chart patterns
- Risk management techniques
- Trading psychology
- The specific assets you’re trading
This takes serious time and dedication to develop. We’re talking thousands of hours of study, practice, and experience.
3. Iron Discipline
I can’t emphasize this enough – you need ridiculous self-control and discipline to:
- Stick to your trading plan regardless of emotions
- Cut losses quickly without hesitation
- Take profits at predetermined levels
- Avoid overtrading
- Manage risk consistently
4. Professional-Grade Tools
You’ll need:
- Low-latency trading platform
- Real-time market data (which isn’t cheap)
- Reliable internet connection with backup
- Charting and analysis software
- Risk management tools
5. A Proven Strategy with Edge
Most importantly, you need a trading strategy that:
- Has a positive expectancy (wins more than it loses over time)
- Works in different market conditions
- Matches your personality and risk tolerance
- Can be executed consistently
Developing a Realistic Day Trading Plan
If you’re still not deterred, at least do it right:
-
Start with paper trading: Test your strategies without risking real money first.
-
Create specific rules for:
- Entry and exit criteria
- Position sizing based on risk
- Maximum loss per trade (usually 1-2% of account)
- Maximum daily loss (maybe 5-6% of account)
- Profit targets
-
Keep detailed records of every trade including:
- Entry and exit prices
- Position size
- Reasons for entry/exit
- Emotional state
- Market conditions
-
Start VERY small with real money once you’ve proven profitability on paper.
-
Scale up gradually only after demonstrating consistent profitability.
Real Talk: Is Day Trading Right for You?
Let me be brutally honest here – for most people, day trading is NOT a viable way to make a living. The failure rate is astronomical, and the learning curve is steep and expensive.
Consider these alternatives that might better align with your goals:
- Swing trading: Holding positions for days or weeks can be less stressful and time-intensive.
- Position trading: Taking trades based on larger trends measured in weeks or months.
- Dividend investing: Building a portfolio of dividend-paying stocks for passive income.
- Index investing: Simple, low-cost index funds have outperformed most active traders over time.
If you’re still determined to try day trading, at least be smart about it:
- Keep your day job while you learn and practice
- Only risk money you can afford to lose
- Set realistic expectations (you won’t be a millionaire in a year)
- Prepare for an emotional and financial rollercoaster
My Personal Take
I’ve been around trading long enough to see countless people try and fail at day trading. The few who succeed typically have exceptional discipline, significant starting capital, and a genuine edge in the market.
Most day traders I know who actually make a living have spent years developing their skills, losing money, and refining their approach. It wasn’t an overnight success, and many admit they could have made more money with less stress in other professions.
Day trading isn’t impossible, but it’s probably one of the hardest ways to make a living. The dream of easy money from home is mostly a fantasy sold by those making money selling trading courses and systems.
If you decide to pursue day trading, do it with eyes wide open. Understand the enormous challenges, prepare for likely failure, and have a backup plan. And most importantly, never risk money you can’t afford to lose.
The Bottom Line
Can you make a living day trading? Technically yes, but the odds are heavily stacked against you. The vast majority of people who attempt it end up losing money, not making a living.
Success requires substantial capital, advanced knowledge, iron discipline, effective risk management, and probably a bit of luck. Even with all these advantages, only a tiny minority of day traders achieve consistent profitability.
If you’re still determined to try, start small, keep expectations realistic, and have a solid Plan B. The trading world is littered with blown accounts and broken dreams of those who thought they’d be the exception to the statistics.
The Day Trader Success Rate
Time is limited, so here is a quick breakdown of the statistics:
- 4% of people were able to make a living with adequate capital, access to mentors, and practicing multiple hours every day during the week.
- Roughly 10% to 15% could make some money, but not enough to make it worth their while to continue trying to do it for a career, or in many cases, the profit didn’t justify the time input.
- Of the 4% who make a living, that doesn’t necessarily mean a good living. If you want to be rich, you’ll need to be in the top tier of that 4%.
- Women tended to be much better traders than men, on average. Females had a much higher success rate than men at the proprietary trading firm.
During my time at the proprietary trading firm, before moving on to trade independently, I saw loads of want-to-be traders come to the firm to day trade, yet very few made the cut. These were people willing to go through several interviews, sign contracts, and make a commitment to show up every day (at an office) and adhere to risk management protocols on their way to becoming potential career day traders. These were, at least on the surface, committed people.
Between the firm I traded at, and from conversations with other proprietary firm operators over the years, about 2,000 traders came through the doors. The success rate—success meaning they could make a living from the markets (that doesn’t necessarily mean a great living)—was about 4%. So out of the approximate. 2,000 people, about 80 were good enough to trade for a living. The other (approximately) 1920 gave up, left, or were fired.
All these people were training and practicing 6 to 8 hours per day, every weekday. While we did have flexibility, we were expected to be at the office during market hours. They had access to capital and help from successful traders (most didn’t use it). And still, only about 4% managed to make a living from day trading.
The day trading success rate, including people who were slightly profitable, but couldn’t make enough to live off, was likely in the vicinity of about 10% to 15% of those who came through the doors. These people may have gone on to trade on their own, as a side gig, but they couldn’t make enough to live off of it, at least while at the firm.
In summary, if you want to make a living from day trading, your odds are probably around 4% with adequate capital and investing multiple hours every day honing your method over six months or more (once you have a method to even work on). Early winning streaks don’t count…that’s actually probably the worst thing that can happen because then you think you’re good without having built the actual trading or mental skills necessary. I am talking about consistent month-after-month profits.
Most of the traders who did make money took five months or more to do it. I lost money (small amounts) for four months. Made a tiny bit in my fifth, equivalent to a part-time job in my sixth, a meager livable amount in my seventh, and then moved up from there.
How long it takes you will depend on your income goals, how much capital you have, and your return from your trading strategy. Here are some income scenarios for forex day trading. For stock day trading, you need at least $25,000 in starting capital, and typically get up to 4x leverage. With that amount of capital, it’s possible to do well. You can also start trading Futures with less capital than stocks.
If you don’t have much capital, and don’t have a lot of time to commit, the odds of making a living from day trading are remote. It is possible, but it is going to take a lot of time and discipline to build a small account into something that can produce a living.
If you want to make some money on the side, you’ll still need the same dedication, putting in many months to refine a method and overcoming sabotaging tendencies. The odds of meeting these lower expectations are greater, with a success rate around 10%.
These are not perfect statistics. There are many things to consider. BUT, conditions were very favorable at the trading firm(s), and yet there is no question that most people could not make money as easily, or as quickly, as they assumed. Streaks of luck were often followed by spectacular blow-ups.Interested in Day Trading Stocks? Check out my new Price Action Stock Day Trading Course. It shows you how to trade, putting in as little as 30 minutes per day (trade longer if you wish). Review and refinement time is required on top of actual trading time.
Understanding the Day Trader Success Rate
Stats are often quoted, such as “95% of traders lose money” but new traders assume they’ll be in the 5% because they think themselves smarter than most. Trading isn’t about being smart. It is about being disciplined; methodically coming up with a trading plan and sticking to it. And it never ends. We need to learn to adapt to life changes, market changes, rule changes, leverage changes, market cycles, good periods, bad periods…we need to develop rules on how to adapt. We don’t just create a strategy and our work is done. Implementing it is a constant task of methodical discipline and patience.
Many new traders also believe that these stats (only 5%, or less, succeed) are a lie because they see loads of people flaunting how much money they are making in online forums or social media. It seems like many people are doing very well!
This is called Availability Bias (see The Art of Thinking Clearly on this trading book list). It is believing that what we see most often is representative of all things, including what we don’t see. Look at the dead space. There are likely thousands of members in those groups, and yet only a few are constantly parading profits. There are maybe hundreds or thousands in those groups losing money, but those people aren’t talking. You can’t know a success rate based on success stories without knowing how many people are also failing, and people who lose are typically much less vocal. This is also similar to Survivorship Bias.
The facts in the section above show how many people succeeded out of the total. And yet the firm, of course, didn’t discuss this. They only showed new recruits how well the traders who did succeed were doing. New traders are only seeing one side of the picture, the tiny more glamorous side.
For further reading on why most traders lose, and the reasons behind it, see The Real Reasons Most Traders Lose Money.
Can You Day Trade While Working Full Time?
FAQ
Does anyone actually make a living day trading?
Yes, it is definitely possible to day trade for a living and make a consistent income from trading. While it’s true that there are challenges and risks involved, many traders have achieved long-term success in the field. Here’s why:
How much does an average day trader make?
Can I make $1000 per day from trading?
In Conclusion:
By strategy, discipline, and patience, an income of 1,000 rupees per day from the share market is possible. Don’t trade on emotions, stick to your trading plan and utilize stop-losses. Stay current, you will over trade against yourself. Start small, learn from experience, refine techniques for beginners.
What is the 1% rule in day trading?
The 1% rule demands that traders never risk more than 1% of their total account value on a single trade. In a $10,000 account, that doesn’t mean you can only invest $100. It means you shouldn’t lose more than $100 on a single trade.