You’ve seen the stories: day traders who made quick profits off a few smart trades, leaving the nine-to-five behind and living free. Particularly around the Covid-19 pandemic, we saw “regular” people making massive sums trading in meme stocks like Gamestop and Bed, Bath and Beyond.
But here’s the thing — while those success stories sound great, they’re mostly just that: stories. When you dig into the actual research and statistics, the reality is a lot different. The vast, overwhelming majority of day traders lose. They either lose early and quit, or keep trading despite their losses.
As we’ll see, only 3% of day traders make a profit. And only 1% do so predictably.
Is day trading actually profitable? And more importantly, what separates the top 3% from everyone else? In this article, we’ll dive into day trading statistics and explore why it remains a losing game for most traders.
Have you ever dreamed of quitting your 9-to-5 job to become a full-time day trader? Those social media success stories make it look so easy – a few smart trades and suddenly you’re living the laptop lifestyle on a beach somewhere.
I hate to burst your bubble but the reality of day trading is much harsher than what most influencers portray. After researching extensively and reviewing the most comprehensive studies on day trading outcomes, I’ve discovered some eye-opening statistics that might make you think twice.
The Hard Truth About Day Trading Success Rates
Let’s cut to the chase:
Only 3% of day traders make a profit And just 1% do so predictably
Yes, you read that right. According to extensive research, a staggering 97% of day traders lose money. This isn’t just one isolated study – multiple independent research efforts have reached remarkably similar conclusions.
Two major studies – one referred to as “Barber” and another called “Chague” – monitored thousands of day traders over extensive periods and both concluded that 97% of day traders end up losing money in futures trading.
The Chague study followed nearly 20,000 traders over 300 days and found something even more telling: only 7% of traders even persisted for the full study period. Most gave up within just 50 days!
Why Most Day Traders Fail
You might be thinking, “Those statistics apply to other people, not me.” Well, that’s exactly what most traders think before they start losing money. Here’s why most day traders fail:
1. They Quit Too Soon
Barber’s study discovered that only 15% of traders remain active after three years. Day trading is punishing – both financially and emotionally. The research points to an interesting catch-22: “only the profitable and most experienced investors predictably earn future profits.” But to become experienced, you need to survive the early losses that most traders face.
2. Cognitive Bias Clouds Judgment
Most people who jump into day trading believe they’re above average. They think their intelligence or financial knowledge gives them an edge. But statistics don’t lie – almost all of these traders are wrong.
When traders win early, they think they’re skilled. When they lose, they blame bad luck. This cognitive bias means “successful traders become overconfident and unsuccessful traders are slow to realize that they have low ability and to curtail their trading.”
3. Limited Experience Hurts Performance
Time in the market seems to correlate with better results, but not by much. Traders with more than 50 days of experience are slightly more likely to show profitability. However, even among experienced traders with 400+ days in the market, only 9% earn positive lifetime net returns.
4. Day Trading Is a Full-Time Job
One of the biggest misconceptions about day trading is that you can “squeeze it in” between meetings or after work. In reality, day trading quickly becomes a full-time job – without salary, benefits, or any guarantee of profit.
Institutional traders have massive advantages over retail traders:
- They’re paid to trade
- They have institutional tools and real-time data feeds
- They work with entire teams of analysts
- Most trades are executed by algorithms trading automatically
Meanwhile, retail traders are juggling charts, news, alerts, and constantly second-guessing their own risk management.
How Emotions Sabotage Trading Success
Emotions play a massive role in trading failure. Here’s how they impact performance:
1. Bias Overrules Rational Decision-Making
Barber’s study found that many traders continue trading despite persistent losses. Both profitable and unprofitable traders remain attached to the market, ignoring negative feedback.
Whatever beliefs caused you to start trading in the first place often override logic. Even when faced with consistent losses, traders struggle to quit or change their approach due to these biases.
2. Traders Don’t Learn From Past Mistakes
Here’s a shocking stat: Unprofitable traders with 50+ days of experience have a 95.3% chance of returning to day trading within 12 months, compared to 96.4% for profitable traders.
Once traders build a few months’ experience, they develop an emotional attachment to trading regardless of financial outcomes. A rational person would probably stop after 50 days of unsuccessful trading. But clearly, most traders aren’t making rational decisions.
3. Overconfidence Kills Performance
Getting into day trading requires immense confidence. You’re essentially trying to “time the market” – something expert after expert says is extremely difficult.
Overconfident traders make poor decisions that reduce profits. They attempt trades too large for their portfolios and double down on losses without considering consequences.
Most traders give more weight to their few successes than to their many losses, fueling the belief they can succeed despite evidence to the contrary.
4. Non-Financial Motivations
Day trading is often compared to gambling, and for good reason. People trade for various non-financial reasons:
- Entertainment, excitement, or challenge (potentially healthy if done responsibly)
- Escapism, loss chasing, or seeking control (problematic motivations)
A study by Grinblatt and Keloharju found a clear connection between people who have speeding tickets and frequent traders. The same thrill-seeking behavior that makes people speed causes some to make risky day trades.
FOMO: The Silent Profit Killer
One of the biggest emotional triggers for day traders is FOMO (fear of missing out). Those meme stock success stories and social media brags trigger a powerful emotional response:
“Don’t miss this once-in-a-generation wealth creation opportunity!”
But trading based on FOMO isn’t a rational strategy. What worked for someone else may not work for you – and might not even work for them again.
This problem gets worse during strong market growth. Barber found that “strong recent market returns may lead to increased day trader entry” because:
- Investors pay more attention to rising markets
- Investor overconfidence increases with strong market returns
- Investors believe strong markets create better day trading opportunities
How to Maintain Emotional Discipline
Studies show a clear link between emotion-driven trading and poor performance. Research by Lo et al demonstrated that “subjects whose emotional reactions to monetary gains and losses were more intense exhibited significantly worse trading performance.”
If you’re serious about trading, follow these simple rules:
- Understand WHY you’re trading. Is it for calculated risk or an uncontrollable urge? The difference matters.
- Create rules and stick to them. For example, risk no more than 1% of your balance on any single trade, and set stop-losses to automatically limit losses.
- Take breaks, especially after losses. If this feels difficult, you’re probably trading for the wrong reasons.
Is Day Trading Success Possible?
Yes, but it’s exceptionally rare. As multiple studies have shown, only about 3% of day traders are profitable, and just 1% make consistent, predictable returns once fees are factored in.
Be wary of vague claims about trader success rates. Most are misleading and ignore critical factors like survivorship bias. And if anyone tries selling you guaranteed profits through a course or “secret system,” run away. Nothing in trading is guaranteed.
If you’re still determined to try day trading, test your strategy in a paper trading simulator first. These tools let you practice in real market conditions without risking real money. They’re excellent for testing your strategies and emotional responses before putting actual capital on the line.
Final Thoughts
Day trading isn’t the glamorous, quick-path-to-riches that social media portrays. It’s a brutal, emotionally taxing activity where 97% of participants lose money.
That doesn’t mean you shouldn’t learn about financial markets or investing. But understand that successful investing usually involves patience, research, and a long-term perspective – pretty much the opposite of day trading.
If you’re still determined to try, go in with eyes wide open, proper education, strict risk management, and emotional discipline. Just remember that you’re attempting something that 97% of people fail at – so prepare accordingly.
#2 – Traders don’t always learn from past performance
Another fascinating finding from Barber’s research is that profitable and unprofitable traders continue to trade at nearly the same rate. Unprofitable traders with 50+ days of experience have a 95.3% chance of returning to day trading within 12 months, compared to 96.4% for profitable traders.
This statistic helpfully removes those traders who don’t last 50 days. Many of those are merely testing the waters. Others lose everything quickly and are forced to stop trading—probably for the best.
But once traders have built a few months’ experience, they seem to build an emotional attachment to trading regardless of the financial outcomes.
A rational person would probably stop after 50 days of unsuccessful trading. But clearly, most traders aren’t making purely rational decisions.
#4 – It’s too time consuming
One of the biggest misconceptions about day trading is that you can just “squeeze it in” between meetings or after work. You can’t. If you’re serious about it, day trading quickly becomes a full-time job—without a salary, without benefits, and with no guarantee you’ll make anything at all.
Institutional have an edge over retail traders: they’re paid to trade. They show up every day with institutional tools, real-time data feeds, and entire teams backing them. What’s more, the vast majority of trades are made by algorithms trading automatically.
Retail traders? You’re on your own.
And while they’re making split-second decisions based on flows and quant models, you’re juggling charts, news, Discord alerts, and second-guessing your own risk management—even if you’re in a chatroom or following a “mentor” who makes more selling courses than actually trading.
Before you even place a trade, there’s the learning curve: brokers, platforms, fees, tax rules. Once you’re in the game, it’s hours a day. Watching setups form. Filtering out noise. Managing your psychology. Reviewing your trades. There’s no passive version of this. Not if you want to be consistent.
The truth is, most people just don’t have the time or bandwidth to compete—and the market punishes those who try to cut corners.
How Much Money Do Day Traders *REALLY* Make?
FAQ
What percentage of day traders are successful?
Why do 90% of traders lose?
The emotional aspect of trading often leads to irrational decisions like panic selling. When the market moves unfavourably, many traders, especially those who are inexperienced, tend to panic and exit their positions hastily. This panic selling often occurs at the worst possible time, leading to significant losses.
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.
How much does the average day trader make a day?
A typical day trading profit per day is between 0.033 and 0.13 percent. This corresponds to a monthly profit of between 1 and 4 percent for successful day traders. However, only a few traders are successful in the long term – most make losses.