LemonTrades
TL;DR
- For most people, no. In Brazil, 97% of people who day traded futures for more than 300 days lost money; in Taiwan, fewer than 1% of day traders were reliably profitable.
- Costs are the killer: spreads, commissions and slippage on dozens of trades a day turn a small edge into a loss.
- If you try it: practice with fake money first, trade small, use stops, keep a journal and know what news is coming.
- LemonTrades tells you why a market just moved, and warns you before the data that moves it, so you’re never trading blind.
Day trading looks easy on social media. The data on what happens to real day traders tells a different story. Here it is, and what the few who succeed do differently. New to it? Start with what is day trading.
What the research says
| Study | Who | What it found |
|---|---|---|
| Chague, De-Losso and Giovannetti (2019) | Everyone who day traded Brazil’s mini index futures, 2013–2015 | Of those who kept at it for over 300 days, 97% lost money; only 1.1% earned more than the minimum wage. |
| Barber, Lee, Liu and Odean (2014) | All day traders in Taiwan, 1992–2006 | Fewer than 1% could predictably earn a profit after fees. |
| Broker disclosures (UK and EU) | Retail CFD accounts | Brokers must publish the share of accounts that lose money; it’s usually 60% to 80% or more. |
The Brazil study is the starkest: it covered every person who day traded those futures, so there’s no survivor bias. Most quit after losing, and the longer people kept going, the more of them lost.
The math every trade has to beat
Your win rate and your average win against your average loss decide everything. Before costs, the win rate you need to break even is:
| Average win vs average loss | Win rate to break even |
|---|---|
| 1 to 1 | 50% |
| 1.5 to 1 | 40% |
| 2 to 1 | 33% |
| 3 to 1 | 25% |
Costs raise every line. A scalper risking 10 cents to make 10 cents on a stock, paying 2 cents a round trip in spread and fees, needs to win 60% of the time just to break even. That’s why most of the research finds losses even among people who pick direction a little better than chance.
Who does make money
- Market makers and trading firms, who earn the spread that day traders pay, with faster systems and lower costs.
- A small minority of retail traders, usually with years of practice, strict risk rules and one or two markets they know well.
- Sellers of courses, signals and “funded accounts,” who earn whether or not their customers do.
How to tilt the odds
- Practice first. Trade a simulator for a month or 50 trades. Try our free trade simulator, and read what is paper trading.
- Trade liquid markets with tight spreads: big stocks, index futures, gold, the major currency pairs.
- Risk a small, fixed amount per trade, often 1% of the account or less, with a stop on every trade.
- Know the calendar. CPI, jobs and Fed days move markets in seconds. Check the economic calendar.
- Keep a journal and quit a strategy that loses over 100 trades.
- Compare with doing nothing. An S&P 500 fund has returned about 10% a year over the long run with no screen time. See is VOO a good investment?
Sources
- Chague, De-Losso and Giovannetti: Day Trading for a Living? (SSRN)
- Barber, Lee, Liu and Odean: The cross-section of speculator skill (Journal of Financial Markets)
- FINRA Regulatory Notice 24-13: review of the day-trading rules
Education, not financial advice. See our disclaimer.
