What Percentage Of Day Traders Fail And How Many Make Money? - Quantified Strategies (2024)

Day Trading

ByOddmund GroetteDay Trading

In the midst of a speculating frenzy and the madness of crowds, it’s easy to get trapped in the belief that day trading is easy money. Survivorship bias and glamorous pics in social media make us blind to the low probabilities of making it big in day trading. The fact is this:

What percentage of day traders make money and how many fail? Approximately 1-20% of day traders make money day trading. Just a tiny fraction of day traders make any significant amount of money.

That means that between 80 to 99% of them fail. We have looked at plenty of research and very few traders can brag about making any significant amount of money day trading. Proprietary traders seem to fare better than retail traders (perhaps as expected).

Let’s have a look at the reports we have looked at:

Recommended Reading: Day Trading Statistics

Table of contents:

What percent of proprietary day traders fail (case study 1)

Do proprietary traders perform better than retail traders? After all, proprietary trading attracts traders that supposedly treat day trading much more like a business than retail traders do.

Back in 2008, a trading shop named Tuco Trading was deemed illegal by the SEC because Tuco had prop traders that were “customers in disguise”.

When the court case started Tuco had to reveal all the trading stats for their traders (or clients, if you like). Almost all traders were day traders. If we assume the papers from the court case are correct, we can conclude that even “prop” traders fare badly at day trading:

  • 206 active traders per 31. December 2007.
  • 33 profitable (16%).
  • 173 unprofitable (84%).
  • 7 with more than 50 000 USD in profits (3%).
  • 57 with losses over 10 000 USD (28%).

This shows that even for day traders who treat it like a business the percentage of failing traders is quite high.

What percent of proprietary day traders fail (case study 2)

After the dot com bubble, the proprietary trading shop Broadway Trading published their stats. The study is old, but we still believe it has relevance. Broadway offered both remote and office trading for its traders.

For the month of July 2001, 196 traders of 559 made a profit, which equals 35%. According to the principals of Broadway Trading, this number is below the average during the dot com bubble in 1998-2000: they claimed 79% made money in April 2000, a month in which Nasdaq fell heavily.

In February 2000, the percentage of profitable traders was 81%. For the whole of the year 2000, 42% made money while the first half of 2001 showed 42% of traders making money.

Keep in mind that the survey only separates profits or losses. Those making a living out of this are even lower.

Broadway also revealed that those trading from home were less profitable than those trading in an office together with other traders. Some trading offices had good traders and were able to have a culture of winning traders.

How many percent of day traders fail in Brazil

A pretty famous study called Day Trading For A Living made by three academics tracked 1 600 Brazilian day traders for over one year. Only 3% made money! The results might be even worse because they tracked only those who lasted over 300 days.

Also worth noting is that only 1.1% of the day traders made more money than the minimum wage.

How many of day traders fail in Taiwan

Another frequently cited source (The CrossSection of Speculator Skill Evidence from Day Trading) was done in Taiwan and conducted over a time span from 1992 until 2006.

The conclusions are twofold:

  • Few day traders are able to earn positive abnormal returns net of fees – a small group of about 15% made more than commissions and costs.
  • Variation in investor skills is an important feature of financial markets.

The authors made a second survey published in 2013 where they claimed that less than 1% of the day traders are able to predictably and reliably earn positive abnormal returns net of fees.

Why do day traders fail?

Several of the studies we have gone through claim overconfidence in trading is one of the main reasons why day traders fail. This might be correct, but the authors have overlooked one very important aspect:

Trading is a zero-sum game. Long-term investing is not a zero-sum game because you have a tailwind from increased profits and earnings. What is best – trading or investing? Trading might be scalable, but it comes at a cost in the form of a high risk of failure.

But when you are a day trader you can’t benefit from the long-term tailwind. Add to this commissions and slippage and you get a minus-sum game.

In other words, the market is “rigged” so only a few consistent traders make money. The main purpose of amateurs is to provide prey and energy for the bigger players further up the food chain, according to Victor Niederhoffer in The Education Of A Speculator.

Trading is just like poker: all the players around the table can’t win – what you win some others must lose. Who are your rivals? Who are the predators? You need to understand where you are in the food chain.

How to avoid losing money as a day trader

Day trading is about avoiding unforced errors, to borrow a term from tennis. The famous investor and partner to Warren Buffett, Charlie Munger, likes to inverse. We have previously written an article where we inverted how you can improve your odds in trading: how to fail as a trader.

This blog is all about quantitative trading. We believe this is the best approach to trading. It requires study and a lot of work, but our own anecdotal evidence is that this increases the probability of reasonable success drastically.

Also, keep in mind that 80% of the job is just showing up. In trading, this means you need to be there every day to learn and get experience. Just by surviving the learning curve you probably increase your odds dramatically.

What percentage of day traders fail? Ending remarks

Sadly, most day traders lose money because short-term trading is a zero-sum game. To avoid being a losing day trader, we recommend trying to develop a quantitative approach to trading. This website is all about quantified trading strategies and we are confident you can find a profitable trading strategy on our website. We also have some single strategies and strategy bundles for sale – all based on daily bars and not day trading strategies.

What percentage of day traders fail? The evidence we compiled for this article suggests that about 80-95% of day traders lose money.


How do proprietary day traders perform compared to retail traders?

Studies indicate that proprietary day traders, who supposedly approach day trading as a business, can still face challenges. For example, in the case study of Tuco Trading, only 16% of traders were profitable, highlighting that even in a professional setting, a substantial portion (84%) faced losses.

Are there any case studies on the success of proprietary day traders?

Two notable case studies, Tuco Trading and Broadway Trading, offer insights. Tuco Trading revealed that out of 206 active traders, only 33 (16%) were profitable. Broadway Trading reported varying success rates over different time periods, with profitability ranging from 35% to 81%.

Why do day traders fail?

Overconfidence in trading is identified as a significant reason for day trader failure. The article also emphasizes that day trading is a zero-sum game, making it challenging for all participants to profit, coupled with the added risks of commissions and slippage.

What Percentage Of Day Traders Fail And How Many Make Money? - Quantified Strategies (2024)


What Percentage Of Day Traders Fail And How Many Make Money? - Quantified Strategies? ›

Low Success Rate: Only 13% of day traders maintain consistent profitability over six months, and a mere 1% succeed over five years. Financial Losses Predominate: 72% of day traders ended the year with financial losses, according to FINRA.

Is it true that 90% of traders lose money? ›

According to various studies and reports, between 70% to 90% of retail traders lose money every quarter. This article will discuss the main reasons retail traders lose money and how they can enhance their performance and profitability.

What percentage of people fail at day trading? ›

So, what percentage of day traders actually stick around? According to various studies and industry observations, it is estimated that around 80% to 90% of day traders eventually quit within their first year.

What percentage of day traders are consistently profitable? ›

Conclusion: Approximately 1–20% of day traders actually profit from their endeavors. Exceptionally few day traders ever generate returns that are even close to worthwhile. This means that between 80 and 99 percent of them fail.

Do 80% of day traders lose money? ›

Day trading is extremely risky.

And day traders typically end up on the wrong side of a trade more often than not. A study found that traders who lose money account for anywhere between 72–80% of all day trades being made. It's just not worth the risk!

What is the 90% rule in trading? ›

It is a high-stakes game where many are lured by the promise of quick riches but ultimately face harsh realities. One of the harsh realities of trading is the “Rule of 90,” which suggests that 90% of new traders lose 90% of their starting capital within 90 days of their first trade.

How many traders actually make money? ›

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.

How much money do day traders with $10,000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

Why is day trading not worth it? ›

It's Very Costly. Every time you buy or sell a stock, there are commissions (i.e. brokerage fees) and taxes involved. Because of the high-frequency of trades being placed, these numbers add up very quickly — to the point where it can eat into a significant portion of your profits (or even turn a profit into a loss).

Is anyone actually successful at day trading? ›

The percentage of day traders who achieve profitability is relatively low. Various studies and broker reports suggest that a small fraction of day traders consistently make profits over the long term.

How much do day traders average? ›

The average income of a day trader varies widely, depending on factors like experience, strategy, and market conditions. While some traders can make over $100,000 per year, many others struggle to break even.

What is the average performance of day traders? ›

The ordinary day trader does not make a sizable sum of money, despite the fact that certain day traders are profitable. Traders sell winners at a 50% higher rate than losers. 60% of sales are winners, while 40% of sales are losers. The average individual investor underperforms a market index by 1.5% per year.

What is the 80% rule in day trading? ›

Definition of '80% Rule'

The 80% Rule is a Market Profile concept and strategy. If the market opens (or moves outside of the value area ) and then moves back into the value area for two consecutive 30-min-bars, then the 80% rule states that there is a high probability of completely filling the value area.

What happens to most day traders? ›

The vast majority of day traders are unprofitable, and many traders persist in trading for years despite their losses. It is estimated that 80% of day traders quit within the first two years, and nearly 40% quit within one month. After three years, only 13% remain, and after five years, only 7% remain.

Can you be rich day trading? ›

While there is no guarantee that you will make money or be able to predict your average rate of return over any period, there are strategies that you can master to help you lock in gains while minimizing losses. It takes discipline, capital, patience, training, and risk management to be a successful day trader.

Do most traders really lose money? ›

It might sound as simple as “buy low” and “sell high,” but the reality is that the vast majority of traders end up losing money over time. Here's why day trading is an extremely difficult pursuit, and what's likely to happen when inexperienced traders get in over their heads.

Do 97 percent of traders lose money? ›

However, the harsh reality is that the vast majority of day traders lose money. In fact, studies have shown that a staggering 97% of day traders end up in the red. This statistic is not only staggering, but it's also incredibly disheartening for those who are considering day trading as a means of making a living.

Why do 95% of Forex traders lose money? ›

Poor Risk Management

Improper risk management is a major reason why Forex traders tend to lose money quickly. It's not by chance that trading platforms are equipped with automatic take-profit and stop-loss mechanisms.

Why 90 people lose money in stock market? ›

This bias often causees us jump to conclusions, make impulse decisions, and constantly change our strategy. Ultimately, many people lose money in the stock market because they simply can't wait long enough for meaningful profits to arrive.

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