ForgeXWhat the research says
Can you day trade for a living
Two studies tracked hundreds of thousands of real day traders. 97 percent of those who kept at it lost money, and under 1 percent were reliably profitable.
This question has been studied properly, twice, with full exchange records rather than surveys. Both studies followed real people over years. The answers are close enough to each other to be worth taking seriously.
Brazil: 97 percent of those who persisted lost money
Three economists tracked every individual who started day trading Brazilian equity futures between 2013 and 2015. Their finding was blunt: "We show that it is virtually impossible for individuals to day trade for a living, contrary to what course providers claim" [1].
The specific numbers are worse than the summary. Of everyone who persisted for more than 300 days, "97% of all investors who persisted for more than 300 days lost money". And of those who did make money, "Only 1.1% earned more than the Brazilian minimum wage and only 0.5% earned more than the initial salary of a bank teller" [1].
Taiwan: under 1 percent, over fifteen years
A separate study looked at day traders on the Taiwan Stock Exchange from 1992 to 2006, which is a much longer window and a much larger group. It concluded that "Less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees" [2].
The word doing the work there is predictably. Plenty of people have a good year. The study was asking who has a good year and then goes on to have another one, which is the only version of the question that matters if you are thinking about doing this for income.
The part that is actually useful
The same Taiwan study found that the best predictor of whether someone would be profitable next year was how they had done in previous years, measured properly with risk taken into account.
That is a more useful finding than the headline. It means the information you need about whether this is working for you is already in your own record, if you keep one honestly. Not in how confident you feel, and not in how well you remember your last few trades.
It also means a small sample tells you very little. One good month is noise. The studies were looking across years for a reason.
Sources
- Chague, F., De-Losso, R. and Giovannetti, B., "Day Trading for a Living?", 13 June 2020. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101
- Barber, B. M., Lee, Y., Liu, Y. and Odean, T., "The Cross-Section of Speculator Skill: Evidence from Day Trading", Journal of Financial Markets, vol. 18, 2014, pp. 1 to 24. https://www.sciencedirect.com/science/article/abs/pii/S1386418113000190