Explainer · Trading Psychology
Do most day traders lose money? What the research says
Every large study and regulator figure we could source points the same way: most retail traders who trade often, fast or with leverage lose money, and only a very small group does better reliably. Here is what the research measured, where its limits are and why the odds are stacked the way they are.
Quick answer
In the studies we have, yes. In Taiwan in 1992-2006, under 1% of day traders reliably beat a benchmark after fees [2], and EU regulators found 74-89% of retail CFD accounts lost money [5]. We have no grade-A figure for US stock or crypto day traders.
Key points
- In Taiwan, 1992-2006, the vast majority of day traders lost money and under 1% reliably beat a benchmark after fees [2].
- EU regulators found 74-89% of retail CFD accounts typically lose money [5].
- Costs are a main cause: FINRA's example needs $111,360 a year in profit just to cover commissions [3].
- Many keep going after losing: 74% of Taiwan day-trading volume came from traders with a history of losses [4].
- FINRA's disclosure says you should be prepared to lose all the money you use for day trading [3].
On this page
What counts as day trading?#
Day trading means opening and closing positions within the same day, aiming to profit from short price moves rather than from holding an asset over time. The SEC describes day traders as rapidly buying and selling throughout the day, hoping prices keep moving their way [1].
Researchers and regulators define it slightly differently, which matters when you compare their numbers. The large Taiwan studies define day trading as buying and selling the same stock by the same investor on the same day [2]. FINRA's rule for firms that promote day trading defines a day-trading strategy as one marked by the regular placing of intra-day orders [3]. If you are not sure how day trading differs from longer-term approaches, start with our page on trading vs investing.
What share of day traders lose money?#
There is no single worldwide figure. What exists is a set of studies, each covering one market, one period and one definition. Read side by side, they agree on the direction: most lose.
| Study | Who was covered | What it found |
|---|---|---|
| Taiwan, Barber and others (2014) | Every Taiwan Stock Exchange day trader, 1992-2006; about 450,000 a year | The vast majority lost money; under 1% predictably and reliably earned returns above a benchmark after fees |
| Taiwan, Barber and others (2020) | Same market, same 15 years | 97% of day traders traced to investors likely to lose money in future day trading; more than 75% quit within 2 years |
| EU regulators, ESMA (2018) | Retail CFD accounts in several EU countries | 74-89% of accounts typically lost money; average loss per client €1,600 to €29,000 |
| France, AMF (2017 summary) | 14,799 active retail forex and CFD clients, 2009 to 2012 | 89% lost money; average loss about €10,900 |
| US forex dealers, CFTC | Customer accounts at registered US forex dealers, Q2 2021 to Q1 2022 | About two-thirds lost money and one-third made a profit |
Sources in order: [2], [4], [5], [6], [7]. Each figure uses its own definition and period; they cannot be merged into one percentage.
Why do most day traders lose?#
The sources point to four causes that stack on top of each other.
Costs. Every trade pays commissions, spreads or fees, and day traders trade a lot. The SEC notes that day traders pay their firms large amounts in commissions, for training and for computers [1]. A small edge before costs can turn into a loss after them.
Competition. FINRA's disclosure reminds day traders that they compete with professional, licensed traders employed by securities firms [3].
Leverage. The SEC says day-trading strategies demand the leverage of borrowed money [1], and FINRA warns that trading with borrowed funds can lose more than you originally put at risk [3]. ESMA linked significant retail losses to the complexity of the products and, for CFDs, excessive leverage [5]. Our page on leverage and margin explained shows how this works.
Overconfidence. Barber and Odean found that the households that traded most earned 11.4% a year while the market returned 17.9%, and argued that overconfidence explains the high trading and poor results [8]. See our page on overconfidence bias in trading.
How much do trading costs add up?#
FINRA's mandatory day-trading disclosure includes a worked example. If a trade costs $16 and you average 29 trades a day, you need an annual profit of $111,360 just to cover commissions [3]. That figure implies about 240 trading days a year (calculated). The $16 is FINRA's example figure, not a quote of today's prices, but the point holds: costs scale with the number of trades.
- FINRA example, commissions a year
- $111,360 [3]$16 a trade, 29 trades a day
- Same cost against a $50,000 account
- 222.7%$111,360 / $50,000, calculated
- Taiwan bottom-ranked traders, daily, before fees
- +11.5 bps [2]1 basis point (bp) = 0.01%
- Same traders, daily, after fees
- -28.9 bps [2]fees took 40.4 bps a day, calculated
Do losing day traders stop?#
Many do, but many do not. In the 2020 Taiwan study, more than 75% of all day traders quit within 2 years [4]. Yet previously unprofitable traders with 50 or more days of experience had a 95.3% probability of day trading again in the next 12 months, and 74% of day-trading volume came from traders with a history of losses [4]. The authors say this fits models of overconfidence and biased learning, not rational learning [4].
The French regulator found the same pattern from another angle: its study highlighted the lack of a learning curve for novice investors over time, and the most active traders saw their losses grow [6]. Experience on its own did not fix the results. A written trading journal at least makes your own record visible, although no study we found shows that it changes outcomes.
Is anyone consistently profitable?#
A few are. In the 2014 Taiwan study, the 500 top-ranked day traders, ranked on the previous year, went on to earn 37.9 basis points a day after fees [2]. Performance persisted: 6.6% of traders were repeat winners, against 3.9% expected by chance [2].
But the same paper puts the group able to predictably and reliably earn positive abnormal returns after fees, meaning returns above a benchmark, at less than 1% of day traders [2]. Skill exists. It is rare, and nothing about a beginner's first months tells you whether you have it. The SEC says day traders typically suffer severe financial losses in their first months, and many never become profitable [1].
What should you check before you try day trading?#
- Read the risk disclosure
US firms that promote day trading must give you FINRA's disclosure before you open the account [3]. Read it. It says day trading can be extremely risky.
- Use only money you are prepared to lose
FINRA says you should be prepared to lose all of the funds you use for day trading [3]. Keep it apart from savings and money for bills.
- Work out your break-even
Add up commissions, spreads and other fees for the number of trades you expect. Our page on trading fees explained lists the main costs.
- Check the provider's own loss figure
ESMA's 2018 measures included a standard risk warning showing the percentage of a CFD provider's retail accounts that lose money [5]. Where a provider shows such a figure, read it before you deposit.
- Size every trade from a fixed risk
Decide the most you will lose on each trade and size the position from it, as in our guide to position sizing.
Mistakes beginners make with day trading#
- Assuming you will be in the small group
Under 1% of Taiwan's day traders reliably beat a benchmark after fees [2]. Treat the base rate as your starting point, not as a statistic about other people.
- Ignoring costs because each one is small
Costs repeat on every trade. In FINRA's example they reach $111,360 a year before any profit [3].
- Reading a good first month as skill
A short winning run says little. The SEC warns of severe losses in the first months [1], and luck can look like skill over a few weeks.
- Trading with borrowed money
Leverage enlarges losses as well as gains, and with borrowed funds you can lose more than you put in [3].
- Believing advertised success stories
The SEC tells investors not to believe advertising that promises quick and sure profits from day trading [1].
Frequently asked questions#
Is it true that 90% of day traders lose 90% of their money in 90 days?
Do crypto day traders lose money too?
We have no grade-A study of crypto day traders' results, so we cannot give a figure. The causes described above (costs, leverage, competition and overconfidence) apply to any fast, frequent trading.
Do I still need $25,000 to day trade in the US?
FINRA has replaced its pattern day trader rules, including the $25,000 minimum, with intraday margin requirements effective June 4, 2026, but firms may take until October 20, 2027 to switch [9]. Ask your broker which rules it applies.
Is day trading the same as gambling?
Our sources do not make that comparison. What they show is that most participants lose after costs, and that only a very small group earns returns reliably [2].
The bottom line#
In every large study we could source, from Taiwan's day traders to EU and US forex and CFD accounts, most retail traders lost money [2] [5] [7]. Costs, competition, leverage and overconfidence explain much of it, and many losing traders keep going. If you still want to try, read the disclosure, use only money you are prepared to lose in full, work out your costs first and size every trade from a fixed risk. Nothing here is a recommendation to day trade; read our risk disclosure first.
Sources
- Day Trading: Your Dollars at Risk.
- The Cross-Section of Speculator Skill: Evidence from Day Trading" (Brad M. Barber, Yi-Tsung Lee, Yu-Jane Liu, Terrance Odean), Journal of Financial Markets, 2014.
- 2270. Day-Trading Risk Disclosure Statement" (FINRA Rules).
- Learning, Fast or Slow" (Brad M. Barber, Yi-Tsung Lee, Yu-Jane Liu, Terrance Odean, Ke Zhang), The Review of Asset Pricing Studies, Vol. 10, No. 1, pp. 61 - 93.
- ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors" (press release).
- Perspectives on the techniques used to market speculative trading on the Forex and binary options markets.
- Customer Advisory: Eight Things You Should Know Before Trading Forex.
- Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors" (Brad M. Barber and Terrance Odean), The Journal of Finance, Vol. LV, No. 2, April 2000.
- Understanding the New Intraday Margin Requirements.
Education only. This page is not investment, tax or legal advice. Trading and crypto can lose you money. See our risk disclosure.
