Traders React to a Study That Says It’s Virtually Impossible to Day Trade for a Living

Posted in: MarketsOpinion
September 24, 2019 5:00 PM UTC

Academic researchers in Sao Paulo, Brazil have studied the likelihood of success in day-trading for a living.

The results weren’t positive. reached out to its community of day traders to ask them whether they think it’s possible for someone to trade daily for a living. This is what they had to say.

What Traders Think

Todd Butterfield, the owner of the Wyckoff Stock Market Institute, said,

I would say for maybe 2-3% of traders could do it day in and day out. [It is] too emotional for most people.

Investment Manager at Equity Management Associates, LLC Lawrence Lepard echoed Mr. Butterfield’s stance. He said,

I would not recommend it. It is very tough. Very few make it.

Scott Melker agreed. He replied,

It is exceptionally difficult to make a living as a day trader, but not impossible.

However, there are those who believe that it is possible for people to earn their keep while trading.

Trader Max, also known as Bitcoin Jack said,

I know people can, but most can’t.

He added:

Some research claims only a very very small portion of people are profitable day trading, but I believe that research was mainly in traditional markets using the entire intersection of assets etc. Traditional markets are very much in the hands of a few large players and as such heavily controlled. You need a very sophisticated calculated approach on lower time frames to be able to lift on the algorithmically induced impulses.

Ian McMillan, CMT, shared his view. The trader replied,

I’ve met people who trade for a living, so therefore I would believe it would not be impossible. At the end of the day, clearly it is possible because people do it. People have been doing it, for all intents and purposes, for decades.

Study Finds That It Is Practically Impossible for an Individual to Trade for a Living

A recent study published in the Social Science Network entitled “Day Trading for a Living?” revealed that it is practically impossible for an individual to trade for a living. The findings come in direct conflict with what many trading course providers claim.

Researchers took it upon themselves to see whether the average Joe can actually make money trading. To do so, they observed the performance of all individuals who day traded in the Brazilian equity futures market (Mini-Ibovespa) from 2013 to 2015. They monitored the performance of 19,646 day traders and computed the net profit of all participants.

The Number of Successful Day Traders Decreased Over Time

The researchers revealed the following results:

  • 29.8% of the 1,111 individuals who day traded for one day had a positive net profit.
  • 15.5% of the 9,978 individuals who day traded between two to 50 days obtained positive net profit.
  • 8.9% of the 3,100 individuals who day traded between 51 to 100 days had a positive net profit.
  • 6.8% of the 2,738 individuals who day traded between 101 to 200 days had a positive net profit.
  • 5.4% of the 1,168 individuals who day traded between 201 to 300 days had a positive net profit
  • 3.0% of the 1,151 individuals who day traded for more than 300 days had a positive net profit.
The number of day traders with positive profit dwindled as the number of trading days grew. | Source: SSRN

In addition, the researchers concluded that there’s no evidence of learning by day trading. Thus, they suggest forgetting about day trading as a possible career path.

Lastly, the researchers compared the results to the patterns usually found in playing a casino roulette. According to the study, “the proportion of successful players also monotonically decreases with the number of rounds played.”

This article was edited by Sam Bourgi for If you see a breach of our Code of Ethics or Rights and Duties of the Editor, or find a factual, spelling, or grammar error, please contact us and we will look at it as soon as possible.

Last modified: September 24, 2019 3:38 PM UTC

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Kiril Nikolaev @kirilnikk123

Kiril is a CFA Charterholder and financial professional with 6+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on finance and cryptocurrencies. He also has his personal website, where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.