Day trading is often presented as a way for individuals to make money off of the markets. It’s not meant to be easy, but it is meant to be profitable.
However, the statistics around day trading demonstrate that it’s not all it’s cracked up to be. The vast majority of day traders lose money, even when the market is booming.
In this guide, we’ll take a look at 10 of the most interesting day trading statistics that anyone considering jumping into day trading should be aware of.
What is Day Trading?
Day trading is a type of trading in which individuals buy and sell assets on timescales of minutes or hours. The goal of day trading is to profit from short-term price changes. Day traders are typically concerned only with how the price of an asset will change in the short-term.
Importantly, day trading is distinct from long-term investing. Whereas long-term investors focus on the fundamental qualities of an asset, day traders focus on determining the likely direction of upcoming price movements.
Here are some of the most exciting statistics about day trading:
- Only the top 1% of day traders are able to beat the market
- 85% of day traders quit within the first 3 years of trading
- There are nearly 10 million traders around the world, most of whom are under 35
- Male day traders outnumber female day traders 7-to-1
- Day traders account for 10% of stock trading volume in the US
Day Trading Statistics
Let’s take a closer look at some of the key statistics current and potential day traders need to know about.
1. 97% of Day Traders Lose Money in the Long Run
There are many different studies examining what proportion of day traders lose money. The exact number varies by country and study period, but in most cases, more than 80% lose money within the first year of trading.
A study of 1,600 day traders in Brazil found that 97% of traders who stuck with trading for at least 300 days lost money. Only 1.1% earned more than the minimum wage in Brazil.
Another study of traders in Taiwan that spanned from 1992 to 2006 found that only 1% of traders were able to beat the market.
2. Active Traders Underperform the Market by 6.5%
A study of retail traders from 1991 to 1996 found that active traders in the US underperformed the broader stock market by an average of 6.5% per year. In 2020, eToro reported that 80% of day traders on the platform lost money, with an average loss of 36.3% per year.
3. Only 15% of Day Traders Survive for 3 Years or Longer
A study of day traders in Taiwan found that 75% of day traders quit within 2 years, and 85% quit within 3 years. Poor performing traders are just as likely to continue trading as traders who have been successful in the market.
4. Day Traders Lost $1.14 Billion Trading Options during the COVID-19 Pandemic
From November 2019 to June 2021, retail investors lost an estimated $1.14 billion trading stock options. In 2021, when meme stocks like GameStop and AMC experienced huge spikes in trading volume, nonprofessional day traders were trading more than 23 million options contracts per week. The financial toll of short-term options trading during this period was more than $5 billion when including trading fees.
5. There is Overlap between Day Traders and Gamblers
While no studies have explicitly looked at how many day traders are also gamblers, there are suggestions that these groups overlap. One study in Taiwan found that day trading volume dropped by 25% after a national lottery was introduced in 2002.
6. There are 9.6 Million Traders around the World
An estimated 9.6 million people around the world are active traders. 33% of traders live in Asia, while 16% live in North America and 16% live in Europe. More than half of active traders earn less than $35,000 per year from trading and other sources of income.
7. The majority of day traders are under 35
65% of online traders in the UK are aged 18-35. Globally, the average age of traders has been getting younger over the past 10 years.
Source: World Finance
8. 1 in 7 Day Traders are Women
The proportion of female day traders has grown from 1 in 10 in 2017 to 1 in 7 today. According to one study, women tend to make fewer trades than men – an average of 69 trades during the study period compared to 94 trades for men. Women are also more opposed to investing in highly risky assets.
9. 75% of Young Traders are Trading Cryptocurrencies
A survey of traders ages 18-34 in the UK found that 75% have tried trading cryptocurrencies. According to Capital.com, Bitcoin was the third-most traded asset on the brokerage platform in the first quarter of 2022.
10. Retail Day Trading Accounts for 10% of Stock Trading Volume
Retail day traders are responsible for only around 10% of the total trading volume in US stocks according to a study by Morgan Stanley. In Europe, retail traders are responsible for only 5% of stock trading volume. Stocks with more trading activity by individual day traders tend to outperform those with less retail trading activity.
Statistics show that day trading can be challenging. Only a small fraction of day traders are able to stick with trading and consistently beat the market. However, that hasn’t stopped nearly 10 million people around the globe from trading. In general, traders are getting younger and more diverse, and trying out newly accessible assets like options and cryptocurrencies.