While day trading is not precisely the same as gambling, one thing remains true about the practice: Most of the time, it is not profitable.
Research has shown that day trading can cause just as intense and problematic habits as gambling does if it is not managed correctly. Because day trading triggers a release of dopamine in the participant, they feel a pull to come back again and again, even if they are losing more money than they are earning.
Yes, it is definitely possible to day trade for a living and make a consistent income from trading. While it's true that there are challenges and risks involved, many traders have achieved long-term success in the field. Here's why:
If your mentality is to use the market as a vehicle to supplement income or get rich, stop yourself — you're already primed for failure. Day trading is a losing game.
And still, only about 4% managed to make a living from day trading. The day trading success rate, including people who were slightly profitable, but couldn't make enough live off, was likely in the vicinity of about 10% to 15% of those who came through the doors.
As of Jan 6, 2025, the average annual pay for a Day Trader in the United States is $96,774 a year. Just in case you need a simple salary calculator, that works out to be approximately $46.53 an hour. This is the equivalent of $1,861/week or $8,064/month.
Many people have made millions just by day trading. Some examples are Ross Cameron, Brett N. Steenbarger, etc. But the important thing about day trading is that only a few can make money out of day trading and the rest end up losing their entire capital in day trading.
The vast, overwhelming majority of day traders lose. They either lose early and quit, or keep trading despite their losses. As we'll see, only 3% of day traders make a profit. And only 1% do so predictably.
Swing trading is most suitable for beginners due to this low speed.
Factors contributing to these dismal outcomes include high transaction costs, emotional decision-making under pressure, and the inherent unpredictability of short-term market movements. Moreover, the rise of HFT algorithms has made it increasingly difficult for individual traders to compete effectively in many markets.
Those involved in day trading often borrow or leverage capital each day in order to purchase additional assets−but it also substantially increases your risk. This sophisticated level of investing requires meticulous market and news monitoring, is fast moving, and involves a large amount of speculation.
Investing and gambling both come with risks, including the risk of loss. But there is one key difference between the two. When you invest your money, there's an equal chance that you'll either lose your money or earn a return. When you gamble, though, the odds are almost always against you.
In fact, day trading is a math business. More exactly, just a probability game. Being mindful of that can change the way you make decisions about your next trades for good.
Whether you're thinking about day trading or already doing it, you should know that this will likely impact your taxes. We'll give a broad overview of what you may expect and some key terms you may encounter. It shouldn't come as a surprise that you must pay taxes on your earnings, which cuts into any potential profit.
Pattern day trading is not inherently illegal. However, it's subject to stricter regulatory oversight than other trading activities. Pattern day traders are also required to maintain a higher minimum account balance. These additional rules aim to protect investors from the higher risks associated with frequent trading.
In theory, day trading offers the opportunity to earn a lot of money in a short period of time. However, the chances are extremely poor: only around 3 % make profits in the long term. The vast majority of traders lose large sums of money through day trading.
Lack of a Defined Strategy
One of the primary reasons traders lose money is the absence of a clear trading strategy. According to research by Bloomberg, over 80% of day traders quit within the first two years, often due to insufficient strategies.
A typical day trading profit per day is between 0.033 and 0.13 percent. This corresponds to a monthly profit of between 1 and 10 percent for successful day traders. However, only a few traders are successful in the long term - most make losses.
The average income of a day trader can vary significantly. Some traders might make upwards of $200,000 a year, while others could lose money day trading. Factors like the amount of capital invested, the strategy employed, and the markets traded can all impact earnings.
George Soros is perhaps the most renowned trader in the world, famous for “breaking the Bank of England” in 1992. His audacious bet against the British pound earned his fund over $1 billion in a single day.
The defining feature of day trading is that traders do not hold positions overnight; instead, they seek to profit from short-term price movements occurring during the trading session.It can be considered one of the most profitable trading methods available to investors.
You will need to be patient and be ready to work hard. For learning swing trading, it takes at least 6 months and for intraday trading, at least a year. So don't get discouraged by the time required because this is a skill that will make you money for the rest of your life.
Can You Day Trade With $100? The short answer is yes. The long answer is that it depends on the strategy you plan to utilize and the broker you want to use. Technically, you can trade with a start capital of only $100 if your broker allows.
Day-Trader Salary
Whether they're trading for themselves or working for a trading shop and using the firm's money, day traders typically don't get paid a regular salary. Instead, their income is derived from their net profit.