Should you day trade at all?

Most people should not day trade. I say that as someone who trades full-time and runs a site about it. The evidence is clear, and you deserve to hear it before you spend a dollar.

This lesson walks through what the research shows, who day trading might suit, and the honest alternative. Then it shows you how to find out for yourself without risking real money.

What the evidence says

Two of the best studies come from countries where researchers could see every trade by every person. That matters, because it removes the people who only talk about their wins.

• In Brazil, researchers followed people who day traded mini-index futures. Of those who kept going for more than 300 days, 97% lost money, and only 1.1% earned more than the minimum wage (Chague, De-Losso and Giovannetti, 2019).
• In Taiwan, a study of day traders found that less than 1% were able to predictably and reliably earn positive returns net of fees (Barber, Lee, Liu and Odean, 2014).

Regulators say the same thing in plainer words. FINRA's required day-trading risk disclosure says day trading "can be extremely risky." It also says you should be prepared to lose all the money you use for it. Most people who day trade lose money, and the studies show that sticking with it doesn't fix that for most of them.

Who it might suit

If a small group does well, what do they share? No study gives a neat checklist, so treat this as my view, not data. The people I've seen last tend to have a few things in common.

• They use money they can truly afford to lose, never rent, savings or a student loan.
• They have a fixed, quiet block of time each day, not scraps between other jobs.
• They like rules and records more than excitement.
• They can go weeks without a clear result and keep following the plan.

If that doesn't sound like you, that is useful to know. It doesn't mean anything is wrong with you. It means this activity is a poor fit.

The honest alternative

For most people, the better path to building wealth is plain investing. You buy broad, low-cost funds, add to them on a schedule, and leave them alone for years. It is boring, and it asks for very little of your time.

Day trading asks for hours a day, steady focus and the skill to beat other traders after costs. Investing asks for patience. If your real goal is long-term wealth, start there.

How to find out cheaply

If you still want to try, don't start with real money. Start in a simulator, which is a practice account with fake money and real prices. Pick one market and one simple setup. Trade it the same way for a fixed number of sessions, such as 30, and write down every session.

Keep the numbers small and honest. On one MNQ contract, a 20-point stop is $40 in a real account. Track your results in points, so the size of the account doesn't distort how you judge yourself. I keep my own public record in a simulated account for the same reason. At the end, you will have real evidence about your own behavior. Lesson 8 lays out that plan step by step.

The takeaway

The research says almost everyone who day trades loses money over time. A few people with spare money, spare time and a love of rules may still want to test it. Test it in a simulator with a written record first. If the record says no, believe it, and put your energy into investing instead.

Do this today

• Read the two studies linked above and write down the one number that stuck with you.
• Write down the exact amount you could lose without it hurting your family.
• Decide whether you would rather test day trading in a simulator or put the same effort into investing.

Check yourself

Answer each one in your head, then open it to check.