A recent study found that 80% of day traders lose money - which is unacceptable. Here’s why, and how you can prevent this from happening - enjoy! Add me on Instagram: GPStephan
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According to the stock trading platform, eToro, a staggering 80% of day traders lose money over the course of a year, with the median “loss” being 36.3%.
https://faculty.haas.berkeley.edu/odean/papers/Day%20Traders/Day%20Trading%20and%20Learning%20110217.pdf
Now for those who aren’t aware, day trading is a style of investing in which you buy and sell a stock, or any other investment, within a short period of time - meaning, you’ll usually hold the stock for a day or two, or sometimes even just for a few hours, before you sell it.
First, a HUGE reason for such large losses is due to a lack of diversification.
Consider this…a finance professor from Arizona State University analyzed the performance of over 26,000 publicly traded stocks since 1926. The most COMMON return for an individual stock, over it’s lifetime…was a loss of 100%. And only 48% of stocks delivered ANY positive returns, whatsoever.
Given that, over the long term of day trading…your likelihood of losing money is INCREDIBLY high without a SIGNIFICANT amount of diversification…and money….and lucky timing…to pick those “winners”
https://www.kiplinger.com/article/investing/T052-C007-S001-why-most-stocks-are-stinkers-and-what-to-do-about.html
Secondly, given that information…it was found that many investors are OVERCONFIDENT about their investment decisions, leading them to trade more aggressively…and lose more money.
A study published in 2017 found that when day traders are successful, many of them disproportionally attribute their success to ability…rather than luck. Which ultimately leads them to making riskier investments, and further contributing to these losing statistics.
Third, your own EMOTION while day trading will likely be the hardest barrier to overcome…
And when investing, we have FOUR main emotions that come to mind:
Hope - Greed - Fear - And Regret
Needless to say, oftentimes those 4 emotions will overpower ANY logic when it comes to the exhilarating thrills of making money and investing…
Fourth, unless your trading with a LOT of money - you’ll likely WANT to make riskier, profit driven investments to justify the time you spend investing.
This might cause people with less money to make RISKIER investments in the pursuit of making 1000% profits…not 30% profits…therefore, increasing their likelihood that they’ll lose money.
And fifth, the main reason I believe people lose money by day trading is because they believe it’s a quick, easy way to make money from their computer or phone with very little work.
These are people who don’t have a plan, they have no idea when they want to enter or exit a stock, hey don’t do their own research, they want to “get rich quick,” and they’ll often jump into trades on a whim because someone recommended it on reddit’s WallStreetBets.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com

By Stock Chat

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30 thoughts on “Why 80% of day traders lose money”
  1. Avataaar/Circle Created with python_avatars Hans Schick says:

    You missed the moat important one ,the algos are programed to give you roulette wheel odds
    Name a roulette champion.

  2. Avataaar/Circle Created with python_avatars Carson Powers says:

    Emotional trading and ignorance

  3. Avataaar/Circle Created with python_avatars Elijah Greene says:

    I would imagine that if there were such patterns in stocks, there would be machine learning algorithms to discover those patterns which would then be exploited. Because no Machine Learning algorithm like this exists, I believe it proves that the stock market is truly random. So no one can profit from day trading without luck

  4. Avataaar/Circle Created with python_avatars VPB Moneyman says:

    Back when Graham had his credibility.

  5. Avataaar/Circle Created with python_avatars Micah Thompson says:

    Graham- The reason most traders lose money, beyond the reasons you mentioned is due to improper tools. They are not using Market relevant tools. I learned this the hard way. A little piece of the puzzle here and a little there, but never the complete picture to take a trader across the finish line time and time again… and the second has everything to do with the individual as you mentioned in part. Designed or gathered my own to turn my trading around.

  6. Avataaar/Circle Created with python_avatars Robert Payne says:

    Thanks!

  7. Avataaar/Circle Created with python_avatars V-Hyper Topic says:

    as someone who is 18 i have a high risk tolerance and the only way to get rich is by approaching high yield opportunities whilst not allowing them to ruin my life having room for error but also allowing the wins to be so massive it can account for the losses

  8. Avataaar/Circle Created with python_avatars V-Hyper Topic says:

    what about the people who take it as a skill and train consistently for years until they master risk management and hone their strategy keep to their trading plan practice mastering psychology

  9. Avataaar/Circle Created with python_avatars Andrew says:

    I bought OTM puts on NVDA and I'm down 80%. Fk trading I'll stick with buying real estate.

  10. Avataaar/Circle Created with python_avatars Csongi Iranyi says:

    Stop saying investing. Day trading is completely different. And yes, majority is losing. Because it takes more than they think.

  11. Avataaar/Circle Created with python_avatars Sherif Latif says:

    Thank you I needed this

  12. Avataaar/Circle Created with python_avatars Raymond Chow says:

    The issue with this is you must be consistent and keep changing your strategy with the market which is impossible to predict

  13. Avataaar/Circle Created with python_avatars 哈哈哈 says:

    I day traded for a few hours right after turning 18 and I made 17 cents 😀

  14. Avataaar/Circle Created with python_avatars RobFrank22 says:

    Options

  15. Avataaar/Circle Created with python_avatars melodyoflife says:

    Day trading is zero sum game. It's based on hype and social media pumps not based on business fundamentals.

  16. Avataaar/Circle Created with python_avatars ELIZABETH LAURA says:

    HELLO MRS CLARISSA THE BITCOIN TRADER IS LEGIT AND HER METHOD WORKS LIKE MAGIC I KEEP ON EARNING EVERY SINGLE WEEK WITH HER NEW STRATEGY

  17. Avataaar/Circle Created with python_avatars robert cliffort says:

    GREAT.

  18. Avataaar/Circle Created with python_avatars Nylix Neylix says:

    And the other 20% are just flat, no loss no profit 🙂 The real winners are the brokers.

  19. Avataaar/Circle Created with python_avatars Hanu Darji says:

    Main reason people loose money because trading penny stocks and focusing on so many stocks at a time. And they can not take loss and hold their position and become swing trader and end up blow up… My wife did that 😂😂

  20. Avataaar/Circle Created with python_avatars OG Reggie B says:

    The stock market is manipulated and rather it's up or down, is nothing more than a calculated decision. Reasons why, are nothing more than Catalyst for Hope or fear.
    We may not be able to time when to get in the market but we sure can follow the market. If you're able to do that then you're working with a winning formula….

  21. Avataaar/Circle Created with python_avatars BlueMoDize says:

    guh

  22. Avataaar/Circle Created with python_avatars Hola! Twin says:

    Mosr paid an expensive class to learn and eventually leave with hugh losses.

    The embarrassment and shame, stop them from telling others to stay away from it.

    The human nature wants to get rich quick, everyone wants to have a lot of money.. but few are willing to see their money compounded.

  23. Avataaar/Circle Created with python_avatars Charles Givilancz says:

    This is stupid, you can't diversify day trading.

  24. Avataaar/Circle Created with python_avatars Don Kovi says:

    I like your video, but just one thing should be mentioned:
    You are talking about trading, and right after that you mention the word "investing". Sometimes you say "investing" and a bit after that you talk about "trading". These two terms represent two different things. I know that you are mostly an investor (a successful one, which is great), but trading is a different field.
    The most basic distinction is that "trading" is short term and "investing" is long term. Using those two terms interchangeably is just incorrect and incredibly confusing.

  25. Avataaar/Circle Created with python_avatars Loading says:

    So what your saying is don’t day trade

  26. Avataaar/Circle Created with python_avatars Paul USA says:

    Its good when people lose money in trading.

  27. Avataaar/Circle Created with python_avatars DUNK TIMETM says:

    Idk graham that stop loss is really important

  28. Avataaar/Circle Created with python_avatars Giorgi Manjgaladze says:

    So now it's 80%?

  29. Avataaar/Circle Created with python_avatars HUG A VET says:

    95% decide this just sucks!

  30. Avataaar/Circle Created with python_avatars HUG A VET says:

    Stay away from day trading! How about 100% loss. Why? small wins breed large losses. Oh yeah, luck breeds overconfidence big time. I was up 10k before losing 30k. IN ONE DAY! Emotionally hijacked! Literally have no idea who was pushing the buttons. Hard expensive lessons. Can't stop now. I am a slave.

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