I get a lot of e-mails about day trading. The typical question is: Is it possible to make money day trading? Can you make money day trading? How to succeed in day trading?
My simple answer is yes, of course, it is possible to make money day trading, I have done it myself and made enough to become a FIRE. But can YOU make money day trading? That depends on a lot of factors.
In this article, I partially reveal my own numbers to show it’s possible to make money day trading. Furthermore, I try to explain why you are unlikely to make money day trading.
Is it possible to make money day trading?
This is the first article, of many, where I will try to actually give some hard evidence of how many are making money day trading, and how much, for good or worse.
Today I will reveal my own numbers from 2002 until May 2012.
These are two other relevant articles about the possibility of making money day trading:
- Is It Possible To Make Money Day Trading? Part 2: Automated trading
- Is It Possible To Make Money Day Trading? Part 3: Tuco Trading
Let’s first establish some unfortunate facts: even though it is possible to make money day trading, it’s no easy way to riches. Most likely you will end up finding out this has been a waste of money and/or time. I think there are other businesses that have a higher and better survival rate than day trading.
Do swing trading before you do day trading
I think you are better off trying swing trading before you start day trading. At least you have the opportunity to participate in the upward bias in the stock market.
Please check out our free trading strategies to get an idea of what swing trading is all about.
Day traders normally get wiped out quickly
I have been doing day trading since 2002 and I have witnessed a lot of turnover in people starting and quitting, but I happen to know some people who have been doing this longer than I have.
Like any business, this requires preparation and strict discipline. Surviving the 2-3 years of learning is the key to success. I am only trading stocks and I only know stock traders. No futures, options, or forex for me.
It is possible to make money day trading? (My own profit and losses from 2002 until May 2012)
Right now I am in a dry spell. 2012 is just grinding and I find it very hard to make good money. There are several reasons for this which I will get back to later.
Let’s look at the summary of my own trading statistics from 2002. Hopefully, the numbers can give some motivation for other traders.
This is my key numbers from January 2002 to May 2012:
- In total, I have traded 2545 days
- 2182 days have been profitable (net after commissions), ie 85,7% (2011 and 2012 makes the average lower)
- Two losing months: January 2012 and April 2012
- Worst day: 16th of august 2007, 22 154 USD in losses
- Best day: 21st of April 2006, 37 246 USD in profits
- Best year: 2008 (only 8 losing days that year)
- Best month: October 2008, 220 000 USD
- Total number of shares traded: almost 170 million
- Value of shares traded: approximately 5.1 billion USD
Here is a graph showing my accumulated profits since the start (number of days on the x-axis, 2002 until May 2012):
The graph illustrates why many are tempted to day trade: there is no significant drawdown and you can make decent money out of a small deposit.
2006 to 2009 were the really stellar years. I had just 15 losing days in 2006, 17 in 2007, and 8 in 2008.
During 2002 and 2003 I built my foundation and I got to learn and get experience.
However, the conclusion of this graph is the following: The first third is nice, I love the middle third and the last third is quite depressing.
Why do I write this? This is mainly twofold: to show others it can be done and it motivates me to work harder and keep on looking for edges.
Conclusion: Is it possible to make money day trading?
Yes, but don’t expect miracles. Because short-term trading is more or less like a zero-sum game, most day traders are doomed to fail. However, if you manage to be cautious when you start out and manage to learn from your mistakes, you stand a pretty good chance of succeeding.
I spent two years being slightly positive before I managed to find some profitable edges to make it worthwhile. Patience is required to succeed.
If you want to read more about day trading, I believe these two articles might provide you with more relevant tips about day trading: