Claim 18 of 22
Day trading: you can make a living from it
Can trading every day become a living?
Verdict
Does not hold
The claim that trading can be learned and turned into an income fails for most of the traders and CFD clients studied, because each study of day traders or CFD clients in Brazil, the United Kingdom, Australia and the US sample finds that most lost money. Two further studies point the same way: Barber and Odean find that the most active households returned less than the market, and the Taiwan study finds fewer than 1 per cent of day traders predictably profitable after fees. The thresholds and the shares meeting them differ, from 0.4 per cent above a bank teller's pay in Brazil to about 20 per cent more than marginally profitable in the US sample.
The cost, from the book's own figures. ASIC reports that 68 per cent of retail CFD investors lost money in the 2024 financial year, totalling more than A$458 million including A$73 million in fees, and the FCA's sample showed an average loss of £2,200 per client account.
Made by: Schwager (Unknown Market Wizards), Douglas, Hougaard, Covel. Argued against by: Phillips.
Test it on your own numbers
- United States: Investor.gov's day trading page (investor.gov/introduction-investing/investing-basics/glossary/day-trading) and FINRA's frequent intraday trading page (finra.org/investors/investing/investment-products/stocks/day-trading), to read both before placing a day trade.
- United Kingdom: FCA's 1 December 2022 statement on CFD firms (fca.org.uk/news/press-releases/fca-highlights-continuing-concerns-about-problem-firms-cfd-sector) and the FCA Financial Services Register (fca.org.uk/firms/financial-services-register), to read the statement and check any firm before trading.
- Australia: Moneysmart's page on CFDs (moneysmart.gov.au/investment-warnings/contracts-for-difference-cfds), to read the loss rate and the leverage warning before trading.
The full test, with every figure dated and sourced, is in chapter 18 of the book.