Many dream of making money from day trading. The dreams are often fueled by ads for frantic “Get Rich Quick” courses that fill the pockets of the course creators in particular. Various studies and analyzes on the subject prove that day trading is anything but easy.
The Trading Report 2022 was recently published on the information and advice portal CFD. guide, where various studies and news articles on trading were analyzed and evaluated. The numbers paint a clear picture: only very few can generate long-term profits with day trading.
In the following article you will learn everything about the chances of success – and other interesting data and facts about day trading from the current report. Also: This way you increase your chances of success when trading.
How Many People Do Day Trading?
If you believe statistics from 2022, there are approximately 13.9 million traders worldwide. The number of active traders is now likely to have passed the 14 million mark.
In terms of global population, this means that around 1 in 634 people on the planet are day trading. About 19-20% of day traders are female.
As far as location is concerned, there are big differences globally.
Most traders live in Asia (4.6 million) and Europe (3.1 million). The popularity of day trading in Europe is probably also due to the fact that many brokers are based here and that politicians (compared to the USA, for example) are relatively relaxed about online trading.
It doesn’t matter whether it’s eToro, Plus500 or AVATrade – they all have a branch in one or more European countries, where the tax offices also carry out their regulation. Within the EU, Cyprus should be mentioned here in particular – the country on the south-eastern edge of the Union is known for comparatively lax financial laws. Although Great Britain has now left the European Union, the island state is still geographically part of Europe. If you only look at Europe, the “United Kingdom” has by far the most online traders.
The 2022 survey shows that around 730,000 people are day trading within the UK.
How Old Are Online Traders?
The largest age group (44%) in day trading is people between 25 and 34 years old. These are the so-called millennials.
14.7% of the dealers are even younger than 25 years. It can be assumed that this value will continue to rise sharply in the coming years. The generation that will come after Millennials is Generation Z. This is the first global generation to have been exposed to smartphones, tablets and the internet since childhood. So these people are true digital natives.
For Generation Z, cryptocurrencies are no longer an unrealistic vision of the future – they are part of their everyday lives.
Above all, the popularity of Bitcoin, Ethereum, Ripple and Co. ensures that day trading is becoming more and more interesting for young people.
Where is Interest in Day Trading Highest?
Determining an answer to this question is particularly difficult as there are always fluctuations and day-to-day events that can spike interest in day trading in some countries.
The Google Trends tool , which was also used for the CFD. guide Trading Report 2022, is particularly helpful in this context . With Google Trends you can display the popularity of search terms over a certain period of time.
This also makes it clear in which regions people search for “day trading” with above-average frequency.
In the period from March 2021 to March 2022, the greatest interest in day trading was in Sweden and Norway – closely followed by USA and Austria. This result may well be astounding for one or the other: Ironically, in the rich north of Europe, short-term day trading is so popular. Why is it? That answer is up to you – the data from Google Trends doesn’t tell us that.
In USA and Austria, however, the TV commercials of some online brokers should also ensure that many people google trading topics.
How Successful Are Day Traders?
This question probably tempted the vast majority of people to click on this post:
What Are the Chances of Success as a Trader?
A study on the subject was published at the University of California in 2004, examining the trading market in Taiwan. Trading movements of more than 130,000 traders were analyzed. The analyzed data show that only 500 out of 130,000 people achieved a return of 0.2 percent per day in the long term. 500 out of 130,000 – that’s just 0.38%, by the way.
Most (about 85%) lost money within 6 months. However, it is also important to note that this study dates back to 2004 and market conditions have changed significantly since then.
Another Study Was Presented in the Report, Which is Much More Up-to-date
In 2022, a large-scale analysis of the trading activities was carried out at the USA social trading provider ayondo .
As with previous studies, it was also shown here that the chances of success are somewhat higher with social trading. “Only” 70% of traders lost money here.
Data Shows That the Vast Majority of People Lose Money When They Trade
As a private investor, day trading involves fighting against large companies and algorithms that act so quickly that the average consumer cannot keep up.
However, they do exist – experienced and successful traders who make money from trading. With social brokers (such as ayondo or eToro), the chances of making long-term profits from trading are slightly higher. This is because beginners can immediately copy experienced traders.
While it’s easy to find successful traders with social brokers, not everyone’s success is built on a solid foundation. For many “top traders”, as the experienced traders are called, the past statistics look good – but the historical performance must not be used 100% as a benchmark for future profits.
Just because someone has made a big profit in the past few years or months doesn’t mean it will continue to do so in the future. From a purely statistical point of view, beginners with social brokers have slightly better prospects than with normal brokers, where you as a customer are almost completely on your own.
Earn Money With Trading: 5 Tips for Successful Trading
1. Use Free Demo Account
Every reputable trading offer should have a free demo account that customers can use.
In the demo account, users can trade with free play money in a virtual environment. The courses are the same as in the real world. A demo account helps users to see what to expect in real trading and how trading works online.
On the one hand, a demo account shows beginners that it is not easy to make money from trading. On the other hand, the virtual environment enables risk-free development of your own strategies.
2. Favor Social Trading Providers
As the surveys have shown, the chances of success with social trading are slightly higher (70% loss rate with social trading compared to 85% loss rate with normal providers).
Social trading is a special type of online trading where you can copy other users.
If the copied dealer then makes a trade, this is automatically and proportionally converted to his own portfolio. However, the biggest challenge is finding truly successful traders.
3. Use Risk Management Tools
These are tools that limit your own risk. The stop loss is the most used technique for risk management. It can be set on a trade to automatically close a position when the price hits a certain level.
A further development of the stop loss is the trailing stop loss. This tracks the price when it goes in the desired direction and closes the position once the price has turned a certain number of points in the wrong direction.
4. Put Emotions Aside
Although the report also showed that emotions have a very high influence on one’s trading decisions, one should try to suppress one’s own emotional turns as much as possible.
The use of a robo-advisor, which you program strategically and without emotion, can help here. The algorithm then trades without emotions and only executes the things that you have previously set.
5. Keep Trading Diary
Many experts agree that a trading journal is essential if you want to become a successful trader. This is a handwritten list, a book or an Excel file in which all trades are noted.
Things like the entry and exit value, the time, your own emotions and other information are written down.
Little by little, a helpful table is developed that can be sorted and filtered according to various criteria: At what time do I generate the most profits? On which day of the week do I trade particularly poorly? Which strategy brought me the most success in trading?
Conclusion: Make Money With Trading
Let’s recap the last paragraph.
The large-scale study at the University of California published in 2004 looking at the Taiwanese market showed that only 500 out of 130,000 people made long-term returns of 0.2% return per day. They could really make money trading.
However, about 85% of people lost money within 6 months.
Another, much more recent analysis from 2022 in USA came to the conclusion that around 70% lost money with social brokers.
Our conclusion: With social trading, the chances of success for possible profits are slightly higher. Statistically speaking, earning money with trading is easier with a social broker than with normal brokers.
Nevertheless, even in the USA study, only 30% were able to win money.