"The Myth of Profitable Day Trading: What Separates the Winners from the Losers?"

Abstract

The study addresses the limited ability of day traders to achieve consistent profits in highly volatile financial markets. Despite access to advanced trading platforms and real-time information, most speculative traders experience significant losses. The objective is to describe the factors that distinguish the few successful traders from those who fail, focusing on risk management, emotional control, and the strategies employed. Studies analyzing data from traders on the Taiwan Stock Exchange and other markets reveal that less than 1% of traders are consistently profitable. In comparison, 80% lose money before accounting for transaction costs. The results show that successful traders maintain a well-defined strategy and manage risk strictly, whereas less experienced traders, often influenced by aggressive marketing, have unrealistic expectations and suffer recurring losses. The study concludes that success in day trading depends on technical skills, discipline, emotional control, and effective risk management.

Keywords: Speculation, Behavioral Economics, Financial Forecasting

JEL Classification: G12, D91, G17