Orders and trading · updated October 21, 2026
What is day trading and why do most people who try it lose money
Day trading means opening and closing your positions on the same day, holding nothing overnight. The profit comes from small price moves, repeated many times, usually with leverage.
How it works
A day trader watches charts on short intervals (1, 5, 15 minutes), goes in and out dozens of times a day and relies on technical analysis, news and volume. Costs (spread, commissions) are paid on every entry and exit. In the US, the old Pattern Day Trader rule required at least $25,000 in the account. The SEC approved scrapping it in April 2026; brokers are replacing it gradually, by October 2027, with their own intraday margin limits for accounts above $2,000.
Worked example
You make 20 trades a day of $10,000 each, and the spread plus commission costs you 0.1% per trade.
Just to cover costs, you would have to make $4,000 a month before your first dollar of profit.
Worth knowing
Studies of real accounts (for example of day traders in Brazil, followed for years) show that the vast majority lose money and only a tiny share consistently earn more than a minimum wage.
When day trading can fool you
Costs add up: dozens of trades a day mean dozens of spreads and commissions. Leverage: one bad day can wipe out months of gains. Tax: every gain is taxed, and keeping records of hundreds of trades is hard.
Related terms
Learn it in the Academy
Questions about day trading
Can you make a living from day trading?
Very few manage it. Most who start lose money in the first year. For most investors, long-term investing in good companies or ETFs has worked out much better.
What is the difference between day trading and investing?
A day trader profits from moves lasting minutes or hours. An investor buys a piece of a business and profits from its growth, over years.
These explanations are for information only. They are not a recommendation to buy or sell.
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