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Why do most day traders fail

Day trading

Day trading is the process of purchasing and selling stocks in a relatively short period of time (minutes or hours) with the hopes of generating a series of modest profits that will add up to large gains over time.

Many day traders trade stocks in response to current events. This ranges from quarterly earnings reports to new launches or significant announcements. 

A day trader has two options. If a day trader notices a stock moving upward or believes it will go higher that day, they will buy it and then sell it after its value has increased. However, if the stock’s value falls, they will lose money upon selling it.

Why day traders fail

There is a large majority of day traders who fail at trading. There are several reasons behind this. Given below are some of them. 

Risk management

One of the most common reasons why  day traders fail is  lack of risk management. Trading is all about risk management. While we cannot anticipate what the markets will do in the coming minutes, hours, or days, we do have complete control over our risk levels at any one time. Traders that are successful are excellent risk managers. They never risk more than a specific percentage of their trading account on a single trade, they understand the reward-to-risk ratio of the setups they’re taking, and they continue to manage their risk while they’re in a trade.

Too big position size

Even if a trader has a sound strategy and executes all of his transactions well, there is a chance to lose money if he sizes his trades too large and is wiped out during a losing streak.

The ability to establish a balance between risk and reward is one of the most difficult tasks  as traders. On  one hand, if you take too many risks, you risk being entirely wiped out. On the other hand, if you take a little risk, your rewards will not be enough.

Market changes

Many inexperienced traders feel that  one technique that works for them will be good to go for the rest of their trading careers. Markets are always changing, and when your tactics fall out of step with the market, you’ll have to reject old ideas that aren’t working.

This also implies that you must be prepared to change any techniques that cease to function in order to avoid being left with nothing to trade. Another important point to remember is that you must know when to turn off a trading technique in order to minimise your losses.


Another significant reason why most day traders fail is overtrading. Overtrading is making a large number of unconfirmed deals.

Markets, especially for rookie day traders, may be tough to grasp at times. When you look at a chart, you’ll see that there are nearly an endless amount of profitable trading chances that might have been profitable transactions. Undisciplined traders feel compelled to take those transactions on a massive scale, resulting in enormous trading losses.

Lack of discipline

Trading is a job that needs full-time attention and effort, especially while learning. Traders plan ahead of time, trade according to a set of rules, and don’t allow emotions to take control. You’ll have a hard time becoming a competent and consistently profitable trader if you don’t put in the necessary screen time to develop significant trading experience.

Day trading is aced with proper knowledge, understanding and determination. It will be easier after you get a hold of it.  PLG is a well-known brand in this industry. It makes commodity trading and investing easier for all of its clients.

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