Go Back Button
Blog Image
January 26, 2024

Day Trading Demystified: What You Need to Know

Welcome to the high-speed world of day trading, a financial pursuit that's both fascinating and, at times, perplexing. This practice, which is often associated with financial independence and flexibility, has seen a surge in popularity among individuals from various demographics. However, the baggage that comes along with the thrill might lead to pressing questions like, what does it take to be a successful day trader? How much do day traders earn on average, and what are the current trends influencing this rapidly evolving landscape?

Throughout this insightful piece, we'll demystify the art and science of day trading. From showcasing an overview of the day trading landscape to enlightening you with the characteristics of proficient day traders, breaking down financial outcomes, and even touching upon some effective trading strategies, the article aims to serve as your comprehensive guide. So, set your sights on this high-stakes financial horizon as we set sail on an enlightening journey to better understand the fascinating world of day trading.

Overview of Day Trading Landscape

Day trading, an intriguing facet of the financial world, is continuing to grow in popularity, especially in the United States. This section provides key insights into the rising number of day traders, gender distribution, and the persistence of individuals in day trading. With this understanding, our readers, whether newbies or veterans, looking to dip their toes into the world of day trading or refine their strategies, will gain valuable perspective.

Increasing Number of American Stock Traders

One noteworthy trend, as per a Charles Schwab Survey, is the substantial increase in the number of American stock traders. This percentage has grown significantly from 15% in 2019 to 25% in 2021. This rise can also be viewed as a direct effect sparked by the Covid-19 pandemic, which has driven a surge in home-bound individuals exploring new ways of generating income, day trading being a prominent option.

Gender Distribution in Day Trading

Interestingly, the world of day trading has traditionally been a male-dominated space. As noted by Zippia, a staggering 90.5% of day traders in the US are male, while only 9.5% are female. This could highlight a vital area for growth and potential outreach in the future, with the scope to engage a more diverse group of individuals into the trading fold.

Popularity and Persistence of Day Trading

Despite its fame and considerable yearn among individuals, day trading isn't necessarily a long-term commitment for many. Nearly 40% of day traders maintain their activities for only about one month. Even more striking, after five years, the number of persistent day traders drops dramatically to merely 7%. This data exposes a fascinating aspect of day trading: while it may be easy to get into, it's persistence that ultimately contributes to long-term success.

The world of day trading can indeed sit on the edge of thrilling crypto adventures and calculated stock market strategies. As beguiling as it may be, we implore readers to approach it with the required prudence and dedication. For those willing to take the plunge, exploring our Basic Day Trading for Beginners guide would serve as an excellent starting point to understand the intricacies involved.

Profile of a Successful Day Trader

Day trading, a unique style of financing that has garnered interest across diverse demographics, is often synonymous with unpredictability and fast-paced dynamics. While it may seem everything about day trading is rapid and ad hoc, you'll be surprised to know that successful day traders are often defined by a pre-established, disciplined strategy and an astute analytical mind. Today, we will delve into understanding what sets apart a triumphant day trader from the rest - their approach to establishing a trading strategy and the evident rise of women in this once male-dominated sector. Interestingly, both these aspects bear particular significance in the whole panorama of the Thriving Day Trading Community.

Trading Strategy Establishment

A fine-tuned trading strategy acts as a distinguishing factor for successful day traders. Surprisingly, research reveals that around 70% of triumphant traders have a defined trading strategy in place. It's not merely about spotting a profit-making opportunity, but comprehending the risk involved, managing the portfolio, and ultimately, making educated decisions.

Successful day traders prioritize the following within their trading strategy:

  • Risk Management: Proficient traders always measure the risk-to-reward ratio before proceeding.
  • Planning Ahead: Envisaging possible market directions and planning an approach accordingly remains a crucial part of their strategies.
  • Continuous Learning: The market is akin to a live organism, continuously evolving and shifting. Successful traders acknowledge this and continue learning to stay updated.
  • Emotional Control: Markets can be tumultuous, and decisions guided by emotions can backfire. Successful day traders maintain stoic composure even in the face of adversity.

Women in Day Trading

Historically, day trading was a territory primarily ruled by men. However, the scene is changing remarkably. A significant rise has been observed in the number of female day traders who are taking the market by storm.

Beyond just the increase in numbers, women in day trading have been found to be more successful than their male counterparts on many occasions. Females, with their distinct approach to risk-taking, careful planning, and focused strategies, often bring diverse perspectives and methods to the trading table. They're also generally better at remaining composed under pressure, which, as we're already aware, is a significant asset in this field. In a nutshell, the proliferation and success of women traders mark a promising and transformative period in the day trading landscape.

In an arena such as day trading, where the stakes are high, success is often tied not solely to financial knowledge but also to strategy development and disciplined execution. And with the rise in female traders, we are witnessing a refreshing change in trading dynamics. This evolution, in turn, contributes to a more diverse, inclusive, and thus, thriving day trading community.

Financial Outcomes in Day Trading

With the rapid advancement of technology, day trading has become a popular investment strategy. By buying and selling assets within the same business day, day traders aim to profit from short-term market volatility. However, success in this field requires a tremendous amount of knowledge, skill, and a certain level of risk tolerance. Let's delve into the numbers to have a clearer understanding of the financial outcomes involved in day trading.

Average Day Trader Salary

In trading, as in any job, potential earnings can vary widely. Based on the data available for 2023, the typical annual salary for a day trader oscillated between $34,000 and $96,500. Such a substantial range may seem perplexing; however, remember that many factors contribute to it. Factors like market conditions, the trader's level of expertise, investment amount, and market strategy play crucial roles in determining their annual income. Therefore, while some traders hit the higher end of salary scales, others might barely scrap by.

Profitable Day Traders

Despite these significant potential earnings, not all players in this risky game end up on the winning side. As a matter of fact, a mere 13% of day traders manage to stay profitable for an extended period. Another crucial point to consider regarding the Profitability of Day Trading is the sheer volume of effort and profound understanding of market trends required to maintain consistent profitability.

Losses in Day Trading

Now, turning our attention to the grim side of the trading story—approximately 64% of all US day traders do not only fail to realize profits but incur losses. The old saying "high risk, high reward" holds, but many tend to overlook the first part of the phrase.

The efficacy of day trading depends greatly on the strategy, skillset, and risk-management protocols applied. As we've just acknowledged, despite potential high earnings, the possibility of substantial losses is equally present. Therefore, any aspiring day trader must carefully consider these outcomes before venturing into this high-risk investment game.

Recent Trends in Retail Trading

The retail trading landscape has undergone a significant transformation recently, shifting from a largely institutional-driven environment to a space filled with non-institutional participants. This coincides with the time where the average daily volume for the Forex market touched an astonishing $7.5 trillion. Unveiling these changes aids in better understanding this evolving space for both seasoned traders and those stepping into the market.

Non-Institutional Market Participation

A seismic change making headlines in the recent retail trading landscape is the surge in non-institutional market participation. Gone are the days when Wall Street was synonymous with investing. In 2023, around 61% of adults in the United States have invested in the stock market, demonstrating an increase in retail traders' active engagement in trading.

This surge can be attributed to numerous factors. A contributing factor could be the move towards democratizing finance, steering away from concentrated portfolios to a wide array of individuals trying their hand at trading. Moreover, the rise in educational resources, think-pieces, and day-trading tips have played a considerable role in encouraging new traders jump into market activity. A perfect place to start is to look at the Tips for Day Trading Beginners.

Forex Trading Volume

Another prevailing trend that deserves a spotlight is the surge in the Forex trading volume. Presently, the average daily volume for Forex trading globally stands at a staggering $7.5 trillion, showcasing the massive scale and reach of this financial space.

Particularly noteworthy is the US Forex market, which garnishes a daily average turnover of an impressive $1.912 trillion. This clearly indicates that Forex trading is an integral part of the current retail trading trend.

Naturally, an investor might wonder what drives such enormous volumes. Along with deeper liquidity and ease of access, the ability to trade 24 hours in the Forex market distinctly stands out from other trading avenues—giving it a global appeal that enables traders to react swiftly to real-time economic updates from any corner of the world.

Looking at these developments in the retail trading landscape, it is clear that investing is continuously evolving, creating unprecedented opportunities for all market participants, from armchair investors to experienced fund managers. A word of caution, however, that while the potential rewards are high in this new market trend, so are the risks. Therefore, getting well-acquainted with the market dynamics and seeking expert guidance, particularly for beginners, could be crucial in navigating this shifting terrain.

Day Trading Strategies

Day trading is one of the more challenging, yet potentially fulfilling pursuits in the financial world. Set in a highly volatile marketplace, day trading allows you to profit from short-term price fluctuations in the stock market. However, to manage these fluctuations, you need an array of dynamic trading strategies at your disposal.

Here, we will explore four of the most popular day trading strategies: Momentum Trading, Scalping, Breakout Trading, and News Trading. These aren't merely tactics; they're full-fledged trading systems that utilize various market elements.

Momentum Trading

Momentum Trading, just as the name implies, is about following market momentum. Traders employing this strategy hop onto moving trends and capitalize on the velocity of the price movement.

  • Identify trends: Traders must use either technical analysis, charting software, or both to identify trends as they occur in real-time.
  • Buy up: When a trend has been identified, it's time to buy. Traders usually snag up as much of the trending stock as they can, looking to profit from the rise in price.
  • Sell: Once the trend has peaked, it's time to sell. Traders aim to sell before the price falls too drastically, securing their profits in the process.


Scalping is probably one of the most time-intensive strategies used in day trading. Traders utilizing this strategy make numerous trades throughout the day, capitalizing on small price differences.

  • High volumes: Scalpers usually work with high volumes, this way, even small price changes can lead to significant profits.
  • Rapid buying and selling: Scalpers need to enter and exit trades rapidly to take advantage of small price changes that occur within minutes or even seconds.
  • Detailed understanding of the market: It needs a keen sense of the market's pulse, as well as a detailed understanding of how to execute trades on home trading platforms.

Breakout Trading

This strategy involves identifying a key price level and then buying or selling as the price breaks that pre-determined level. The 'breakout' refers to a stock moving above a resistance area or moving below a support area.

  • Technical analysis: Breakout traders use technical analysis to determine their entry and exit points.
  • Positioning: Breakouts usually signify a significant change in the market, and breakout traders position themselves to capitalize on this change.
  • Patience: Oftentimes, breakout traders will set a limit order on a breakout level and be patient enough to wait for the stock to break the specified level.

News Trading

News Trading is a strategy that works around the release of news that is likely to impact the markets. Whether it's a company announcement, economic indicators release, or even geopolitics, events like these can cause significant market moves.

  • Monitoring news: News traders need to keep a close eye on the news to watch for announcements that could impact the stock market.
  • Rapid reaction: When news breaks, news traders need to react quickly to capitalize on market movements.
  • Understanding of market impact: You need a solid understanding of how news events can affect market conditions.

Each one of these trading styles can be incredibly effective in its way, provided it aligns with your trading goals, risk tolerance, and available time. In our article detailing Essential Day Trading Strategies, we delve deeper into these strategies and provide more insights into making the most of your day trading activities. So, before you dive into the exciting world of day trading, gain an understanding of these robust strategies. They might just be your ticket to a successful day trading career. Happy trading!


Day trading might seem overwhelming with so many factors to consider and complex strategies to understand. Like any career, it comes with its joys, trials, and tribulations. A massive element of your success in day trading lies in your determination, continued education, and the ways you adapt to the ever-changing trading landscape. The good news is that you don't have to navigate this world alone.

Whether you're pondering on a trading career or looking to escalate your current trading results, Market Masters is here to guide you every step of the way. With us, you can cut through the noise and focus on learning strategies that work, all while being part of a dynamic community of traders exchanging insights and experiences. It's a challenging journey, indeed, but one made easier with the right support network. So, take the leap and let's achieve financial freedom together, one trade at a time.

Start your journey with us now by visiting Market Masters. You'll find that the complexities of the stock market aren't so complex after all.

Frequently Asked Questions

  1. What is day trading?

    Day trading is a trading strategy where individuals buy and sell financial instruments within the same trading day. Traders aim to take advantage of short-term price movements and make profits by executing multiple trades throughout the day.

  2. Do I need a lot of money to start day trading?

    While you don't need a large amount of money to start day trading, it is recommended to have a sufficient amount of capital. The exact amount will depend on various factors such as your trading strategy, risk tolerance, and the market you are trading in.

  3. What skills and knowledge are required for day trading?

    Day trading requires a combination of technical analysis skills, knowledge of financial markets, risk management, and emotional discipline. It is important to have a good understanding of market trends, chart patterns, and indicators to make informed trading decisions.

  4. What are the risks associated with day trading?

    Day trading involves high levels of risk due to the fast-paced nature of trading and the potential for significant price fluctuations. Some risks include loss of capital, emotional stress, and market volatility. It is crucial to have a well-defined trading plan and risk management strategies in place.

  5. Are there any specific tools or platforms for day trading?

    There are several tools and platforms available for day trading, such as online brokers with advanced trading platforms, charting software, real-time market data, and order execution tools. It is important to choose reliable and user-friendly tools that cater to your trading needs.