Trading: Why most retail investors lose money – and what the alternative is

A few clicks in the evening, a chart, a buy order – and your portfolio is already growing. That’s how trading is portrayed in many videos and adverts. The reality is quite different. Anyone who trades for themselves is up against professionals who have more time, more data and better technology. The vast majority of retail investors lose money in the long run.

I’ve been working in the finance sector since 1994 and have seen many investors who started trading with high expectations. In this article, I’ll show you what the research says, why most people fail – and how you can share in trading profits without having to sit in front of a screen yourself.

Tip: You can find all the study materials, a short knowledge quiz and a free PDF guide on my website Assessing trading realistically →

How many traders lose money?

The often-cited figure of ‘97 per cent lose weight’ is not a myth, but it does not apply across the board to everyone. It comes from a specific study of a clearly defined group. Nevertheless, if one looks at several studies, a clear picture emerges:

• Day traders in Brazil: In a study by Chague, De-Losso and Giovannetti, around 97 per cent of people who had been day trading for more than 300 days lost money. Only a very small proportion earned more than the minimum wage.
• Day traders in Taiwan: Barber and his colleagues analysed stock market data over many years. Only a very small proportion of day traders achieved sustained profits after costs.
• CFD accounts in Europe: According to analyses by the European Securities and Markets Authority (ESMA), between 74 and 89 per cent of retail CFD accounts lost money. As a result, providers are now required to highlight this figure.
• Retail investors in general: A study by Barber, Lin and Odean from 2024 also shows that, on average, retail investors’ trades are not profitable after costs.

So there are successful traders, but they are a small minority. Anyone starting out should not assume they will be one of them.

Why trading is so difficult for retail investors

Time and competition. On the other side of your trade, you’ll often find banks, investment funds and high-frequency traders. They work with faster systems, better data and entire teams. The US Securities and Exchange Commission (SEC) describes day trading as a demanding full-time occupation. Most retail investors, by contrast, trade as a sideline, after work.

Psychology. More is decided in the mind than on the chart. We hold onto losing trades for too long because we don’t want to face up to the loss, and we sell winning trades too soon. After a few good trades, we overestimate our abilities. Even those with a good plan gradually stray from it when under pressure.

Costs. Spreads, fees, financing costs, slippage and taxes quietly eat into returns. Anyone who trades a lot needs a significant head start just to break even after costs.

Lever. Leveraged products such as CFDs or futures allow you to trade large positions with little capital. This works both ways. A few wrong decisions can wipe out your account in no time.

Luck or skill? A good year doesn’t prove anything. Whether someone really has an advantage only becomes clear over many years, taking all costs into account and even during difficult market periods.

How to spot a reputable trading service

There are many courses, signal services and bots related to trading that promise quick profits. A few questions can help you make sense of it all:

• Is there a long, demonstrable track record of success? Ideally, over a period of several years, on a cost basis and showing the largest interim losses (drawdowns).
• Are risks openly identified? Anyone who only shows profits is hiding something.
• Where is the money? Reputable schemes operate via an account in your name with a regulated broker or bank.
• How is payment made? A profit-sharing arrangement based solely on new highs (high-water mark) is fairer than high upfront fees.
• Is the strategy clear? You don’t need to know every detail, but you should know which markets are traded in and what the leverage is.

The alternative: having your trading managed by professionals

If you want to capitalise on market opportunities, you don’t have to trade yourself. There are trading models where experienced professionals trade according to fixed rules, with risk management and a verifiable track record. You provide the capital; others do the work at the computer.

If you’re interested, I’d be happy to show you some of these models. Here you’ll find some initial information What about such an opportunity? I look for a solid track record, clear rules, an account in your name and fair remuneration. Even these models are not without risk. Profits are never guaranteed, and temporary losses are part and parcel of the process. That’s why you should only invest money that you won’t need for a long time and that you can afford to lose.

Date: If you’d like to know which models suit you, Arrange a no-obligation chat →

Frequently Asked Questions

What percentage of traders lose money? Depending on the study and the market, the vast majority. According to ESMA, the figure stands at between 74 and 89 per cent for private CFD accounts in Europe, whilst a Brazilian study puts the figure at around 97 per cent for long-standing day traders.

Can you learn to trade? Knowledge helps to avoid mistakes. It is no guarantee of profits, however. Even well-trained traders often fall short due to time, costs and psychology.

Is trading a dodgy business? No. It becomes dubious when quick and guaranteed profits are promised.

Can I make a profit from trading without trading myself? Yes, models where professionals trade on your behalf according to set rules. Look for a long track record, an account in your name and fair remuneration.

How much money should I set aside for trading? Only a portion of your assets that you won’t need for some time and the loss of which you can afford.

Conclusion

Trading is not an easy way to make a quick profit. Studies clearly show that the vast majority of retail traders lose money in the long run. Anyone who still wishes to capitalise on market opportunities can do so through professionally managed trading strategies – with clear rules and without having to sit in front of a screen themselves.

I’ll guide you through the process, from assessing your personal situation right through to making a decision and putting it into action. To help with this, I’ll put you in touch with selected partners. You can find more information on my website Taking a realistic view of trading.

This article is for general information purposes only and does not constitute investment advice. Trading involves significant risks, including the possibility of total loss. Past performance is no guarantee of future results. As at October 2026.