on August 19, 2025
Whenever I hear of someone attempting day trading to “make some extra money,” I can’t help but shake my head at the riskiness of this decision and the almost certain financial loss. For every retail trader who makes it, a dozen fail. While “beating the market” sounds exciting and proactive, I’m here to tell you this is a largely hopeless endeavor, and any prudent financial planner will advise against it. Here’s why…
A Pattern of Failure
Retail traders often watch the market closely, buying and selling stocks when they believe it will benefit them. Many do this obsessively, monitoring the movements of the market from the time the bell rings in the morning until the markets close for the day. They read blog posts and books about how to “get rich quick” from day trading. They treat investing like one might a Las Vegas blackjack table. But the same principle that applies to casinos applies to day trading: The house almost always wins in the long run.
The basic goal of day traders is to buy right before stocks explode in value and sell right before they decline. The problem, however, is that no one has a crystal ball, and by the time the typical trader springs into action, it’s too late. They then buy when stocks are expensive and sell when they’re cheap, leading to an overall loss. This is nothing more than gambling with funds—placing bets on the movements of the market.
And the numbers reflect just how what unwise this game is. According to an article by I/O Fund, “…the average retail investor underperformed the S&P 500 by 6.1% annually over a 20-year period with a 5.5% gap in 2023, which was higher than the gap in 2022.” In fact, these investors didn’t even beat the rate of inflation! Over the same time period, those who invested in indices that mirrored the S&P 500 gained 8.2%, on average. Additionally, a study by Bloomberg found that the vast majority of day traders (80%) gave up this activity within two years.
A Better Way
When considering who benefits the most from the stock market over the years, it’s clear that investors who kept their money in boring, old broad-market index funds outperformed day traders by a wide margin. They rode the market’s ebbs and flows, and benefited from being inactive and not touching their investments.
This is a tried-and-true way to invest. Though everyone’s situation is different, most people benefit from establishing a diverse portfolio, thinking long-term, and generally leaving their investments alone, aside from the occasional rebalance (which, ideally, a financial planner would facilitate). A prudent investor isn’t jumpy, doesn’t make knee-jerk decisions, and doesn’t chase trends. Though this level-headed approach isn’t as exciting as day trading, it is far safer.
Unless you have money to burn, I would caution you to stay far away from day trading. The numbers don’t lie, and the odds are stacked against you. You probably wouldn’t cash out your retirement fund and “bet it all on red” at a Vegas roulette game. So why would you risk it all by attempting to predict and beat the market?