Is Day Trading Profitable? What the Numbers Show
Day trading can be profitable, but it is not the usual result. In 2018, the European Securities and Markets Authority (ESMA) shared data from national…
Day trading can be profitable, but it is not the usual result. In 2018, the European Securities and Markets Authority (ESMA) shared data from national regulators. It showed that 74% to 89% of retail CFD accounts lost money.
So, is day trading profitable for you? I do not think anyone can answer that with a yes or a no. The answer sits in numbers you can measure yourself. In this article, I show you the math behind wins, losses and costs. I also show you how risk limits work in an FXIFY funded account.
What Is Day Trading?
Day trading means you open and close a trade on the same trading day. You do not hold a position overnight. One day trader may place one trade a day. Another may place ten.
On CFD accounts, a swap is a fee or credit on a position held past the daily rollover. When every trade closes before rollover, no swap applies. That does not make day trading free. The costs show up in other places, and I cover them below.
What Makes Day Trading Profitable
One trade tells you very little. A win can come from luck, and so can a loss. To judge your day trading, you need to look at many trades together.
The number I want you to watch is expectancy. Expectancy is the average amount you make or lose on each trade. It uses four inputs:
- How often you win (win rate)
- Your average win in dollars
- How often you lose (loss rate)
- Your average loss in dollars
The formula looks like this:
Expectancy = (win rate × average win) − (loss rate × average loss)
If expectancy is above zero, your trades make money on average. If it is below zero, your trades lose money on average.
A Worked Example
I made up the numbers below to show the math. They are not results from any FXIFY account.
Say you take 100 trades. You win 45 of them. Your average win is $150. You lose 55 trades. Your average loss is $100.
- Win side: 0.45 × $150 = $67.50
- Loss side: 0.55 × $100 = $55.00
- Expectancy: $67.50 − $55.00 = $12.50 per trade
Over 100 trades, that is $1,250 before costs. Notice what happened. You lost more trades than you won. You still made money, because your wins were bigger than your losses.
Now Add Costs
Every trade has a cost. Say each trade costs $7 in total. Your expectancy drops to $5.50 per trade. Over 100 trades, that is $550.
Now say each trade costs $15. Your expectancy becomes minus $2.50 per trade. Over 100 trades, you lose $250.
Look at what changed. The trades stayed the same. Only the cost moved. That is how a small edge turns into a loss.
Win Rate Is Not the Full Picture
Win rate is the share of trades you win. It is a useful number, but it cannot show profit on its own. You also need your reward-to-risk ratio.
Reward-to-risk compares your average win to your average loss. If you win $200 on average and lose $100 on average, your ratio is 2 to 1.
Your break-even win rate is how often you must win to end at zero. You can work it out with this formula:
Break-even win rate = 1 ÷ (1 + reward-to-risk ratio)
| Reward-to-risk ratio | Break-even win rate |
|---|---|
| 0.5 to 1 | 66.7% |
| 1 to 1 | 50% |
| 2 to 1 | 33.3% |
These figures are before costs. Costs push each break-even win rate higher.
So a 70% win rate can still lose money if the wins are small. A 35% win rate can still make money if the wins are large. I would never judge one of these numbers without the other.
The Costs That Add Up in Day Trading
More trades mean more costs. There are three costs I would track on every trade.
Spread. The spread is the gap between the buy price and the sell price. You pay it each time you open a trade.
Commission. Some accounts charge a fee for each lot you trade. Check how your account charges it before you trade.
Slippage. Slippage happens when your order fills at a different price from the one you expected. It can happen when prices move fast. Slippage can help you or hurt you.
To see how fast costs grow, picture 5 trades a day for 20 trading days. That is 100 trades in a month. At $7 per trade, you pay $700 in costs that month.
Write the cost of each trade in your trade log. Then use your average cost in the expectancy formula.
Trading Choices That Lower Expectancy
Not every loss comes from the market. Some come from choices a trader makes. Each choice below changes one input in the expectancy formula.
- Raising position size after a loss. If the next trade loses, it costs more. Your average loss grows.
- Moving a stop loss further away. A planned small loss becomes a bigger one. Your average loss grows.
- Closing winners too early. You take a small gain before your target. Your average win shrinks.
- Taking trades that are not in your plan. These trades have no tested edge. They can pull your win rate down.
- Placing more trades after a big loss. Each new trade adds cost and risk on a day that is already down.
My suggestion is to write your trading rules down before you start each trading day. After each trade, check it against those rules.
Day Trading Inside an FXIFY Funded Account
A funded account adds fixed risk limits to your trading. FXIFY accounts use a daily loss limit and a maximum drawdown. The exact figures depend on the program. You can see them on the FXIFY programs page.
How the Daily Loss Limit Works
The daily loss limit resets each day at 5PM EST. The new limit is set from the previous day’s 5PM EST closing balance. Your loss allowance is the daily loss percentage of that closing balance.
Your equity is checked against this limit at all times. Equity includes your open trades. So a floating loss counts toward the limit before you close the trade.
There are two numbers to know. The loss allowance is the dollar amount you can lose in the day. The breach level is the equity figure where the limit is reached. They are not the same number.
Let me show you with an example. It is not an FXIFY program. Say you had no open trades at 5PM EST. Your closing balance was $10,000. Your loss allowance is $400. Your breach level is $9,600.
Now look at your risk per trade. If you risk $100 per trade, four losses in a row use the full allowance. If you risk $200 per trade, two losses use it.
How Maximum Drawdown Works
Maximum drawdown sets the lowest level your account can reach. This level is called the floor. FXIFY programs use one of two types: static or trailing.
Static drawdown is measured from the starting balance. The floor does not move.
Trailing drawdown tracks the highest closed trading balance. It does not track open equity. The trail distance is a fixed dollar amount. It equals the drawdown percentage of your starting balance. When your highest closed balance rises, the floor rises by the same amount.
Take an example with made-up numbers. Say your starting balance is $10,000 and the trail is 6%. The trail distance is $600, so your floor starts at $9,400. Your highest closed balance then rises to $10,300. Your floor rises to $9,700. The trail distance is still $600.
On One Phase and Two Phase Standard accounts, the floor locks at the starting balance in two cases. The first is when your highest closed balance reaches the starting balance plus the drawdown percentage. At that point, the floor reaches the starting balance and stops moving. The second is when a payout is processed.
This is where day traders need to pay attention. Each closed trade can set a new highest closed balance. When it does, the floor rises. A later loss on the same day does not move the floor back down. So a day can end below its high point while the floor stays raised.
Why These Limits Matter for Profitability
A positive expectancy needs many trades to show up. A run of losses can come first. So I would size every trade with that run in mind.
Before you set your risk, compare it to your daily loss allowance. Then compare it to the room left above your maximum drawdown floor. The smaller of the two is the limit that matters that day.
How to Check If Your Day Trading Is Profitable
You can test this with your own trade data. This is the process I would follow:
- Keep a trade log. Record the date, market, entry, exit, size, result and cost.
- Collect a large set of trades. With only a few trades, luck can change your average a lot.
- Work out your win rate, average win and average loss.
- Find your average cost per trade.
- Put these numbers into the expectancy formula.
If your expectancy is below zero, change one thing at a time. Then measure again over a new set of trades.
Past results do not promise future results. Markets change. An edge that worked last month can shrink or stop working.
So, Is Day Trading Profitable?
My answer is this. Day trading can be profitable when your expectancy stays above zero after costs. That result needs to hold over many trades. Your losses also need to stay inside fixed limits while it happens.
Regulator data shows that a large share of retail CFD accounts lose money. So treat profit as something to measure, not something to expect. Only trade with money you can afford to lose.
The risk limits for each account are listed on the FXIFY programs page.
Frequently Asked Questions
Does day trading avoid swap fees?
On CFD accounts, a swap applies to positions held past the daily rollover. If every trade closes before rollover, no swap applies.
How many trades do I need to judge my results?
There is no fixed number. A larger set of trades gives a more useful average. A few trades can show luck more than skill.
Is a high win rate enough to make money?
No. You also need your reward-to-risk ratio and your costs. A high win rate with small wins can still lose money.
