Why most people lose money investing, and what it takes not to

Most people who buy and sell short-term lose money. And it isn't about intelligence. What's missing is context, and the time to gather it. That gap is what Volatly exists to close.

What percentage of day traders lose money

Between 74% and 89% of individual CFD accounts lose money. A CFD is a contract where you win or lose depending on whether the price of something goes up or down, without ever buying it. ESMA, the body that oversees securities markets in the European Union, compiled that range in 2018 to justify its limits.

In the study that logged fifteen years of same-day trading across an entire market, 97% of the people doing it were likely to lose money going forward.

What the Taiwan study found

The Taiwan Stock Exchange requires every trade to be logged in full detail. A research team — Barber, Lee, Liu, Odean, and Zhang — analyzed fifteen years of data, from 1992 to 2006, covering the roughly 450,000 people who were day trading — buying and selling the same day — there each year.

Three findings from that team on the same data:

• 97% of day traders were likely to lose money on their future trading (Review of Asset Pricing Studies, 2020).
• Fewer than 1% earned predictable profits once fees were deducted (Journal of Financial Markets, 2014).
• More than 75% quit within two years, and only 15% were still trading after three (Review of Asset Pricing Studies, 2020).

What's missing here. Over a few hours almost nothing new happens that can be read. That's where day trading breaks.

Over an hour the price goes up and down without anything new having happened at the company: that's noise. Someone trading that way is missing signal, which is the part of the movement that does respond to new, verifiable information.

What Spain's regulator measured

The CNMV (Comisión Nacional del Mercado de Valores, Spain's securities regulator) studied individual CFD accounts in Spain between January 2015 and September 2016. The result: 82% of clients who traded that product closed the period at a loss.

30,656 clients lost €142 million, according to the statement the CNMV published in March 2017. Spread across those 30,656 clients, that works out to roughly €4,600 each. Of those €142 million, €90 million were fees and other costs.

Those figures, together with those of other European supervisors, led ESMA to impose leverage limits across the entire European Union in 2018.

Leverage is trading with more money than you put in: you put in €100, you move €1,000, and you win or lose ten times as much.

The CNMV went further: since August 3, 2023, CFD advertising aimed at individuals has been banned in Spain.

What's missing here. What follows is a suspicion of ours: almost none of those 30,656 people could explain in two sentences what a CFD actually is.

Nor how leverage makes a 3% drop in the price take 30% of what you put in. The gap is language: the product got bought without being understood, because it came described in jargon. A number you don't understand protects you from nothing.

You've already seen these numbers, in small print

In the European Union, any broker — the company through which you buy and sell — that offers these products has been legally required since 2018 to display the real percentage of its own clients who lose money. That's why you see notices like "X% of retail investor accounts lose money when trading CFDs with this provider" — with whatever number applies to each one — sitting right next to an ad that, at the same time, suggests it's easy.

That contradiction, to us, says a lot about whoever sells these products: the truth is published, in a font size nobody reads.

So why do people keep doing it?

Because most of them don't stay long enough to find out how it went. Go back to the Taiwan figure: more than 75% quit within two years. People come in, lose, and leave. Then others arrive who never saw how it went for the last group.

The ones who stay don't necessarily learn either. One more figure from the 2020 paper: 74% of day-trading volume — that is, of the total money moved buying and selling, not the number of accounts — came from people who already had a history of losses. Losing ought to teach you to correct. Here it teaches nothing.

What's missing here. A record.

Nobody corrects what they never wrote down, and almost nobody writes down why they bought something, what they expected to happen, and what actually happened. Without that record, every trade is the first one.

Volatly keeps that record for you. Before a company publishes its accounts, it writes down with a date what it expects to happen. Once the outcome is known, it writes that down alongside. Neither entry can be changed afterward. So the list of hits and misses exists even if you never write anything down.

What percentage of fund managers beat their index

A fund is a pot where lots of people put their money together and a manager decides what to buy with it.

Over ten years, 98% of the funds that invest all over the world and count in euros failed to beat their benchmark: to earn more than the list of companies it gets compared against. These are professional managers, with teams behind them and data that costs money. It's their only job.

That figure comes from SPIVA (S&P Indices Versus Active), the report with which S&P Dow Jones Indices, the company that builds the most widely used indices, has spent over twenty years comparing each fund against the index that corresponds to it. This is its European edition, with data as of June 30, 2025.

In the United States the result repeats with more years behind it: over the fifteen years ended in December 2024, not one of the twenty-two categories of funds tracked by the US edition of the report had a majority of managers beating their index. Not one.

Why this number is trustworthy. SPIVA includes in the count the funds that closed or were merged into another during the period.

Imagine working out a school's average grade, but only counting the students who made it to the final year. The ones who repeated or dropped out don't show up.

The average comes out great and means nothing. That has a name: survivorship bias, which is counting only the ones still standing and forgetting the ones who fell. Funds work the same way: the ones doing badly close or get merged into another, and vanish from the count.

What's missing here, and it's uncomfortable to say. What's missing is being able to check who you're listening to. Our view is that whoever sells these products and whoever manages these funds shows their good stretches and leaves the bad ones out of the count. What you have just seen is that even the serious reports correct for that bias deliberately, so that the number means something.

So what this figure does say. That the hard part comes after getting it right once: sustaining it against a market where professionals already compete full-time.

And if having context and time isn't enough for those professionals, it won't be enough for you either. That's why the bar for this course is a different one: understanding what you're doing with your money, not beating the market. Volatly doesn't promise to beat anyone either: what changes is how much context you have behind each decision.

The difference between investing, speculating, and gambling

Plenty of people use investing, speculating, and gambling as if they were the same thing. They're three different things. Gambling is when the outcome depends on a process where, by design, nobody can hold an information edge.

The line that still works almost a century later

The investor and professor Benjamin Graham proposed in 1934, in the book Security Analysis he signed with David Dodd, a distinction that's still in use. An operation is an investment if it meets three conditions: there's serious analysis behind it, the money you put in is reasonably protected, and the return you expect can be justified. If one of the three fails, it's speculation, whatever you call it when you buy it.

What decides the category isn't what you buy, it's how you arrived at buying it.

The same purchase, three different categories

A share is a small piece of a company. Picture three people buying shares in the same company on the same day, at the same price.

The first has read the company's accounts, understands where its profits come from, and has worked out how much they could lose if they're wrong. They can explain their decision with data. That's investing.

The second buys because the stock has been rising for four straight months and they don't want to miss out. They haven't looked at the accounts. Their reason is that it went up before. That's speculating: deciding by looking only at the price.

The third buys at 10:15 and sells at 11:40 based on how the price moved over the last hour. You've already seen that at that horizon almost everything is noise, and nobody holds an edge over noise. That resembles gambling far more than most people care to admit.

There's nothing wrong with speculating now and then. The danger is not knowing that's what you're doing, and risking money you need on it.

Three questions that separate the three

These three questions put any purchase in its box, and they are the same ones the course closes with in what you've learned and what's left out:

1. Can I explain, with concrete data, why I think this is going to work out?
2. Do I know exactly how much I could lose if I'm wrong?
3. Am I acting on analysis, or on a gut feeling, a recent streak, or something someone said?

If the honest answer to the third is "a gut feeling," that's not a disaster: you've just learned something about yourself. A 2023 study by the FINRA Investor Education Foundation and the CFA Institute, two organizations that train investors and analysts, found that 41% of investors aged 18 to 25 surveyed in the United States and Canada admitted to investing out of fear of missing out.

This distinction reaches all the way to the regulator. Spain's own CNMV, in its 2021 guide to basic investor competencies — built on the framework of IOSCO, the international organization of securities regulators — opens its list of knowledge with two items: telling saving apart from investing, and investing apart from speculating.

Something else is missing here. The first question is the only hard one. Working out how much you could lose takes five minutes, and recognizing a gut feeling only takes honesty. But explaining a decision with concrete data requires having that data in front of you, and gathering it company by company takes more time than anyone has.

Five things most people are missing

The five gaps that have come up are about information and time. Seeing them together explains why the statistics at the start come out the way they do.

What's missing	Why it's so hard to solve alone	What Volatly does
Signal, not noise	A few hours out, almost nothing that moves is new information	Works on the days a company publishes something
Language	Everything gets published in jargon	Every metric explained the way you'd explain it to a twelve-year-old
A record of what you expected and what happened	Nobody writes it down, and without a record every trade is the first	Writes down beforehand what it expects, and afterward what happened
Being able to check who you're listening to	Everyone shows their hits and keeps quiet about their misses	Publishes its full archive, hits and misses
Having the data in front of you	Gathering it by hand takes hours, and hundreds of companies publish every quarter	Goes through them all ahead of each announcement

What it deliberately doesn't cover. Volatly doesn't decide for you, doesn't execute trades, and doesn't replace your broker.

It runs alongside whichever broker you choose (Trade Republic, MyInvestor, Revolut, whichever), as a copilot. The reason is both legal and fundamental: the risk is carried by whoever decides, and the one who decides is you. A platform that decided for you would put you right back at the starting point: not understanding what you're doing with your money.

In the chapter on earnings events you'll read two real cases start to finish, with what was expected written down before they happened. One hit and one missed, and both are in the public archive. That chapter teaches you to do by hand what the platform does continuously, so you can judge whether it's done well.

What to remember

• Between 74% and 89% of individual CFD accounts lose money, and in the fifteen-year study of same-day trading, 97% were likely to lose.
• Over ten years, 98% of the funds that invest all over the world and count in euros failed to beat their index. Everybody has that difficulty.
• What separates investing from speculating is being able to explain your decision with concrete data.