This question matters more than almost any other in trading — and it's brutally harder to answer honestly than it looks. Ask ten traders at a BBQ and you'll hear ten suspiciously impressive numbers. Ask the actual data, and it tells a very different story. The gap between what people think retail traders earn and what they actually earn is enormous.
The direct answer? Most retail traders don't make money consistently. Studies across multiple markets suggest somewhere between 70% and 80% of retail traders lose money over a 12-month period. The average net return, across the full population of retail participants, is negative. That's not pessimism — that's the arithmetic of a zero-sum market after costs, spreads, and taxes take their cut.
Think of it like a poker table with a rake. Even if you're a better player than everyone else sitting down, the house taking chips every hand means you need to be significantly better just to break even. Trading has its own rake — brokerage, the bid-ask spread, slippage, and tax on gains. A trader needs a real edge before those costs are even factored in. Most retail participants underestimate this drag dramatically.
The traders who do make money — that consistent 10% or so — tend to share a few behaviours. They obsess over their cost structure. They keep detailed records and analyse outcomes statistically, not emotionally. They size positions relative to account risk, not gut feel. For deeper reading on how edge and expectancy actually work, expected value is the foundation concept every serious trader should understand. The mechanics of how markets move against retail participants is well documented under algorithmic trading research. And the structural reason most discretionary traders underperform comes down to behavioural finance — specifically what overconfidence bias does to risk-adjusted decision making.
The practical takeaway you can use today: before asking what return you want, calculate your all-in cost per trade and work out what win rate and reward-to-risk ratio you actually need to profit. Most traders skip this step entirely.
If you don't know your edge in numbers, you don't have one yet — and that's the most honest thing this industry will ever tell you.
This content is for educational purposes only and does not constitute financial product advice. Past performance is not indicative of future results. Profit Logic Ltd (ACN 688 669 936) accepts no responsibility for errors or omissions in this content or anywhere on this website. Always seek advice from a licensed financial adviser before making investment decisions.