I was in a trading forum 
the other day and a new 
trader asks the question, 
"Does anyone make money 
day trading?"  What a great
question! The fact is that 
95% of all traders lose money.
That's right they blow their 
account out and never make
money. Quite shocking, isn't 
it?  But if the above statement 
is true, that means that 5% 
of traders do, in fact, make 
money.  The question becomes, 
"Why do such a small percentage 
of traders in the vast universe 
of day trading make money?"

Undercapitalized

It is true that you do need money to trade. How much is enough?
For the beginning trader, more is better. There is going to be a
certain amount of mistakes a beginning trader makes no matter
how careful he or she is. Trading firms have margin minimums to
help protect the trader (and the firms) from immediate disaster.
My thinking is that those minimums are too small for the
beginning trader.

Success In Another Profession

A good many traders come from a profession that they are already
successful in. They come into the day trading world with a sense
that they can do anything. And because they are already
successful, they usually come into the trading game with a fair
amount of money. Trading requires an entirely different skill
set than most any endeavor in the world. Just because a person
is successful in one aspect of their life, they may not be
successful day trading. There have been documented cases of
doctors, lawyers, or successful salespeople who did well in
their chosen profession only to fail dismally day trading.

Instant Gratification

In our fast paced, get every thing you want without waiting,
society, it stands to reason that anyone considering trading
would come into it with the mind set that trading is easy and
there is money to be made at the drop of a hat. That simply is
not true. Trading requires a tremendous amount of dedication and
screen time to become consistently profitable. Trading is not
one of those things that can be mastered with little or no work. 

Poor Money Management Techniques

Finally, poor money management techniques contribute to many
traders inability to consistently make money. There have been
many books written to cover this aspect of trading. The scope of
this article is not to re-write those books but to point out
that money management is much more than taking a trade and
deciding where to place stops and limit orders. The real issue
is how a trader deals with all of the influences a trader faces
while in the trade. If a trade is up, do you move your stop? If
so, when, and by how much? If your trade is approaching a
critical resistance area, do you cut the trade short? There are
so many different ways to manage the same trade. How a trader
manages the trade will, to a great degree, determine if the
trader is profitable.

In summary, these are just a few reasons why most traders fail.
The best thing for the new trader is to come to the table with
few, if any, pre-conceived ideas about trading. Then develop the
necessary skill set specifically designed for trading. Those
skills can be honed by studying, screen time and reading books
that help the trader to have the proper mindset. Is it difficult
to accomplish? Yes! But the rewards are well worth the effort.