For years, we’ve argued that
Stockspot and trading platforms solve two very different problems
One helps people build long-term wealth through disciplined investing. The other makes it easy to trade individual securities like shares and ETFs, often encouraging frequent buying and selling.
A recent piece of research perfectly illustrates why that distinction matters.
The surprising result of research
Well-known investor Jim Chanos recently shared an analysis of trading activity on Robinhood, one of the world’s largest retail trading platforms. His conclusion? Since the meme stock boom ended in mid-2021, the combined profits of Robinhood traders have been approximately zero.
That’s a remarkable outcome when you consider what markets have done over the same period.
The S&P 500 Total Return Index has risen by more than 70% since mid-2021. Global share markets have delivered strong returns despite periods of volatility.
Yet, on average, retail traders didn’t meaningfully benefit.
That tells us something important.
Trading isn’t the same as investing.
Many people assume that because share markets generally rise over time, actively trading shares should also be profitable. In reality, they’re two completely different activities.
- Investing is about participating in the long-term growth of businesses and the global economy.
- Trading is about trying to predict short-term price movements and consistently outguess other market participants.
The evidence suggests that’s much harder than most people expect. Research from markets including the United States, Taiwan and Brazil has consistently found that between 80% and 97% of day traders lose money over time. 1
Why is trading so difficult?
1. Behaviour works against us
One of the biggest challenges isn’t the market, it’s human psychology.
A few early wins often create the illusion of skill when they’re really the result of luck.
That confidence encourages investors to take bigger risks, trade more frequently and sometimes even use leverage.
Behavioural finance has repeatedly shown that overconfidence is one of the biggest drivers of poor investment outcomes.
2. Trading is structurally difficult
Every trade has both a buyer and a seller. Before costs, trading is effectively a zero-sum game.
Once you include brokerage, bid-ask spreads, taxes and timing mistakes, it becomes a negative-sum game for the average participant.
In other words, the odds become stacked against frequent traders.
3. You’re competing against professionals
When you buy or sell an individual share, you’re rarely competing with another everyday investor.
You’re often trading against professional fund managers, quantitative hedge funds and institutions equipped with sophisticated technology, extensive research and teams of analysts.
In some markets, retail orders are also routed through payment-for-order-flow arrangements, where high-frequency trading firms execute customer orders.
The average investor is entering a highly competitive environment with far fewer resources.
ETF investing changes the equation
This is exactly why ETF investing takes a fundamentally different approach.
Rather than trying to identify tomorrow’s winning stock, you own thousands of companies through a diversified portfolio.
Instead of trying to beat the market, you capture the market’s long-term growth. History shows that’s been a far more reliable strategy for building wealth.
Here’s one way to think about it. Retail traders are often like gamblers sitting at the poker table, trying to beat everyone else. Long-term ETF investors are closer to the casino itself. They aren’t relying on predicting the next winning hand. They’re benefiting from the long-term growth of global markets.
It’s a much less exciting approach. But excitement isn’t usually what builds wealth
The number every trading platform should publish
If regulators genuinely want to improve outcomes for retail investors, there is one simple statistic every trading platform should disclose prominently:
What percentage of your clients are actually profitable?
That single number would tell prospective users far more than flashy advertising or promises of easy investing.
At Stockspot, we looked at current clients who have been invested with us for at least one year as at 31 August 2026, 99.6% are ahead. That’s not because we’ve discovered a secret trading strategy. It’s because long-term diversified investing removes many of the behavioural mistakes that frequent trading encourages.
The issue isn’t giving people access to financial markets.
Access has never been easier.
The real question is, how people use that access. Building wealth doesn’t require predicting the next meme stock or timing the market perfectly. For most investors, success comes from something much simpler:owning a diversified portfolio, keeping costs low, staying invested and letting compounding do the heavy lifting.
That’s the difference between speculation and investing.
Frequently asked questions
Is stock trading the same as investing?
No. Investing focuses on building wealth over the long term by owning diversified assets, while trading attempts to profit from short-term price movements. Research consistently shows most active traders underperform over time.
Why do most day traders lose money?
Studies have found that between 80% and 97% of day traders lose money. Common reasons include overconfidence, transaction costs, poor timing and competing against professional investors with better information and technology.
Why are ETFs better for long-term investing?
ETFs provide broad diversification across many companies, reduce the risk of relying on individual stock picks and allow investors to capture long-term market growth with relatively low costs.
Is active trading gambling?
While trading and gambling are not the same activity, frequent speculative trading can exhibit many of the same behavioural patterns as gambling. Long-term investing is generally based on participating in the growth of productive businesses rather than attempting to predict short-term market movements.
- ~97% of day traders in Brazil who stuck with it for more than 300 days lost money (Brazilian CVM study on equity futures traders, widely cited in research from 2013–2015 and reaffirmed in later analyses).
Globally, ~70–80% of retail FX traders lose money each quarter (broker disclosure data under regulations like ESMA/CFTC; recent filings average 70–85% loss rates, with some brokers still reporting higher).
The average self-directed investor underperforms the S&P 500 by ~6% annually over long periods (Dalbar studies on investor behavior, with gaps often driven by emotional timing mistakes like buying high/selling low). ↩︎
