Forex To Stocks Annual South African Day Traders Survey 2020

Day trading has been one of the popular options for anyone who is seeking to make money online anytime, and at the comfort of their home. Some are looking to trade for a living, and others are looking to supplement their salary. To the ambiguous and fearless fews, it is often the fastest path to riches. 

But the few questions are constantly on everyone’s minds: 

  • What asset should I trade? 
  • How much can I make?
  • What is the chance of my success?
  • How much capital do I need to start out?

We conducted a survey with over 800 South African from the general population, and narrowed down to 104 actual day traders. We asked them 9 key questions, analysed and correlated their answers, and finally, distilled down to key insights that will be helpful to our readers. 

Key takeaways:

We surveyed 838 random South African online, 87% do not trade and 13% trade one or more assets.
Stocks, forex and crypto are the most popular assets representing, 31%, 31%, and 13%, respectively – and slightly more than half of the traders (52%) made money.
Traders who traded only stocks have a 69% chance of making money, and Crypto at 64% – while traders who traded only Forex have a 69% chance of losing money. In other words, stocks only traders have 2x chance of making money over Forex only traders.
The majority stocks only traders made > 25,000 ZAR, but the majority Forex only traders lose 9,999 ZAR or less. 
21% spent 10,000 ZAR or more in educational resources – but there was no evidence suggesting that spending on educational materials would lead to a higher chance of making money. 
One-third of the traders have been trading for more than 2 years, and the same group has also the highest rate of making money at 63% – which suggests some correlation between years of trading and positive P&L. 
Over one-third of the traders started with 10,000 ZAR or above, and the same group has the highest chance of making money at 68%, which suggests some correlation between starting capital and positive P&L. 
16% of traders indicated they would ask their families and friends to stay away from trading, 19% neutral, and only 12% would strongly recommend trading to them. This suggests South African traders are generally receptive to recommending online trading to their loved ones. 
 20% of traders indicated they ‘strongly believe it’s possible to make money out of trading,’ 12% neutral, and only 14% don’t believe it at all.

#1. 87% of South African Do Not Trade, And 13% Trade One Or More Assets.

We surveyed 838 random South African online asking them to select any of the asset options they are currently trading or have traded before. The options comprise: Stocks, Forex, Crypto, Options, and Futures. 

The result is not a surprising one with 87% of the respondents did not take part in trading any of the asset classes, which confirmed with our experience that online trading is a niche market, and it only appeals to a small population of the country. 

#2. Stocks, Forex And Crypto Are The Most Popular Trading Assets – Representing 31%, 31%, And 13%, Respectively. 

Forex only and Stock only are the two most popular trading categories, representing both 31% of the sample size after Crypto at 13%. This aligned with our experience that Forex and stocks are the most commonly traded instruments among traders for reasons such as increased accessibility via offshore online trading platforms, asset liquidity – and most notably, with the rise of social media influencers and their hypes and promises on day trading.  

For new traders especially, Forex trading is often the starting point of a later more conventional and stable trading option like stocks. Unexpectedly, Crypto does not seem to be as popular despite the considerable price surge since the start of 2020.

NOTE: Since there are a portion of traders who traded one asset or more, we find it helpful to categorize them into their respective asset mix – hence, we can see individual assets groupings such as ‘Forex only,’ and asset mix groupings like ‘Stocks and Forex.’

#3. Slightly More Than Half Of The Traders (52%) Made Money.

Unlike the conventional belief that says 90% of day traders lose their money, our survey showed that slightly more than half of the traders made money, and only 48% lose money. 

#4. You Have 2x Chance Of Making Money With Stocks Than Forex

69% of traders made money trading only stocks compared to 31% of traders who traded only Forex, or Forex only traders have a 69% chance of losing money. This concludes that stocks only traders, on average have a 2x chance of making a profit over Forex.

The second highest likelihood of making money is Crypto only traders at 64%, but since the sample size is a lot smaller, we will put our focus to the most traded asset classes of Forex and stocks. 

#5. The Majority of Stocks Only Traders Made > 25,000 ZAR. But The Majority of Forex Only Traders Lose 9,999 ZAR Or Less. 

Out of the 69% of stocks only traders that made money we covered earlier, 50% made 25,000 ZAR or more, 14% made between 10,000 and 24,999 ZAR – and 27% made 2,999 ZAR or below. 

In comparison, out of 69% of Forex only traders that lose money, 64% lose 9,999 ZAR or less,  18% lose between 10,000 ZAR and 19,999 ZAR,  5% lose between 20,000 ZAR and 39,999 ZAR – and 14% lose 40,000 ZAR or more.

#6. 21% of the Traders Spent 10,000 ZAR or More on Educational Materials – But It Did Not Correlate With Positive P&L.

We asked “How much have you spent on educational materials such as seminar courses / tools / newsletter?” 63% indicated that they spent less than 1,999 ZAR or nothing on educational material, 12% indicated spending between 10,000 and 19,999 ZAR – and 9% indicated spending 20,000 ZAR or more.

We also compared educational spending with traders that made/lose money. And as you can see that the traders who spent between 0 and 1,999 ZAR have an equal chance of making money than those who spent 20,000 ZAR or more. Despite the latter having a higher spending amount, both success rates are the same at 56%. Hence, this suggests that higher spending on educational materials do not lead to a higher chance of making money. 

#7. Half of The Traders Have Been Trading 1 Year Or More. And Trading Experience Correlated Slightly With Positive P&L.

51% of the traders have been trading for one year or more, and when we compared trading experience with positive P&L – we found a slight correlation between them. 

Traders who have traded more than 2 years have the highest chance of making money at 63%, similarly to the traders who have traded between three and six months – but because the sample size for the > 2 years group is near double than that of 3 – 6 months group, it suggests stronger evidence towards the former. 

#8. ⅓ of The Traders Started With 10,000 ZAR or Above. And Starting Capital Correlated Strongly With Positive P&L. 

Most traders started with 10,000 ZAR or above trading capital –  and we found a strong correlation between starting capital and positive P&L.

Traders who started out with 10,000 ZAR or more trading capital have a 68% chance of making money compared to traders who started out with 999 ZAR or less at 44%. Does this suggest that the more starting trading capital you have, the higher chance you would have a positive P&L? We do not think so. We believe that traders who have started with higher capital may be taking their trading endeavor more seriously than those with considerably lower starting capital – hence, resulting in a higher success rate. 

#9. 16% of Traders Would Ask Their Family And Friends To Stay Away From Trading. But The Majority Are Generally Receptive.

16% of traders indicated they would ask their families and friends to stay away from trading, 19% neutral, and only 12% would strongly recommend trading to them – this suggests South African traders are generally receptive to recommending online trading to their closed ones. 

#10. 20% of Traders Strong Believe It’s Possible To Trade For A Living.

20% of traders indicated ‘strongly believe it’s possible to make money out of trading,’ 12% neutral, and only 14% don’t believe it at all.

Last Thoughts

Let’s know below if the above align with what you have experienced. 

Methodology

  • Sampling method: Convenience.
  • The survey was conducted via Google Surveys Publisher Network between Nov 11, 2020 and Nov 17, 2020 – targeting all ages, all genders, and the South Africa region.
  • A total of 1,013 responses were collected with 838 unique participants, which then further filtered down to 104 qualified respondents (i.e. online traders) through two screening questionnaires.
  • To obtain higher accuracy on positive/negative P&L, we used two questionnaires’ answers to cross-reference with one another, and made required corrections to any inconsistencies. For instance, respondents who selected one of the positive P&L range options under the questionnaire ‘how much have you made in trading so far.’ But subsequently selected one of the negative P&L range options under the questionnaire ‘If you have a net loss, how much did you lose in total?’ would be corrected and treated as negative P&L. Since the right option should be ‘Not relevant, since I’m on net profit.’