Starting to Trade Crypto for Profit: What the Evidence Says Before You Deposit a Cent

"A landmark Brazilian study found that over a five-year window, only 1.1% of day traders who persisted earned more than minimum wage from their trading."

"the results reveal that day traders not only trade more frequently than non-day traders, but also outperform them based on raw, passive benchmarks and on a risk-adjusted return basis."

"Examination of daily returns for 428 accounts from March 2004 to September 2009 shows traders are able to earn positive excess returns, even after accounting for transaction costs."

"We do, however, find that the traders’ Sharpe Ratios increase markedly with the number of years they have traded, a result suggesting that learning plays a role in increasing the returns of traders."

"We find that 68.78 percent of trades executed by the top traders are profitable net of transaction costs, and profits do not arise from chance."

"Dividindo o prejuízo agregado do período por esse número de participantes, chega-se a uma perda média de R$ 10,2 mil por pessoa."

"The results show that the use of technical analysis by individual currency traders is negatively associated with performance."

"um jogo de soma negativa para pessoas físicas, em que quase todos os dias agregam prejuízo e em que, nos raros dias com ganhos, esses são insuficientes para reverter a tendência de perdas sistemáticas."

"Nos poucos dias em que há lucro agregado, os valores positivos são de magnitude muito modesta quando comparados às perdas observadas nos dias negativos."

"Como não consideramos em nossas contas nenhum custo de operação ou tributário, as perdas de R$ 9,9 bilhões no day trade implicam que esse montante foi diretamente transferido das pessoas físicas para as instituições financeiras que operaram contra elas no mercado futuro."

"Over the years, Bitcoin’s price volatility has led to rapid gains and also considerable losses."

"For example, theweeklymeanreturnonBitcoinis3.79percentwithastandarddeviationof16.64percent."

"This is more than a tenfold increase in trading volume for most exchanges."

"We observe that the mean and the standard deviation of returns are an order of magnitude higher than those for the traditional asset classes."

"On most exchanges the number of trades almost triples between the first half of 2017 and the period from August 2017 to February 2018."

"a “disaster” of the daily 20 percent negative return on Bitcoin happens with the probability of 0.5 percent while a “miracle” of the same size happens with the probability of almost 1 percent."

"The bid-ask spread on average is about 10 basis points, and on the most liquid exchanges it is about 2-3 basis points."

"Historically, Bitcoin has crashed nearly a dozen times, with some of the most notable crashes occurring in June 2011, April 2013, and December 2017."

"Thereturnsexperiencehighprobabilitiesof“disasters”and“miracles”."

"The returns have positive skewness increasing with the frequencies fromdailytomonthly."

"most-active traders vs the market: 11.4% vs 17.9% annually (Barber & Odean, 2000)"

"Most importantly, our findings clearly indicate that diversification also across CCs is beneficial. At the same time, investors could diversify too much."

"investors are roughly 50% more likely to realize a winning position than a losing one, holding losers too long (Odean, 1998)"

"We show that purely risk-minimizing investors will optimally choose to mostly forego CC investment; however, for investors with higher target returns their addition seriously expands the efficient frontier."

"CFDs and forex are complex instruments with a high risk of losing money rapidly due to leverage. "

"For instance, the MD strategy shows excellent performance without liqudity constraints (+175%), yet the application of LIBRO pushes final CW below initial wealth (−14%)."

"You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money."

"fewer than 1% of day traders were able to predictably and reliably earn net profits after fees"

"Most importantly, returns of broad CC portfolios that are calculated without accounting for liquidity remain virtual: they cannot be realized by professional investors."

"US fund investors earned about 1.1 percentage points per year less than the funds they held, purely from timing of entries and exits (Morningstar Mind the Gap, 2024)."

"dass der Vertrieb von CFD auf dem Kleinanleger-Massenmarkt stetig zunimmt, obwohl diese Produkte komplex und für die große Mehrheit der Kleinanleger ungeeignet sind"

"Nevertheless, large steps towards efficiency in cryptocurrencies have been traced during the last years. This can lead to less profitable trading strategies for speculators."

"theirmagnitudedecreasedgreatlyfromApril2018onward."

"weshowthatitisbarelypossibletoexploitexistingprice"

"Weconcludethatarbitrageinthemarketforcryptocurrenciesishardlypossibleanymore,aspricedifferencesacrossexchangesarerelativelylowgivenpresentfrictions."

"Before September 2022, around $675M was extracted in terms of MEV in Ethereum."

"There have been a number of articles that have attempted to quantify this [Tit23,DGK+20] and the conclusions on the magnitude of user impact are inconsistent."

"in order to allow arbitrage trades to take advantage of uninformed user flow. This type of MEV has been well-studied and in fact"

"This ratio translates to nearly $20 billion in transactions from MEV bot activities alone"

"At the time of this writing, an “MEV-explore” tool [1] estimates the amount of MEV extracted on Ethereum since the 1st of Jan 2020 to be close to $700M."

"an implicit tax that uninformed users pay for"

"accounting for a mere 10.7%. We conclude that these two services only protect a limited number of users, highlighting the growth potential of both services."

"Out of sample, the strategy returns 8.0% a year against 15.1% for buy-and-hold, with volatility of 8.5% against 17.4% and a maximum drawdown of-12.1% against-38.6%."

"Buying index options on the same signals loses money in simulation."

"The results proved that the CTTRs strategy offers forecasting power when trading Bitcoin and alt coins, causing the trade to outperform the traditional or default B&H strategy."

"The authors find that the trading strategies based on single indicators or the combination of two indicators do not generate higher returns than buy-and-hold returns among cryptos."

"Consumer transaction revenue was $734 million in Q4, down 13% Q/Q driven by a volume mix shift f rom Simple to Advanced"

"No explicit fee; the spread is the cost"

"a long-only, realistically-costed trader has no detectable edge that price information can supply"

"which has successfully generated approximately C$113.8 million (US$83.4 million) thus far in Q2 from low-risk arbitrage trades, marking a robust start for this new venture."

"generated a one-time return of approximately C$30.2 million (US$22 million) from an arbitrage trade."

"Price-based timing shows no detectable edge at any horizon (intraday, swing, cross-sectional, cross-chain): real data performs no better than, and usually worse than, its own shuffle"

"generated C$132.1 million (US$96.8 million) in revenue through systematic arbitrage trading"

"The strategies practitioners actually use fail too, net of cost (market-neutral hedging, launch timing, liquidity provision, cross-pool arbitrage, regime conditioning, portfolio aggregation, and order flow)"

"the median strategy loses even at zero cost"

"its predictability is concentrated in the lower tail (it flags which coins crash, not which rise)"

"Meanwhile, 62.2% of all participants, representing 575,246 wallets, realized losses."

"their trades on average yield negative returns of -16.4% over three days, with losses increasing with complexity"

"Our findings suggest that retail investors do not fully grasp the risk/returns trade-offs in complex strategies, and they are lured by their inherent leverage and promise of lottery-like payoffs."

"5x or below for room to handle normal swings"

"Isolated margin limits the loss to the collateral assigned to one position."

"With a liquidation, the exchange picks the exit, the trader loses most or all of the margin, and slippage and fees can add costs."

"Ask any crypto trader what's wrong with perps and you'll usually get "liquidations," or forced closure of long and short positions on account of margin shortage. But, according to Krenn and Ong, the funding rate is more of a cause for concern."

"The results show that emotional biases like panic selling, overconfidence, FOMO, and frequent short-term trading greatly increase financial losses."

"Nearly 1 million retail traders lost an estimated $3.8 billion on $TRUMP, according to a July 2026 report by Democratic staff on the Senate Permanent Subcommittee on Investigations that cited blockchain analysis."

"A perpetual futures contract, on the other hand, has a funding rate that changes over time and is typically charged every eight hours."

"Trump’s meme coin was recently trading around $2.20 — roughly 97% below its January 2025 record of $73.43."

"If you hold positions for long periods, it can potentially balloon to the point where a profitable trade loses money."

""It is unquantifiable at the point of trade and unhedgeable afterwards," Krenn said."

"The Trump coin delivered heavy losses for many of the retail traders who piled into the president’s cryptocurrency."

"limiting price impact alongside slippage [12]"

"to exploit profit in the pending transaction pool."

"whilenoteliminatingitentirely."

"Weattributethesesandwichestotransaction-poolleakage"

"Thus,96%ofattacksspanblocks."

"Traders tend to realise positive returns when sentiment is bullish."

"positive changes in the level of bullishness lead to traders executing larger trades, and a higher probability of depositing and withdrawing funds."

"Moreover, it survives the impact of transaction costs and persists in big and liquid coins."

"We show that first‐day winners continue to be winners over the first year, and first‐day dogs continue to be relative dogs."

"Exceptions are “extra‐hot” IPOs, which provide the worst future performance."