InvestingWe have known for a long time that daytraders do not make money. The select few that do are an exception and are handsomely rewarded for their unique talent. As for the rest of us—daytrading is full of risks and opportunities to lose money.

There are theoretical reasons for this, and it only takes a casual look at the data to confirm those more sophisticated studies of the issue. Last week, for example, provided a stellar example of how daytrading cannot, in fact, sustain wins in the long term for most people.

At the beginning of last week, stocks looked like they were beginning to recover from the beginning of a major correction. Bears and bulls, looking at the same data, came to two conclusions: the bear call was that August 8th was a bull trap, and that the market would continue its correction soon. Bulls, on the other hand, said that the correction was baseless and that technicals pointed to a market still healthily within a raising wedge.

There are many ways to play either hypothesis, but to be a day trader means to play it within the day. So if they did this, how did the daytraders do? Let’s assume, for simplicity’s sake, that bulls and bears went long or short the S&P 500 SPDR (SPY) at open price and exited at closing. What were their gains for the week?

The bulls, until Friday, clearly won. If we assume bulls bought SPY at opening price and sold at closing price, their gains were $105.17 for the first four days of the week. Bears, on the other hand, lost the same amount in the week. If a bullish daytrader could repeat that performance every week by correctly identifying the bullish and bearish trends, that trader could deliver a 55% return for the year no matter how the market broadly trends. That’s a very compelling business model.

Of course, repeating that performance on a weekly basis is impossible, which is why many daytraders use leverage and leveraged products, like the various VIX ETNs (VXX, UVIXY, XIV). This can augment returns, but it still relies on the daytrader’s ability to identify trends consistently to show a positive return.

And Friday demonstrates just how hard that is.

On Friday, the trend was clearly on sight to continue, with the S&P 500 nearing 1964 in the morning, until news broke of another development in the Ukraine crisis, which was enough to cause stocks to turn. The S&P 500 fell to 1943 levels before lunch, and showed mixed signals of recovery in the afternoon.

Assuming that Friday’s trading ends at the 1943 level, our bullish trader will post his second daily loss for the week and end up about $24.15. While that’s better than our bearish trader, it’s still only an annualized gain of 13%—again assuming that this trader can replicate that performance every single week—and there are zero transaction costs.

The fact of the matter is that a 13% return isn’t actually all that good, particularly when comparing it to our benchmark. Even after the volatility that Ukraine caused, the S&P 500 is up 0.81% for the week, while our stellar bullish trader is only up 0.24%. Just buying SPY Monday morning and selling Friday afternoon would have made more money.

Daytrading is based on the idea that you can identify trends in the stock chart and a quick entry/exit will help you piggyback on larger movements, regardless of company fundamentals or macroeconomic developments. While this is not impossible, it is only possible some of the time—and that lack of consistency means gains from daytrading can easily be erased by sudden changes in the market.