And the other 20% just lie.
Or get rich by selling new letters with tips, and using them to pump and dump worthless stocks.
Almost 80% of Private Day Traders Lose Money
31–40 of 278 posts
Re: Almost 80% of Private Day Traders Lose Money
#32I did it for a while in the very exciting year of 2008. I see-sawed back and forth and was profitable for months at a time, but in the end I was down. I strictly kept my daily losses limited at $50/day. So really small risk. At the end of that year my day trading losses were about $1500 and otherwise I was in cash just watching the world burn. My long term funds lost more than that in a day. I've lost out on more mon…
So if you went in with an "algorithm" which baked in your own rules for trading and left it for a year, would it have performed better? Does a greater proportion of non-HFT bots make money?
Developing that trading strategy is a continuous job; that's what successful traders do. They don't play stocks, they play strategies. There are going to be computers involved no matter what. Your indicators, your trading platform, what analysts you trust.
So what is a bot ?
A "bot" suggests to me something just trading in and out of some security at some average frequency: weeks, days, intraday, minutes, seconds and then there is HFT.
These things are all just feeding off of the movement of whales: major flows of money that cause those waves that small technical traders think they can figure out just by watching the shape of them.
There is really an amazing amount of intelligence involved in playing the day's game and you are taking in a lot of data, watching other markets (oil versus airlines, currencies, futures, sovereign debt) and using this to either realize the moment is now or to just scare the shit out of yourself and end the day up frazzled and $30 richer. That was my experience.
Successful traders reduce their risk even further by choosing what they are trading, shortlisting things that might pop and being able to jump on those (manually or automatically) in less than a heartbeat. That's where the bots will rip an entire sector up before an amateur trader has any chance to understand what is happening let alone why it happened. But those bots are just extensions of the trader.
Anyway, the whole thing is retarded and I have more fulfilling things to do on the planet.
> would it have performed better?
Definitely. Discipline is tough when somebody just demolished your chinese solar stock and you are down a week's earnings. The bot would've cut and run.
Re: Almost 80% of Private Day Traders Lose Money
#33And the primary reason is that one loses more in a single trade than what one probably earned in 5 or more trades. Humans are inherently risk-averse when it comes to protecting their profits and risk-taking otherwise. The possibility to make money increases if one acts more like a robot, i.e. acting strictly upon rules decided a priori.
> The possibility to make money increases if one acts more like a robot, i.e. acting strictly upon rules decided a priori.
Only if the rules are correct, for all situations. Robots have lots vast amounts of money because there was a missing or wrong rule. Good luck figuring out in advance all the rules - remember that the situation is changing, and your robot in the mix is itself a change.
Re: Almost 80% of Private Day Traders Lose Money
#34Restricted to the publically-available data from one particular and rather odd site, but probably not crazy. At first it seems counterintuitive, shouldn't it be roughly 50% gaining and 50% losing? But I guess that people typically put in a modest amount of play money, and then tend to trade until either they run out or get discouraged from losses.
I am sure someone will come here and say they have made their fortune from day trading, but every single person I know personally who has tried has lost a fortune. It is like lotto - sure someone wins each week, but nearly everybody loses.
Well, I don't make a fortune from it, but after losing a fair amount of money day trading, I wrote an iOS app where people can practice their day trading. The income from it has covered my losses from trading. So, yeah I can say I make some thing from day trading!
Re: Almost 80% of Private Day Traders Lose Money
#35Isn't is possible that the sample is biased because you only looked at the subset of traders who were not sophisticated enough to turn off the feature that allows others to observe their trades?
Re: Almost 80% of Private Day Traders Lose Money
#36eToro wouldn't be used by any remotely professional day trader. Most of those accounts are most likely idle and judging by eToro's target audience - highly amateur. Whilst majority of course loose money, so do majority of businesses in any industry, from startups to restaurants to hedge funds. The nature of human economics is such that there's more money chasing opportunities than the value of those opportunities. Su…
I recommend against "Economics in One Lesson". It's basically a libertarian promotional pamphlet. If one wants an economic education, something like "The Undercover Economist" is much better.
Re: Almost 80% of Private Day Traders Lose Money
#37The way the math works out with that distribution: only 80% of them lose money over one year, but as time continues over multiple years, the percent losing money approaches 100%.
This is not how the math works, and it shows a common statistical fallacy. We cannot assume that the chance that a person loses money one year is uncorrelated with the chance that the same person loses money the next. Here is a simple model a mathematician might realistically use to model this. Given N traders, let P_1..P_N be iid Beta(α, β), and let the chance that trader n loses money during a year be Bernoulli(P_n…
I think he was just doing a play on words with the ambiguity and you went full math on him.
>only 80% of them lose money over one year, but as time continues over multiple years, the percent [that loses some] money approaches 100%.
Re: Almost 80% of Private Day Traders Lose Money
#38Earlier quoted context omitted.
So if you went in with an "algorithm" which baked in your own rules for trading and left it for a year, would it have performed better? Does a greater proportion of non-HFT bots make money?
Developing that trading strategy is a continuous job; that's what successful traders do. They don't play stocks, they play strategies. There are going to be computers involved no matter what. Your indicators, your trading platform, what analysts you trust. So what is a bot ? A "bot" suggests to me something just trading in and out of some security at some average frequency: weeks, days, intraday, minutes, seconds and…
Thanks - I like the idea of strategies being an extension of the trader. Until we have fully independently trained NN-based trading algorithms, I guess there will always be domain knowledge being applied. (Even with NNs the domain knowledge will be applied in choice of layers etc.)
>Definitely. Discipline is tough when somebody just demolished your chinese solar stock and you are down a week's earnings. The bot would've cut and run.
What stopped you from cutting and running in that case? Was it the hope that the stock would swing back?
Re: Almost 80% of Private Day Traders Lose Money
#39It's just slot machines with a more respectable coat of paint.
This picture is much more accurate than I would admit. I've seen many of my older relatives "playing" the stock market all day. Basically sitting in front of their computer, buying and selling stocks like a game. And that picture looked eerily similar to when I saw them in Vegas spending all day in front of those electronic slot machines.
Re: Almost 80% of Private Day Traders Lose Money
#40I have a serious problem with the "conclusion" of this post. This data isn't normalized against some kind of control group to show that maybe day-trading during Brexit is a different beast than index-tracking during Brexit. Or maybe its the same beast, we can't conclude anything...
I'm beginning to realize the difference between "data scientist" and just looking at numbers to put them on a chart.