Almost 80% of Private Day Traders Lose Money

If you get to 5, make sure you are judgement proof, and any loaned money is unsecured credit card money.

I honestly couldn't care less about credit card money losses, but I've seen too many people with assets(home, profitable website, really good job, nice cars) get reamed in bankruptcy court. Or, they lie about assets. Lie about assets, but make sure they never show up anywhere.

And just because you lied about your income on that cc form; in 99 percent of the time, it won't be mentioned in bankruptcy court. Credit card companies use your credit credit score to give you of money, and I believe they still redline(give more to certain individuals). Bankruptcy lawyers know most people lie on those cc applications. Yes, it's technically fraud, but try to prove it. They just don't. Nolo Press has a glaring error concerning income, fraud, and potential bankruptablity. It think newer editions corrected it?

If you get onto financial troubles, try to be proactive. Learn about what assets are legal to transfer. Learn about statue of limitations. Protect yourself from these bottom feeders.

(I don't want to debate anyone on the ethics of the cc industry. I just got a cc plea offering me a 29 percent offer, and if I could do it again, I would have ripped up that first cc card sent to me upon graduation, endorsed by my school.)

Since you mentioned him: http://finance.yahoo.com/news/buffett-most-mportant-investme...

> Nearly a decade ago, Warren Buffett made a million-dollar bet: that by investing in a completely unmanaged, broad-market low-fee index fund, he could beat the gains earned by a high-powered hedge fund with a team of managers at the helm. His opponent was Protege Partners, LLC, a New York City hedge fund with $3.5 billion in assets under management.

[...]

> His simple Vanguard S&P 500 (VFINX) fund has delivered returns more than 40 points higher than those of the hedge fund. “I believe this is the most important investment lesson in the world,” he said.

I'm probably going to continue going "full math" in the foreseeable future.

Warren Buffett is not a day trader. To paraphrase, "My favourite holding period is forever."

He is a good data point to demonstrate that long term investors can beat the indices. Most don't, however, and it is my understanding that day trading is even worse. Just as there are professional poker players that can consistently make money, I'm sure there are some day traders that do very well, but it is not a skill that most people have.

This blog post did not answer it's own question because it's conditions were not day trading (over 3 trades in 12 months). That condition selects for people choosing individual stocks hoping for a moonshot, for which people tend to choose riskier stocks rather than stocks actually likely to make them money. So no wonder 80% lost money. On the other hand, notice that the 20% who do make money have a large power distribution curve.

A better way would have been to compare performance versus frequency of trading (I don't expect this to prove one way or another though). The fact is, there are many strategies one could take, and it's how well you execute them that counts.

Personally, I don't find daytrading riskier than holding stocks. By far my biggest losses come from holding the wrong stocks for a long period. It just seems riskier because you have to confront yourself with the possibility of loss each day, rather than hold "long term" and deny that you are wrong.

I now take the Doyle Brunson approach. The poker champion loved to pick up small pots and felt it was critical to do by aggressively playing small hands. That way, these little wins pay for the risk of playing bigger hands over time. I've had the same experience - my daytrading tends to be small money but it stems from work done for holding long term stocks. So why not put it to use?

But, to actually make good money daytrading is still really difficult. Commissions alone can make you have to be 55/45 correct, but there is also the steamroller affect where people tend to hold on to losses and double down further. So it's also about mastering yourself in addition to your market. Otherwise, there is not reason why you can't be better: you are putting in more work than others to make good decisions, and that's how you profit. Trouble is, when are you still outgunned informationally?