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Almost 80% of Private Day Traders Lose Money

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Re: Almost 80% of Private Day Traders Lose Money

#171

Post by stouset »

nicholas73 wrote: post #59

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 distri…

Most of the people I know who've been profitable day-trading have earned less than they would have in an index fund. They consider themselves successul because they're up 17% since 2014. Of course the market is up 22%, so they've actually lost money relatively to everyone else.

It's also easy to make a net return when the market is up. The trick is not losing your shirt when the market tanks.

Re: Almost 80% of Private Day Traders Lose Money

#172

Post by jnordwick »

mrchicity wrote: post #135
nicholas73 wrote: post #59

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 distri…

I think the individual retail trader is almost always outgunned informationally when it comes to intraday trades. Most short-term price action is driven by order flow and cross-asset correlations, which machines are very good at trading. They are often net trading cost earners due to rebates and capturing bid-offer spreads. That means their win rate doesn't need to be as high, so they can pull the trigger on a trade…

Event driven trades are definitely not done by humans, especially when they are scheduled such a economic releases or some other periodically released number. These are all computer driven. (I have written these for HFT shops for years now.)

Working on the pro side too, I also just hold ETFs mostly. No way an amateur day trader beats me at my job except by luck or finding trades too small for me to really care about.

Re: Almost 80% of Private Day Traders Lose Money

#173

Post by jnordwick »

daveguy wrote: post #145
waylandsmithers wrote: post #140

Earlier quoted context omitted.

> Commissions alone can make you have to be 55/45 correct Don't forget taxes!

Taxes are different. Taxes won't make a winning position a losing one, but commission very easily can. That is because taxes are on profit. Small profit => small tax and large profit => large tax, but that will not turn a winning position into a losing one.

In real dollars (after adjusting for inflation) taxes will most easily turn a winning position into a losing one. This has always been the problem with taxing capital, often you are just taxing inflationary gains.

Re: Almost 80% of Private Day Traders Lose Money

#175

Post by qznc »

mrchicity wrote: post #135
nicholas73 wrote: post #59

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 distri…

I think the individual retail trader is almost always outgunned informationally when it comes to intraday trades. Most short-term price action is driven by order flow and cross-asset correlations, which machines are very good at trading. They are often net trading cost earners due to rebates and capturing bid-offer spreads. That means their win rate doesn't need to be as high, so they can pull the trigger on a trade…

I believe there sometimes are opportunities you can take, because a "Hacker" knows more about some parts of the world than most traders. My prime example: When Apple released the iPad it quickly became a great hit. For me it was obvious that a lot of cheap copycats would spawn soon. What would you use for a cheap iPad knockoff? An ARM processor for sure. Strategy: Buy ARM and hold for years. First iPad was released April 2010. ARM.F [0] at $3. By the end of 2010 it was near $6. Now near $20.

The problem is, such opportunities are rare.

[0] https://finance.yahoo.com/quote/ARM.F

Re: Almost 80% of Private Day Traders Lose Money

#177

Post by WalterBright »

nicholas73 wrote: post #59

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 distri…

> Commissions alone can make you have to be 55/45 correct

Why are taxes on short term gains never considered?

Commissions, taxes, and being a small player means you don't get the best price, all make for quite a hill needed to climb just to break even.

Re: Almost 80% of Private Day Traders Lose Money

#178

Post by empath75 »

mrchicity wrote: post #135
nicholas73 wrote: post #59

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 distri…

I think the individual retail trader is almost always outgunned informationally when it comes to intraday trades. Most short-term price action is driven by order flow and cross-asset correlations, which machines are very good at trading. They are often net trading cost earners due to rebates and capturing bid-offer spreads. That means their win rate doesn't need to be as high, so they can pull the trigger on a trade…

I made a >100% return in the last 6 months by buying companies that made products that I understand and use frequently: nvidia and Amazon. I think if you focus on particular industries that you know well you can get an edge on 'the market'. I'm not day trading though, I'm just keeping an eye out for opportunities and trying to balance as much as I can. I'm also just playing with a small IRA account that I can afford to lose.

Re: Almost 80% of Private Day Traders Lose Money

#179

Post by [deleted] »

stouset wrote: post #171
nicholas73 wrote: post #59

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 distri…

Most of the people I know who've been profitable day-trading have earned less than they would have in an index fund. They consider themselves successul because they're up 17% since 2014. Of course the market is up 22%, so they've actually lost money relatively to everyone else. It's also easy to make a net return when the market is up. The trick is not losing your shirt when the market tanks.

[deleted]

Re: Almost 80% of Private Day Traders Lose Money

#180

Post by thomasrossi »

"80%" it's very unlikely, say it is true, you just do the opposite and you have free money. I suspect the correct overall percentage should be much closer to 50%. Finding a profitable strategy should be much more difficult than "do the opposite of day traders", right?
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