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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

#181

Post by yfhsjjskc »

emodendroket wrote: post #157
yfhsjjskc wrote: post #151

Earlier quoted context omitted.

So he beat one particular hedge fund, that hardly proves that "essentially no traders beat the performance of index funds long-term."

http://www.cnbc.com/2015/06/26/index-funds-trounce-actively-... > Pity the active fund manager. > More dollars have flowed to index strategies that track a market benchmark, such as the S&P 500 index, partly because such funds typically have lower costs than active funds and more investors believe that stock-picking managers can't regularly beat the financial markets. > Now a new Morningstar study, released this week…

This evidence all suffers from the problem that you are trying to prove a very difficult claim. Information about averages won't help you here.

Re: Almost 80% of Private Day Traders Lose Money

#182

Post by cdavid »

thomasrossi wrote: post #180

"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?

it is at least partly because 100 % of day traders do less than 100 % of trades. And they play against people who are vastly more intelligent, better equipped, etc... on average. As a day trader, the odds are overwhelmingly against you.

Re: Almost 80% of Private Day Traders Lose Money

#183

Post by morgante »

thomasrossi wrote: post #180

"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?

What does "do the opposite of day traders" entail?

If it's to not trade daily then yes, having a profitable strategy is trivial: just buy index funds.

If you think it's possible to reliably trade better than day traders, you're probably just as deluded as them.

That being said, this data set is unlikely the be representative. The best traders are using something like IB, not eToro.

Re: Almost 80% of Private Day Traders Lose Money

#185

Post by bjacokes »

dllthomas wrote: post #98
jfoster wrote: post #95

Earlier quoted context omitted.

If you ask me, daytrading seems riskier because you're essentially trading within noise. A company could rise or fall a few (and more rarely, a lot of) percentage points within a day. Is it fluctuating based on anything other than the feedback loop and noise? Usually not, I think. It seems far more unpredictable and lacking in reasoning than something like "Amazon's strategy for the next couple of years involves X, Y…

> "Amazon's strategy for the next couple of years involves X, Y, and Z, so I think they will be successful/fail." That's not really the right question. If Amazon's strategy is hugely successful, but everyone else already thought Amazon's strategy was going to be even more hugely successful and had priced that in, then you could be 100% correct about your question and lose money.

That's mostly true with growth stocks. If you buy Amazon trading at 300x earnings with the expectation that earnings will grow 50% per year over the next five years, then it's tough to say whether the price will be higher or lower if they meet your expectations.

Value trades rely a bit less on others' expectations. If you were to buy a company trading at 12x earnings with the expectation that earnings would grow 15% per year over the next five years, then it's pretty likely that if your expectations come to fruition then you'll make money on the trade.

Re: Almost 80% of Private Day Traders Lose Money

#186

Post by jomamaxx »

qznc wrote: post #175
mrchicity wrote: post #135

Earlier quoted context omitted.

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 A…

"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. F"

Do you think that Wall Street hasn't figured that out?

Apple is one of the most watched stocks in the world. To the original commenters point: the banks have reams of 'technically astute' Analysts making those assessments, and much, much, more.

Wall Street has people all the way up and down Apple's value chain. They pay 'consultants' the world over to eek out any tiny bit of information WRT Apple's supply chain.

Again - I agree with the original commenter: individual traders are severely outgunned when it comes to these things and that's why they lose money.

Yes - theoretically, there are some very narrow areas where a savvy investor might be able to win, and surely, Wall St. has some gaping systematic problems ... but by enlarge, I agree with the sentiment of the analysis as well, even as other have pointed out flaws.

Investing is 90% gambling. The world only has so much GDP growth and there's not enough to go around to make every investor super happy. Most returns that an investor makes are someone else's loss. The losers are usually those with less information, or are lazy about it all (like some 'big dumb funds')

Re: Almost 80% of Private Day Traders Lose Money

#187

Post by [deleted] »

_yosefk wrote: post #166
Spooky23 wrote: post #149

Earlier quoted context omitted.

> If Amazon's strategy is hugely successful, but everyone else already thought Amazon's strategy was going to be even more hugely successful and had priced that in, then you could be 100% correct about your question and lose money. Yet, Amazon is about 100% more valuable stock wise in 2016 vs. 2014. The strategy is about the same. The real question is: "How will stock X perform vs some baseline". I use a 90/10 VTI/BN…

"If you picked Apple or Amazon, you hit a home run." Well, sure you did. If you picked Yahoo in the late 90s, a home run hit you. If you picked Intel or Microsoft in the recent past, nothing happened to you. A good article on using insights as a tech person is Phil G's piece on shorting Microsoft in the 80s. (Microsoft was much less appealing to a tech person in the 80s than it is now, and a much better investment.)…

[deleted]

Re: Almost 80% of Private Day Traders Lose Money

#188

Post by randartie »

samfisher83 wrote: post #103

If someone is consistently good at losing money 60% of the time. Why not just do the exact opposite of whatever their initial hunch is. Then they should make money. Based on loss of 36% from the article that is more than just transaction and trade fees which are 1 to 2%of trade therefore if they just do the opposite of what they are doing they should make money.

You can't just flip all your decisions because that would only work if your decisions are inversely correlated to the right decision. Losing traders are usually completely uncorrelated.

Re: Almost 80% of Private Day Traders Lose Money

#189

Post by Spooky23 »

_yosefk wrote: post #166
Spooky23 wrote: post #149

Earlier quoted context omitted.

> If Amazon's strategy is hugely successful, but everyone else already thought Amazon's strategy was going to be even more hugely successful and had priced that in, then you could be 100% correct about your question and lose money. Yet, Amazon is about 100% more valuable stock wise in 2016 vs. 2014. The strategy is about the same. The real question is: "How will stock X perform vs some baseline". I use a 90/10 VTI/BN…

"If you picked Apple or Amazon, you hit a home run." Well, sure you did. If you picked Yahoo in the late 90s, a home run hit you. If you picked Intel or Microsoft in the recent past, nothing happened to you. A good article on using insights as a tech person is Phil G's piece on shorting Microsoft in the 80s. (Microsoft was much less appealing to a tech person in the 80s than it is now, and a much better investment.)…

> If you picked Yahoo in the late 90s, a home run hit you.

To abuse the baseball analogy, even exceptional hitters don't get on base > 60% of the time. If you picked Red Hat or Oracle, you didn't hit a home run, but you still beat the VTI.

That's why you diversify. One safe way to do it is to buy the market. Another way is to buy a basket of diverse stocks. That basket is a higher risk but also has a higher potential of reward.

Re: Almost 80% of Private Day Traders Lose Money

#190

Post by emodendroket »

yfhsjjskc wrote: post #181
emodendroket wrote: post #157

Earlier quoted context omitted.

http://www.cnbc.com/2015/06/26/index-funds-trounce-actively-... > Pity the active fund manager. > More dollars have flowed to index strategies that track a market benchmark, such as the S&P 500 index, partly because such funds typically have lower costs than active funds and more investors believe that stock-picking managers can't regularly beat the financial markets. > Now a new Morningstar study, released this week…

This evidence all suffers from the problem that you are trying to prove a very difficult claim. Information about averages won't help you here.

"Essentially nobody" is admittedly not well-defined, but I don't take it to mean that a handful of guys doing better would disprove it (and in any case have trouble finding any data points in favor of the opposite position).
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