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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

#201

Post by TheOtherHobbes »

jomamaxx wrote: post #186
qznc wrote: post #175

Earlier quoted context omitted.

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…

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

Yes, I think Wall St hasn't figured that out. Sentiment regresses to the mean, and so do analyst expectations.

If Wall St had figured out what the iPad meant there would have been a huge rush towards ARM.

That didn't happen. There's your answer.

It's also worth pointing there's a big difference between tactical short-term trading and strategic long-term trading.

Short-term trading is not a winning option for non-professionals.

Long-term trading can be, because - here's the obvious point - most traders are looking for quick returns.

Unspectacular stocks with robust longer term returns tend to be systematically undervalued - more so if they're in a specialised technical niche not many people understand.

Conversely stocks with a good historical record but signs of a less robust future tend to be overvalued.

There's a huge amount of fashion and trend-following on Wall St. People who research fundamentals in depth - like Warren Buffet - are very much the exception.

Re: Almost 80% of Private Day Traders Lose Money

#202

Post by songzme »

Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She had to find ways to make money to support my sister and I through school so she turned to the only other place where she could earn some money - the stock market.

She started with around 100k, read up about stock options, and decided that shorting calls and puts would work well. The time value decay seems to work in the investor's favor. Every time she made enough money, she would take them out and buy houses (all cash) and start from 100k again. Now, 8 years later, she has acquired a few properties in West LA and Oakland and makes more rental income per month than my salary as a senior software engineer. She still trades today.

Re: Almost 80% of Private Day Traders Lose Money

#203

Post by Paul-ish »

>On the 1st of August, 2016, I downloaded the publicly available data through their ranking API. I selected all users who were active during the past twelve months, traded with real money, and had at least three trades. The results consist of 83.3k traders who fulfill these conditions.

What may be interesting is to see a graph where the number of trades a person executes is on the x axis and on the y axis is median return. Do people who make more trades make more or less money? It would also be interesting to look at a window larger than 12 months. Do people with trades going back years do better than people with trades going back months? Is this gambling, or can some people build some skill in this?

Re: Almost 80% of Private Day Traders Lose Money

#204

Post by nothrabannosir »

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.

As another commentor mentioned: you're not comparing against a 0% baseline, but against the relevant index fund. Or, at the very least, against normal savings accounts interest. So taxes can indeed turn a winning position into a losing one.

Re: Almost 80% of Private Day Traders Lose Money

#205

Post by anonu »

The smartest thing an individual investor or trader can do is put their money in extremely low-cost index funds and leave them there. I have worked as a trader at various large financial services firms for almost a decade now. Even though I believe I have more insight into the markets in general than the lay person - the moment I decide to trade for myself, I will not get the same quality of execution and breadth of services I would sitting at my work desk...

Re: Almost 80% of Private Day Traders Lose Money

#206

Post by bsder »

songzme wrote: post #202

Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She had to find ways to make money to support my sister and I through school so she turned to the only other place where she could earn some money - the stock market. She started with around 100k, read up about stock options, and decided that shorting calls and puts…

Winning the lottery always happens to somebody. Just not many.

Re: Almost 80% of Private Day Traders Lose Money

#207

Post by siavosh »

TheOtherHobbes wrote: post #201
jomamaxx wrote: post #186

Earlier quoted context omitted.

"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…

>Do you think that Wall Street hasn't figured that out? Yes, I think Wall St hasn't figured that out. Sentiment regresses to the mean, and so do analyst expectations. If Wall St had figured out what the iPad meant there would have been a huge rush towards ARM. That didn't happen. There's your answer. It's also worth pointing there's a big difference between tactical short-term trading and strategic long-term trading.…

You're assuming the research Wall Street publishes actually has anything to do with their own market positions, they do not. Research that an investment bank publishes is for customers; they work independently of their traders who have their own proprietary methodology and information sources.

Re: Almost 80% of Private Day Traders Lose Money

#208

Post by wlievens »

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…

You're sort of cheating in that example as a big chunk of that growth is from the acquiston offer and not organic.

But still, good move and your point stands. I took a position in ARM (my former employer) again half a year ago, too bad it was tiny!

Re: Almost 80% of Private Day Traders Lose Money

#209

Post by wlievens »

TheOtherHobbes wrote: post #201
jomamaxx wrote: post #186

Earlier quoted context omitted.

"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…

>Do you think that Wall Street hasn't figured that out? Yes, I think Wall St hasn't figured that out. Sentiment regresses to the mean, and so do analyst expectations. If Wall St had figured out what the iPad meant there would have been a huge rush towards ARM. That didn't happen. There's your answer. It's also worth pointing there's a big difference between tactical short-term trading and strategic long-term trading.…

> That didn't happen

Actually ARM's stock went x10 in six years time. Having Apple as a key customer was no small part of that.

Re: Almost 80% of Private Day Traders Lose Money

#210

Post by jboles »

wstrange wrote: post #139
loteck wrote: post #127

Earlier quoted context omitted.

In investing, my understanding is the opposite of a long is a short.

Shorting has asymmetric risk. When you are long your loss is 100%. With a short it is theoretically unlimited.

Isn't this the situation that a margin call is meant to handle -- limiting your losses to the collateral you have on deposit?
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