Almost 80% of Private Day Traders Lose Money • Hacker News Board

Re: Almost 80% of Private Day Traders Lose Money

#261

Post by thomasrossi » Tue, Aug 23, 2016, 1:24 PM UTC

morgante wrote: post #183

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.

No, I was just pointing out that 80% is not very likely and is probably some sort of bias or mis-representation. In fact it would be a great compliment for them because they would be getting consistently the opposite of the market (If they overall lose money it must be that at least on the weighted average of their bets they get it wrong, maybe one big wrong and many little right ones, or mostly all moderately wrong, etc..).

Re: Almost 80% of Private Day Traders Lose Money

#262

Post by Blackthorn » Tue, Aug 23, 2016, 2:33 PM UTC

nicholas73 wrote: post #255

Blackthorn wrote: post #251

Earlier quoted context omitted.

Plenty of those stocks exist. We just talked about two of them the other day - CXW and GEO.

Are you saying you make 10% trades every day?

No I'm not, and I don't see how that is relevant. You claimed that it was hard to find stocks that moved 10% in a day. I show that this is not the case.

Re: Almost 80% of Private Day Traders Lose Money

#263

Post by infinite8s » Tue, Aug 23, 2016, 5:17 PM UTC

TheOtherHobbes wrote: post #69

manishsharan wrote: post #45

Earlier quoted context omitted.

@chollida1 , you should write a book; help drive Michael Lewis' point home. In my last project for a brokerage system, I developed features for day traders. What was most surprising to me how much money the brokerage system generated for the bank regardless of the outcomes for the day traders.

"Be the farm, not the livestock."

Or sell the shovels, don't dig for gold.

Re: Almost 80% of Private Day Traders Lose Money

#264

Post by HockeyPlayer » Tue, Aug 23, 2016, 5:20 PM UTC

yfhsjjskc wrote: post #257

jnordwick wrote: post #172

Earlier quoted context omitted.

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.

Out of curiosity - do you get some kind of template version of the earnings report before it is released so you can parse the numbers? Are they just always worded the same way? Or do they broadcast the numbers directly somehow?

Depends on the release, but generally the numbers are released in a consistent machine-readable format.

Re: Almost 80% of Private Day Traders Lose Money

#265

Post by infinite8s » Tue, Aug 23, 2016, 5:23 PM UTC

icantdrive55 wrote: post #120

mkaziz wrote: post #79

Earlier quoted context omitted.

Do you have any literature you can recommend for when one gets into financial troubles. I don't think I would ever feel comfortable using leverage, but would like to know what I'm up against if I get to medical bankruptcy, for example.

Medical bankruptcies are the number one reason people file for protection. Don't beat yourself up. I once got a hospital blood test, and they charged me $1100 dollars. When they found out I had insurance through my Union; that total bill went down to $90.00. That's the total price they charged my insurance company. My portion was $7.00. So the medical system is rigged. I find the system very unfair, and it doesn't ma…

My comment is independent of your discussion of medical bankruptcy, which I find abhorrent.

I take issue with your statement that housing should be exempted from bankruptcy. As someone who rents and doesn't own, and thus has a net worth that is more concentrated into savings/investments, why should a house be protected? I'm not protected from losing the savings that I haven't invested into a house.

Re: Almost 80% of Private Day Traders Lose Money

#266

Post by sunstone » Tue, Aug 23, 2016, 5:28 PM UTC

Day trading is the perfect forum for the overly confident.

Re: Almost 80% of Private Day Traders Lose Money

#267

Post by dietrichepp » Tue, Aug 23, 2016, 6:15 PM UTC

thedevil wrote: post #223

dietrichepp wrote: post #200

Earlier quoted context omitted.

Are you saying that it's unreasonable to suppose that some people can make money day trading in the long run? I was just illustrating a simple model you might use to test that theory.

I'm saying it's not reasonable to think that a private individual can make a long-term profit day-trading, skilled or not. It's quite reasonable to suppose lots of impossible things. How does your model account for magnitude?

There are professional day traders who earn an income over the long run by day trading. This is a true fact. It seems like you are trying to contradict this fact… or do I misunderstand what you are saying?

The model I gave was the simplest model I could think of that would let you test the theory that skill is a factor in day trading. It was an illustration of how someone with mathematical training might think about statistics like "80% of day traders lose money" without jumping to the false conclusion that all traders eventually lose money.

Re: Almost 80% of Private Day Traders Lose Money

#268

Post by nicholas73 » Tue, Aug 23, 2016, 8:17 PM UTC

Blackthorn wrote: post #262

nicholas73 wrote: post #255

Earlier quoted context omitted.

Are you saying you make 10% trades every day?

No I'm not, and I don't see how that is relevant. You claimed that it was hard to find stocks that moved 10% in a day. I show that this is not the case.

I claimed it was hard to find stocks that move 10% intraday, in the direction you want, before they have moved 10%. Trading is about profit after all.

Re: Almost 80% of Private Day Traders Lose Money

#269

Post by jnordwick » Wed, Aug 24, 2016, 3:54 AM UTC

yfhsjjskc wrote: post #257

jnordwick wrote: post #172

Earlier quoted context omitted.

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.

Out of curiosity - do you get some kind of template version of the earnings report before it is released so you can parse the numbers? Are they just always worded the same way? Or do they broadcast the numbers directly somehow?

Earnings reports are the worst. Most of the economic numbers and other statistics are released in a machine readable format by a few companies that compete on speed. (There are some anomalies that come over the web and they are horrible to deal with.)

Earnings reports though I've tried numerous things from subscribing to services that release numbers electrically to writing parsers based on prior reports. Earnings though you care about things like one time charges, gaap and non-gaap numbers, etc. They are one of the less consistent things to trade.

Re: Almost 80% of Private Day Traders Lose Money

#270

Post by Waterluvian » Wed, Aug 24, 2016, 5:32 AM UTC

habosa wrote: post #211

Excuse my meta-comment, but I notice that HN seems to have an obsession with proving that active trading is bad and that we should all buy low-cost indexes. And before anyone jumps on me, I 100% agree with that investment strategy and use it myself. I'd just like to comment on the intersection of that belief and tech enthusiasts. It seems to generally come from a place of binary/analytical thinking which we're all so…

I don't even consciously think of risk aversion. For me, it's purely about making the locally optimal decision.

Money is a tool to me, and an annoying one at that. I kind of hate it. I want to think about it and handle it as little as possible in my life. So I make the financial fire and forget decisions.

I take all the exciting and potentially rewarding risks in the other parts of life.