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Day Trading for a Living?

papers.ssrn.com

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Re: Day Trading for a Living?

#31

Post by lazyasciiart »

esotericn wrote: post #10
ch4s3 wrote: post #4

Earlier quoted context omitted.

The interesting bit to me is, “we find no evidence of learning by day trading”. This implies to me that the top earners are merely lucky, and have no special knowledge or advantages.

It could also imply that they simply have related experience or skills before starting. It's difficult to, for example, learn how to become a brain surgeon on the job.

Medicine actually involves a significant amount of learning on the job in all specialties - https://www.verywellhealth.com/types-of-doctors-residents-in...

Re: Day Trading for a Living?

#32

Post by outime »

Putting aside the potential quality issues of the study, the headline here in HN isn't accurate and made a lot of people comment about how wrong it is.

The study doesn't literally say "impossible" but "virtually impossible" and they do say that a very small percentage was able to make about $310 a day which is about ~110k a year.

Re: Day Trading for a Living?

#33

Post by vonmoltke »

cptaj wrote: post #23
Kranar wrote: post #15

I mean you may as well say: Study shows it is impossible for an individual to build a tech start up as a living. Just because something is hard doesn't mean it's impossible. Day trading, like many other risky ventures, is something that is very hard and unlikely but for the few who succeed ends up being very profitable.

Playing the lottery is also very profitable for those who succeed.

Correct, and the statement "it is impossible to become rich by playing the lottery" is absurd. It's part of an annoying tendency to conflate "extremely low probability of success" with "impossible".

Re: Day Trading for a Living?

#34

Post by adrianmonk »

Kranar wrote: post #15

I mean you may as well say: Study shows it is impossible for an individual to build a tech start up as a living. Just because something is hard doesn't mean it's impossible. Day trading, like many other risky ventures, is something that is very hard and unlikely but for the few who succeed ends up being very profitable.

Or you could say: it's impossible to win the world championship at anything.

It would be easy to find data to show that 99.99% of people aren't the best tennis player or fastest runner or best Scrabble player in the world; therefore, nobody can be the best at it. According to this reasoning, at least.

Re: Day Trading for a Living?

#35

Post by matwood »

eloff wrote: post #9
sverige wrote: post #5

Earlier quoted context omitted.

Probably very similar to results for people who try to make a living gambling in casinos.

Looking at how bad these results are, the career gamblers in the casino seem to have an edge. They have various strategies that actually do work to greater or lesser degree - e.g. Playing poker which is a game of skill against other people with a house rake instead of a house mathematical edge.

Poker isn't gambling, but a game of skill. Are there many people making a living actually gambling on something like craps or roulette.

Re: Day Trading for a Living?

#37

Post by PaulRobinson »

mattkrause wrote: post #7
steveklabnik wrote: post #3

Earlier quoted context omitted.

The abstract, of course, contains more detail than the headline regarding exactly what is claimed: > We show that it is virtually impossible for an individual to day trade for a living, contrary to what course providers claim. We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world, and persisted for at least 300 days: 9…

And the article even moreso: > "We follow all individuals who day traded mini-Ibovespa futures contracts for their first time from 2013 to 2015, a total of 19,646 individuals." I know nothing about the Brazilian equities market, but it seems like it might be harder to for individuals to reliably make a profit on something heavily traded and fungible (Ibovespa is an index), where you're competing with much bigger play…

I don't know much about the Brazilian equities market per se, but I do know about trading in other markets.

Liquidity is a very important aspect of any market. If you are the largest player in a small market (i.e. it has low liquidity), you are market making, and the problem with that is information asymmetry comes into play: you're trading against people who know stuff you don't know, and they will only trade against you when you're wrong.

If you are in a highly liquid market, the market represents all the information out there, so you need to think about where your informational edge comes from.

Most day traders seem to focus on technical analysis in the belief that there are underlying probabilities that drive market movement and this alone is enough to find an edge.

The linked paper is not one I have read completely yet, but it seems to align with my own experience and those observed elsewhere: that might be true, but you need to find the edge nobody else has seen yet, and that seems to be very difficult and carry some risk.

Re: Day Trading for a Living?

#38

Post by lallysingh »

ectospheno wrote: post #28
docker_up wrote: post #11

Impossible? Lol I have a handful of friends that do this. It's hard work but they make 5 to 6 figures consistently per year. It's very very hard, and not everyone can do it. I tried and lost a lot of money. But it's definitely not impossible, that is simply a lie.

Your particular logical fallacy is "cherry picking".

Not against "impossible."

Re: Day Trading for a Living?

#40

Post by mawburn »

outime wrote: post #32

Putting aside the potential quality issues of the study, the headline here in HN isn't accurate and made a lot of people comment about how wrong it is. The study doesn't literally say "impossible" but "virtually impossible" and they do say that a very small percentage was able to make about $310 a day which is about ~110k a year.

> which is about ~110k a year

$310 * 5 days a week * 52 weeks a year = $80,600

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