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I don't doubt the headline, but "We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market" seems like a weird way to come to that conclusion.
Why weird?
Maybe they mean day trading isn’t something that can be managed, metricized, and scrummed to death like some other fields?
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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.
Making a living on craps or roulette? Not mathematically impossible, but highly improbable. How do they get their edge?
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.
The abstract of the paper seems to suggest otherwise: 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: 97% of them lost money, only 0.4% earned more than a bank teller (US$54 per day), and the top individual earned only US$310 per day with great risk (a standard deviation of U…
Imagine we tracked a group of 1000 randomly picked individuals who wanted to be a brain surgeon. I don't know for sure but I wouldn't be surprised if of 1000 randomly chosen people, only 3 people managed to succeed at it after 4 years.
But no one would ever say "Study shows it's impossible for an individual to become a brain surgeon." or imply that it's just random luck to be a brain surgeon. Instead we conclude that being a brain surgeon must be very hard and require a great deal of dedication and commitment.
The reason day trading is singled out whereas brain surgeons are not is that the barrier to entry to become a day trader is very low, anyone can try to become a day trader and many people think they can succeed at it.
The proper conclusion to take from this is isn't that the stock market is pure luck or just a form of gambling... it's that one shouldn't be deceived by the low barrier to entry into thinking that they can succeed at it. It's really hard, soul crushing work to be a successful day trader in much the same way it's really hard work to do anything in life that pays well.
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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".
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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.
We were taught explicitly in my (highly-ranked US) business school that stock performance is a random walk and success is luck.
Doesn't this amount to telling you your education is useless?
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".
TLDR: just invest in an index fund.
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All things considered, "5 figures" seems like a pretty low income for something that is "very very hard", and risky. Seems like if you have the skills and tenacity to day trade like that you could find some other job to pay you high 5 figures with a more stability.
$20,000 per year is livable in many areas of the US, especially if you have a lot of savings to back that up. The point is that saying it's "impossible" is a lie.