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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

#11

Post by pliny »

igf wrote: post #2

Restricted to the publically-available data from one particular and rather odd site, but probably not crazy. At first it seems counterintuitive, shouldn't it be roughly 50% gaining and 50% losing? But I guess that people typically put in a modest amount of play money, and then tend to trade until either they run out or get discouraged from losses.

>shouldn't it be roughly 50% gaining and 50% losing

1) They aren't trading against each other (they're trading against professional investors)

2) When you trade randomly you should expect to lose money (paying fees, paying spread, getting 'good' executions rarely and getting 'bad' executions often, etc.)

Re: Almost 80% of Private Day Traders Lose Money

#12

Post by 0xmohit »

And the primary reason is that one loses more in a single trade than what one probably earned in 5 or more trades.

Humans are inherently risk-averse when it comes to protecting their profits and risk-taking otherwise.

The possibility to make money increases if one acts more like a robot, i.e. acting strictly upon rules decided a priori.

Re: Almost 80% of Private Day Traders Lose Money

#14

Post by acjohnson55 »

danieltillett wrote: post #6
igf wrote: post #2

Restricted to the publically-available data from one particular and rather odd site, but probably not crazy. At first it seems counterintuitive, shouldn't it be roughly 50% gaining and 50% losing? But I guess that people typically put in a modest amount of play money, and then tend to trade until either they run out or get discouraged from losses.

I am sure someone will come here and say they have made their fortune from day trading, but every single person I know personally who has tried has lost a fortune. It is like lotto - sure someone wins each week, but nearly everybody loses.

It's also like the casino in that people tend to advertise their big wins, but not so much their losses.

Re: Almost 80% of Private Day Traders Lose Money

#15

Post by justincormack »

SyneRyder wrote: post #10
koolba wrote: post #5

If you think that's bad, check out forex trading accounts. I don't have the exact stats on hand but an insane percentage of them get completely wiped out. I'm not talking about losing some of your money, I mean 100% of the money in your account and possibly owing even more.

I'd love to see some references for that if you do find them (I'm not disagreeing with you, just would be interested to read more). That's been my impression of most Forex trading too, and I've seen people running 'Forex education' courses where style/bling and motivational Instagram quotes seem to be their main selling point. Forex is so highly leveraged that even if you have some degree of success, it seems easy to…

Forex is not highly leveraged per se, but obviously you have to leverage it to help people lose money more effectively, as buying some yen or something and watching it go up and down a bit is a bit boring.

Re: Almost 80% of Private Day Traders Lose Money

#17

Post by yomly »

crucialfelix wrote: post #9

I did it for a while in the very exciting year of 2008. I see-sawed back and forth and was profitable for months at a time, but in the end I was down. I strictly kept my daily losses limited at $50/day. So really small risk. At the end of that year my day trading losses were about $1500 and otherwise I was in cash just watching the world burn. My long term funds lost more than that in a day. I've lost out on more mon…

So if you went in with an "algorithm" which baked in your own rules for trading and left it for a year, would it have performed better?

Does a greater proportion of non-HFT bots make money?

Re: Almost 80% of Private Day Traders Lose Money

#19

Post by danieltillett »

acjohnson55 wrote: post #14
danieltillett wrote: post #6

Earlier quoted context omitted.

I am sure someone will come here and say they have made their fortune from day trading, but every single person I know personally who has tried has lost a fortune. It is like lotto - sure someone wins each week, but nearly everybody loses.

It's also like the casino in that people tend to advertise their big wins, but not so much their losses.

Yes this is totally true. I am not much of a gambler (outside of my investments, but at least I can lie to myself here that I know what I am doing), but I was stuck on my last visit to a casino how nobody was having fun. I saw hundreds of miserable people losing masses of money and not a single smile or laugh.

Re: Almost 80% of Private Day Traders Lose Money

#20

Post by joosters »

igf wrote: post #2

Restricted to the publically-available data from one particular and rather odd site, but probably not crazy. At first it seems counterintuitive, shouldn't it be roughly 50% gaining and 50% losing? But I guess that people typically put in a modest amount of play money, and then tend to trade until either they run out or get discouraged from losses.

1) There's a spread between buy and sell prices, so after many trades, both sides can lose.

2) As there is high leverage, traders are encouraged/forced to put up stop loss orders. These limit the amount you can lose on a trade, but effectively kick out a trader at maximum loss in even tiny amounts of market turbulence. Plus in times of volatility, the automatic market sell orders may get even worse prices. The market volatility kills many a trader.

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