The headline is probably close but I don't think you can reasonably extrapolate out from only eToro customers.
Almost 80% of Private Day Traders Lose Money
191–200 of 278 posts
Re: Almost 80% of Private Day Traders Lose Money
#19280% are losing who the hell is winning and how? I fell like they are cheating or have some sort of advantage that is not easily available to private day traders and no I don't think that advantage is a PHD and fast data connection.
The spread betting companies are winning, of course. They are the market makers and they can manipulate the market as much as they like, even pushing the price up or down temporarily to hit stop loss orders and the like. And of course they adjust the spread to suit them, esp. in equities. I always thought the safest markets are forex because the huge liquidity tends to limit the spreads somewhat, but I have no idea i…
Okay, but there's plenty of highly liquid things to trade. For example the SPY has a spread of 1 penny, same with SPY options.
You mention a potential strategy for manipulating the market like pushing prices to hit stops, well if these strategies are common then it seems there exists a potential strategy to take advantage of this.
It seems like so long as the market's next tick price is not completely uncorrelated from its previous tick price, then there will always be a way to 'beat' the market. The market price is not completely uncorrelated (as you mentioned, there's price manipulation driving it to certain prices throughout the day).
Re: Almost 80% of Private Day Traders Lose Money
#193Earlier quoted context omitted.
An online friend just got into currency trading and went into some tutorials about reading curves. Apparently there are recurring curve patterns, which allows one to predict where a rate is going. If you can code up some pattern recognition algorithm, there might be a way to make money. Although I'm very skeptical about those patterns, because there could be someone trading back and forth to create those trends, and…
I've tried trading on patterns for a short while. Problem is, those patterns do exist, but they are chaotic behaviors, and transition probabilities are already priced in. So that, for a non-causal analyst looking at past data they look very reliable, but for somebody with no forward knowledge, they are useless.
How else beyond being a precog and insider trading could one have forward knowledge?
Re: Almost 80% of Private Day Traders Lose Money
#194Earlier quoted context omitted.
An online friend just got into currency trading and went into some tutorials about reading curves. Apparently there are recurring curve patterns, which allows one to predict where a rate is going. If you can code up some pattern recognition algorithm, there might be a way to make money. Although I'm very skeptical about those patterns, because there could be someone trading back and forth to create those trends, and…
I am a technical analyst. Patterns do occur but ultimately prices are driven by fundamental events. Interest rate decisions, market data releases and similar. When that occurs no pattern can survive on the smaller timeframe. Technical analysis works but it is not written in stone.
What are your thoughts on A Random Walk Down Wallstreet? He pretty thoroughly picks apart the efficacy of technical analysis vs buying some indexes with supporting data.
Re: Almost 80% of Private Day Traders Lose Money
#195Earlier quoted context omitted.
An online friend just got into currency trading and went into some tutorials about reading curves. Apparently there are recurring curve patterns, which allows one to predict where a rate is going. If you can code up some pattern recognition algorithm, there might be a way to make money. Although I'm very skeptical about those patterns, because there could be someone trading back and forth to create those trends, and…
I am a technical analyst. Patterns do occur but ultimately prices are driven by fundamental events. Interest rate decisions, market data releases and similar. When that occurs no pattern can survive on the smaller timeframe. Technical analysis works but it is not written in stone.
> Technical analysis works but it is not written in stone.
Works 60% of the time 100% of the time.
Re: Almost 80% of Private Day Traders Lose Money
#196I looked into trading a while back after my dad lost a bunch in the market. I read a lot of info and in the end finally found someone who stated information like this in the link. In the end I learned that the vast majority of retail traders lose money, I think 85 or 90% was listed, the majority of people who get into professional day trading quit within a couple years, day traders make profit by leveraging their money many times over just to make a living, and day traders actually take an income instead of letting their money ride and losing it all in a few trades but this also keeps them from progressively getting richer. Day traders expect to lose on at least 40% of their trades which is apparently one of the biggest issues mentally with trading. None of the retail platforms explain these facts nor many other sources of info online.
Re: Almost 80% of Private Day Traders Lose Money
#197Earlier 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 made a >100% return in the last 6 months by buying companies that made products that I understand and use frequently: nvidia and Amazon. I think if you focus on particular industries that you know well you can get an edge on 'the market'. I'm not day trading though, I'm just keeping an eye out for opportunities and trying to balance as much as I can. I'm also just playing with a small IRA account that I can afford…
You could have picked almost any company and made a great return in the last 6 months, assuming you did not buy at the all time highs. The market is reaching record highs right now, so it is easy to believe you have an edge as the times are good.
I would not go so far to say that simply buying companies of products you buy and understand is a viable trading strategy that will give you an edge for >100% returns. When the market is in a downturn this could be very different.
Re: Almost 80% of Private Day Traders Lose Money
#198Insider trading is not illegal; http://cnbc.com/id/43471561
Legislators aren't insiders. Insider trading requires being an employee, board member, or otherwise owing a fiduciary duty to the company. The crime hinges on breaking that duty.
It does _not_ mean merely trading on so-called "insider information", unless you're in cahoots with an insider who will benefit directly or indirectly.
If it were otherwise, trading on a "hot tip" about a stock could put anybody at risk of federal felony charges, no matter how far removed they were from the company. That would be ridiculous.
Insider trading also requires trading on material, non-public information. Few employees have access to that; usually only C-level executives and board members have that kind of information before it's made public. Many of the trading window restrictions imposed on you by your employer aren't required by the law or SEC regulations. Often it's to maximize the window that large investors and stock holders (including executives, through their trusts!) can profit on big movements, without legions of employee stock option holders raining on their parade.
That said, the SEC can be super aggressive about insider trading, whether or not any court would ultimately permit the charges to stick. They'll go after people with a noose in one hand and a slap on the wrist in the other; most sane people know which to choose. Racking up plea deals makes the SEC look effective at policing the market when in fact they're anything but. Which is why the decision a couple of years ago by the 2nd Circuit reaffirming the law of insider trading really upset the SEC.
Honestly, I'd rather that all Congressmen's investments were made public. Unlike the law discussed in the article, it could be anonymized before publication for all I care. But transparency would make it less profitable for Congress to trade on insider information because people could follow and mimic their trades. And big corporate investors might then pressure companies to stop disclosing so much information. That'd be a far preferable state of affairs than trying to criminalize trading on non-public information. Everybody and their Uncle tries to trade on non-public information; that's exactly how the market is supposed to work--provide a profit motive to uncover non-public information and effectively make it public by pricing it into the stock.
And a Congressman trying to subvert the transparency rules provides much more clear-cut culpability. Otherwise there's too much plausible deniability regarding the how, what, and why of their trades.
Re: Almost 80% of Private Day Traders Lose Money
#199> The data source for this post is eToro, a brokerage company that offers a feature called Social Trading, which is social network for traders. It is enabled by default and allows users to view and copy other users’ trades. Therefore, everyone’s trading performance is publicly available who have not disabled Social Trading.
What if the winners are choosing not to make their trades public? That alone could introduce some serious bias.
Re: Almost 80% of Private Day Traders Lose Money
#200Earlier quoted context omitted.
This is not how the math works, and it shows a common statistical fallacy. We cannot assume that the chance that a person loses money one year is uncorrelated with the chance that the same person loses money the next. Here is a simple model a mathematician might realistically use to model this. Given N traders, let P_1..P_N be iid Beta(α, β), and let the chance that trader n loses money during a year be Bernoulli(P_n…
Okay, okay. To be strictly correct, I should have said something like "with that distribution and any reasonable assumption about correlation".
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.