are you in the 1%?

gmst,

compounding for short term trader is relative. once your account reaches 7-8 figures, it is going to be very very difficult without lengthening holding horizon.

the even bigger problem is: how does one know he/she is in the elite group of top 1% trader? everyone on ET thinks he/she is there already or will get there some day. the sad truth is that most will never get there. the consistency of bad traders is even stronger than the top 1% traders, according to the paper. bad traders just keep on losing year after year until they get wiped out (probably for multiple times).

njrookie
 
Quote from njrookie1:

gmst,

compounding for short term trader is relative. once your account reaches 7-8 figures, it is going to be very very difficult without lengthening holding horizon.
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completely agree, no disagreement here whatsoever :-)

Quote from njrookie1:


the even bigger problem is: how does one know he/she is in the elite group of top 1% trader? everyone on ET thinks he/she is there already or will get there some day. the sad truth is that most will never get there. the consistency of bad traders is even stronger than the top 1% traders, according to the paper. bad traders just keep on losing year after year until they get wiped out (probably for multiple times).

njrookie
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only 1% will get there eventually :-) I think this process of 99 guys losing it all eventually and 1 guy winning it all - this is a classic illustration of "Winner takes all". In some sense, those 1% traders are at the top of the food chain and their existence depends on other 99%. If those 99% stop trading, then those 1% will not remain 1%. Sad - but nature's rule i guess. Only best survives.

How does one know if he is in top 1%. Welll its pretty easy to know. If you made money 'at least' 10 months out of last 12, if you made money 40 weeks out of 52 weeks, its pretty clear that you are in 1%. If you started the year with 100k, and ended with 200k, you are in the 1%. Problem arises in the beginning - when the trader has not proven himself. How does he know if he will be able to get it? I think the answer is he will have to try, he need to gain screen-time and do lots of backtesting to understand 'how market actually works'. This is a time consuming process and costs money. Most guys don't survive the learning curve and thats the reason for them losing. I think if anyone can persist and is logical, he can hack it as a trader - tuition could be 3 years or more of time and 50 thousand dollars of losses. Most people give up before - this is my theory why 99% lose. My 2 cents.
 
Another comment - looking at the extremely less number of postings on this thread - its clear that ETers have not really understood the importance of this research.

This is the most comprehensive research done 'ever on our planet' that proves only 1% of day traders consistently make money. It is much more thorough than looking at one particular day trading firm's customers and their behavior when it bankrupted itself. Or asking Don bright how many of his guys make money or doing a poll on ET :-) Also this is for the first time that we know on average how much top day traders do actually make per day.

The research data consists of all the trades across all equities done over a 16 year period in a country (Taiwan). This is a massive research. This research is the single most authoritative piece the world has ever seen. Now maybe this thread will elicit 500 responses :-)
 
Quote from njrookie1:

vinc,

If market is purely random, nobody can out-perform market consistently.
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so nLepwa and Maestro are lying??:confused: I thought they were proponents of randomness in the markets but it's also possible that I misunderstood them.. now , suppose they trade as they claim / they bet on randomness/ would they still profit when we take into account what's being discussed here ??

anyways, thanks for the clarification :)
 
statistically speaking, randomness means you cannot predict what is going to happen next based on past information, including price/volume/fundementals etc.

some traders really mean noise which will revert when talking about market being random.

i would say at least 80-90% of time, market direction is not clear given what just happened and there are no way to do better than a 50/50 bet. however there are 10-20% of time where stars are aligned, one can do 60/40 or even 70/30. it is hard to sit through all these boring period when nothing is going on without putting up a trade. forcing a trade without good edge is very hard to resist.

even if you sit through all the "no-edge" period, if you cannot take losses when you are wrong, you still cannot survive longer term. ruthless risk management will get you over the 30-40% bad outcome, but right entry trade, and will help you realize your edge over longer term.
 
Quote from njrookie1:

the paper says 80% of the trade of the successful traders is NOT providing liquidity. it is taking.
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It probably might mean that they weren't the top or bottom fishers.
 
Ask what;s the percentage of casino gamblers who win year after year? The answer will provide a baseline to judge the 1% figure in the study.
 
Quote from gmst:



How does one know if he is in top 1%. Welll its pretty easy to know. If you made money 'at least' 10 months out of last 12, if you made money 40 weeks out of 52 weeks, its pretty clear that you are in 1%. If you started the year with 100k, and ended with 200k, you are in the 1%.
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Top 1% for this year, sure. Long term this doesn't mean cr6p. You could be in the poorhouse next year, or 5 years later.
 
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