Is Trading Itself a Bad Trade? I Analyzed the Industry- Prove Me Wrong
- Thread starter cityboy12
- Start date
And high probability means less reward in the trading world.
Looks like things have calmed down recently. I was hoping for more data and case studies.
Here is the one regarding the Taiwan traders.
https://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trading and Learning 110217.pdf
Some quotes
'However, very few traders are predictably profitable.In the last column of Table 3, we see that only 9.81% (3.20%+6.61%) of day trading volume is generated by predictably profitable day traders. From column 8, we can calculate that these predictably profitable traders constitute less than 3% of all daytraders on an average day'
Personal note: Profitable is not quantified or defined in comparison with other occupations/enterprises and their risk/reward. Of the 3% I doubt many make significant money over the long term.
'In Taiwan, day traders, in aggregate, lose money. Therefore it is not rational for a risk-averse investor with no special claim to superior ability to undertake day trading in hopes of discovering that he is amongst the chosen few. Furthermore, it is not rational for day traders who have incurred persistent losses to continue day trading for the purpose of learning about their ability. So why do investorstake up day trading and why do so many persist in the face of losses? We consider three broadly defined answers to this .'
I will leave you to read 1 and 2...but reading this thread I see a lot of evidence of number 3
'...Third, day traders may trade for non-financial motivations including entertainment, a taste for gambling, and the desire to impress others (see, e.g. Grinblatt and Keloharju (2009)). Some investors may enjoy the process of day trading so much that they are willing to persist in the face of regular losses. Some investors may be attracted to the casino like qualities of day trading with its frequent bets, wins, and losses.Some investors may choose to day trade in hopes of impressing others.'
Here is the one regarding the Taiwan traders.
https://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trading and Learning 110217.pdf
Some quotes
'However, very few traders are predictably profitable.In the last column of Table 3, we see that only 9.81% (3.20%+6.61%) of day trading volume is generated by predictably profitable day traders. From column 8, we can calculate that these predictably profitable traders constitute less than 3% of all daytraders on an average day'
Personal note: Profitable is not quantified or defined in comparison with other occupations/enterprises and their risk/reward. Of the 3% I doubt many make significant money over the long term.
'In Taiwan, day traders, in aggregate, lose money. Therefore it is not rational for a risk-averse investor with no special claim to superior ability to undertake day trading in hopes of discovering that he is amongst the chosen few. Furthermore, it is not rational for day traders who have incurred persistent losses to continue day trading for the purpose of learning about their ability. So why do investorstake up day trading and why do so many persist in the face of losses? We consider three broadly defined answers to this .'
I will leave you to read 1 and 2...but reading this thread I see a lot of evidence of number 3
'...Third, day traders may trade for non-financial motivations including entertainment, a taste for gambling, and the desire to impress others (see, e.g. Grinblatt and Keloharju (2009)). Some investors may enjoy the process of day trading so much that they are willing to persist in the face of regular losses. Some investors may be attracted to the casino like qualities of day trading with its frequent bets, wins, and losses.Some investors may choose to day trade in hopes of impressing others.'
I thought you were against trading...LOL
You should make a distinction between statements about the mass and individuals.
For the mass you are right: high probability means less reward.
But the mass exist of huge amounts of individuals. For individuals it can be completely different as all depends of the skills of the individual. On the one end you have (a few lucky) traders that are very good and have high probabilities and big rewards. On the other end you have (a lot unlucky) traders that are lousy and have low probabilities and low rewards. The mass will be in between these two extremes. And if you take everybody together you will get the "high probability means less reward" average.
Listen up nothing truer was ever said on ET! The retail traders potatoe chip money is not of great interest to the big players. The institutions are interested only in taking each others money...a retail trader just has to develop the skill to determine which side is winning for the moment and join that side..i.e. who is winning...the bears or the bulls..So......dispense with “they went after my stoploss” nonsense. Front running does happen in HTF micro TF’s but most retail traders trade way out of those TF’s.
And we have arrived to the long awaited moment! Here it is??
My personal note is: these 3% are all billionaires. So you see, you are wrong. LOL.
Where do you get the information to proof that many don't make money over the long term? Do they all send you every year their audited trackrecord? If not you are just telling nonsense as you have no information at all.
Where is the evidence? I marked in red all the hypothetical assumptions, which are no proof at all but just assumptions.
A lot of some and may. How many is some? 0.1% or 99%?
May, but also may not.
There is no proof at all.