NASAA Study: 1 in 26 Day Trading Accounts Tracked Successful: 70% Lose Everything
- Thread starter ByLoSellHi
- Start date
Abstract:
After the U.S market earned strong returns in 2003, day trading made a comeback and once again became a popular trading method among traders. Although there is no comprehensive empirical evidence available to answer the question do individual day traders make money, there is a number of studies that point out that only few are able to consistently earn profits sufficient to cover transaction costs and thus make money. The day trading concept of buying and selling stocks on margin alone suggests that it is more risky than the usual going long way of making profit. This paper offers a new approach to day trading, an approach that eliminates some of the risks of day trading through specialization. The concept is that the trader should specialize himself in just one (blue chip) stock and use existing day trading techniques (trend following, playing news, range trading, scalping, technical analysis, covering spreads…
to make money.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=957172
After the U.S market earned strong returns in 2003, day trading made a comeback and once again became a popular trading method among traders. Although there is no comprehensive empirical evidence available to answer the question do individual day traders make money, there is a number of studies that point out that only few are able to consistently earn profits sufficient to cover transaction costs and thus make money. The day trading concept of buying and selling stocks on margin alone suggests that it is more risky than the usual going long way of making profit. This paper offers a new approach to day trading, an approach that eliminates some of the risks of day trading through specialization. The concept is that the trader should specialize himself in just one (blue chip) stock and use existing day trading techniques (trend following, playing news, range trading, scalping, technical analysis, covering spreads…
to make money. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=957172
How big is your 'little' cousin?
Does he make more than you?
:eek:
How dare anyone question the statistical likelihood of consistently making money day trading, let alone not blowing up, and citing real studies to boot!!!
Take two of these, and your Vag will feel better tomorrow:
Quote from nutmeg:
Abstract:
After the U.S market earned strong returns in 2003, day trading made a comeback and once again became a popular trading method among traders. Although there is no comprehensive empirical evidence available to answer the question do individual day traders make money, there is a number of studies that point out that only few are able to consistently earn profits sufficient to cover transaction costs and thus make money. The day trading concept of buying and selling stocks on margin alone suggests that it is more risky than the usual going long way of making profit. This paper offers a new approach to day trading, an approach that eliminates some of the risks of day trading through specialization. The concept is that the trader should specialize himself in just one (blue chip) stock and use existing day trading techniques (trend following, playing news, range trading, scalping, technical analysis, covering spreads…
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=957172
I just glanced at that, and it's consistent with everything I've been reading.
Let's discuss the first sentence:
"Numerous market studies have concluded that accurate market timing is not possible, even for professional money managers.
Day trading is the ultimate test of market timing in that the trade is opened and closed within the same day".
Day traders do not need "accurate market timing". Average market timing is already plenty to make money.
Furthermore, day trading is not based on "market timing", it is based on buying lower than you sell, as all investing activities I know of, not catching the bottom and selling at the top. The fact that it would occur on a shorter time frame does not make it "ultimate" market timing.
All this stuff is a mediocre regurgitation of the efficient market hypothesis (EMH) of the 70's. Finance has progressed by leaps and bounds since then and EMH is about as sexy today as a 1979 Toyota Celica.
Finally, the validity of a statistical study based on 30 (thirty!) accounts is about as compelling as the conclusions of the psychic next door.
This site deserves better than this.
"Numerous market studies have concluded that accurate market timing is not possible, even for professional money managers.
Day trading is the ultimate test of market timing in that the trade is opened and closed within the same day".
Day traders do not need "accurate market timing". Average market timing is already plenty to make money.
Furthermore, day trading is not based on "market timing", it is based on buying lower than you sell, as all investing activities I know of, not catching the bottom and selling at the top. The fact that it would occur on a shorter time frame does not make it "ultimate" market timing.
All this stuff is a mediocre regurgitation of the efficient market hypothesis (EMH) of the 70's. Finance has progressed by leaps and bounds since then and EMH is about as sexy today as a 1979 Toyota Celica.
Finally, the validity of a statistical study based on 30 (thirty!) accounts is about as compelling as the conclusions of the psychic next door.
This site deserves better than this.
If a professionally conducted study puts your ass into a hostile 'me want to send aggressive PM' mode, worry about yourself there, sport.
Good detective work.
Let's smoke these hypocrites out...
...smoke 'em out of their caves.
