Research on day trading

[ironchef]

Most of you said that the majority of day traders lost money, and here is an article that quoted some statistics:

http://www.marketwatch.com/story/th...a-profit-are-lower-than-you-expect-2016-08-19

which said 80% of day traders were unprofitable after a year and only 1.6% were profitable net of fee.

On the other hand there is this article:

http://www.cdx3investor.com/ns/articles/apr08_day_trader_research.pdf

Abstract

Active stock traders, or day traders, who may account for a sizable proportion of US trading volume, hold stocks for only hours or even minutes. Examination of their trading profits reveals that about half of the 1,386 day traders in this study were profitable after paying commissions. Both profitable and unprofitable traders have very similar trading characteristics; they concentrate their trading at much the same time, on the same stocks, and in the same trading locations. Yet the skilled or lucky traders generate $9.5 million in net intraday profits, and the unskilled or unlucky lost $4.6 million in the same three month sample period.

Since:

A study by Bear Stearns finds that approximately 40% of US share volume originates from an estimated 30,000 day traders (Goldberg and Lupercio, 2004).

The second article made some sense to me since day trading is more or less a zero sum game, so if most day traders are trading against one another the # of wins and losses must approximately equal.

Their conclusion:

Conclusion

Active day traders account for a sizable proportion of the trading volume and value in US equities. The two most appealing questions as to this market segment may be: 1) Do active traders really trade profitably? and 2) If so, how? We provide some insight into question 1 and some conjecture on question 2. We find that approximately one-half of the day traders in our sample were profitable after paying commissions, and some traders consistently earned large net trading profits.

And here is what really counts:

When the profitable and the unprofitable traded with market makers during our sample period, they both lost money. Yet the profitable traders achieved overall net profitability through their ECN trading, while the unprofitable did not. Since active day traders are not informed, this suggests that skillful active traders can profit only as long as unskilled day traders are willing to enter the market and lose.

The one group we do not want to trade with is market makers, no one beats them in this game!

And to you professionals here, don't show your disdains towards us small mom and pop traders, you need us to pay your bills.

 

[Overnight]

...
And to you professionals here, don't show your disdains towards us small mom and pop traders, you need us to pay your bills.

I spew disdain to those who think that "stock traders" are the only ones who comprise trading. Dude...Seriously?

All you see is stock trading? *sighs* Algofy, please eviscerate this folk. Thanks!

 

[algofy]

I spew disdain to those who think that "stock traders" are the only ones who comprise trading. Dude...Seriously?

All you see is stock trading? *sighs* Algofy, please eviscerate this folk. Thanks!

everybody knows the only pro trader around is the bitcoinz traders.

 

[Jack1960]

All day traders I know make over a million dollars.

 

[Overnight]

everybody knows the only pro trader around is the bitcoinz traders.

That was not an evisceration. Into the penalty box with ye. 12 hours.

 

[victorycountry]

I am not sure whether it's appropriate to call day traders traders. A lot of them trade without market knowledge and experience and without risk management. If this was an airline industry, it's like giving the pilot title to those who doesn't know how to fly airplanes. Pilots get their title after going through thousands of simulations while these traders start trading as soon as they open up their account.

 

[dealmaker]

"Better to remain silent and be thought a fool than to speak and to remove all doubt"
- Mark Twain

 

[Overnight]

I am not sure whether it's appropriate to call day traders traders. A lot of them trade without market knowledge and experience and without risk management. If this was an airline industry, it's like giving the pilot title to those who doesn't know how to fly airplanes. Pilots get their title after going through thousands of simulations while these traders start trading as soon as they open up their account.

Yes, it is appropriate to call daytraders, traders. Just as it is appropriate to call pilots, pilots.

You must either be from another country, or have no clue what you are speaking of regarding FAA rules. Pilots do not get a "title" per se. Pilots get licensed on different levels. There's Student, Sport, Private, Commercial, ATP. But they are not titles. They are levels of licensure. All of them ARE PILOTS.

This is not the same thing as trading. Where you be going with this I am not sure, but pilot licenses have NOTHING to do with trading. BAD analogy. Kthankxbye.

 

[victorycountry]

Yes, it is appropriate to call daytraders, traders. Just as it is appropriate to call pilots, pilots.

You must either be from another country, or have no clue what you are speaking of regarding FAA rules. Pilots do not get a "title" per se. Pilots get licensed on different levels. There's Student, Sport, Private, Commercial, ATP. But they are not titles. They are levels of licensure. All of them ARE PILOTS.

This is not the same thing as trading. Where you be going with this I am not sure, but pilot licenses have NOTHING to do with trading. BAD analogy. Kthankxbye.

Fair enough, we can agree to disagree.

 

[dealmaker]

Plato wouldn't allow poets in his Republic, he called them dangerous people who have ideas, worse dreams...