Study says Daytrading for a living is virtually impossible.

If you read the "Nothing Works" thread, you will see why no one makes money trading.

But to make it clear, as @krugman25 stated, you need 1 million hours of chart time to get an edge. I think only 0.4% of people live that long!
 
krugman25 said:
1 million... boy, you will have to dig up that quote for me.
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Ahh, my mistake it was "Tens of Thousands".

But my point is, so many people are focused on chart reading rather than finding miss-priced assets.
For example, a ticket scalper (a trader) does not stare at charts all day. Instead she prices fair value for the tickets and tries to buy them cheaper.

Spending 10's of thousands of hours chart reading, is a waste of one's life and potential to help humanity. You develop no skill that can be applied to the real world and you loose money.
 
There are too much junks in internet.

If you think Daytrading for a living is virtually impossible,
then it is impossible.
If you think Daytrading for a living is possible,
then that is a step towards reaching financial freedom.

 
gaussian said:
I love it when people use the "as a..." as some sort of de-facto proof the plebs reading their post should take what they say as truth.

This paper will become a seminal work in economics quickly because it's making so many frauds mad.

For a corporate statistician you didn't even do 2 HONEST MINUTES of research. So I did it for you:

(b) You're wrong. See the attached photo - The markets for the last ~3 years or better (I only went that far) spent more time correlated than uncorrelated. Before you say "there are drops to negative correlation"! That is still significant correlation. Since this underpins your entire argument (which is a bad argument anyway - correlation is not causation) the rest of your post is invalid.

(c) You're wrong again. From (b) and my image linked the markets are highly correlated (|CC(20)| > 0.9 majority of the time). This even makes fundamental sense as we get a lot of softs from Brazil so naturally our economies are intertwined.

You seem to have no idea what an actual "representative sample" is (you've even managed to screw up causation by implying market correlation relates to new day trader ability!) Do we throw out health data from Japanese studies because Americans are not Japanese? Are you kidding me "corporate statistician"? Was the auto-maker Saturn?
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This guy throws out "as a..." to negate others arguments however she throws the same thing out in a hissy fit here:

Why you should learn to code

@gaussian something something throw the first stone? I counted 5 "as a" coming from that autist.
 
maxinger said:
There are too much junks in internet.

If you think Daytrading for a living is virtually impossible,
then it is impossible.
If you think Daytrading for a living is possible,
then that is a step towards reaching financial freedom.
More...
LOL financial freedom? This a term used to make people do stupid things.

Work hard at something you enjoy and get payed. There is a PM on this site who drives a Honda Fit and makes close to 7 figures a year. He get's up and goes to work every single day and works hard to improve.

99% of people would be taking vacations with his salary. Happy that they achieved "financial freedom".

Just remember, there are different levels of poverty....
 
comagnum said:
What planet are these researchers from? Last time I checked any advanced skill takes about 5-10 years on avg to learn. An electrician for example, can not even take the test to get master certified until they have 10k hours work experience & 1k hours of class room training. Only the best can pass this test, most will take the test at around the 7-10 year mark.
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This is not what they're arguing. No one is arguing about "it takes a long time to learn a hard skill and trading is a hard skill".

What they are arguing, effectively, is that as a new day trader the barrier to entry is so high it effectively is impossible to do properly from what they defined as starting from a stand-still. You can attribute this to a number of things - leverage being the key in my mind. Unlike your examples trading has a major barrier to entry: you need to build the capital up to do it and when you blow out you have to decide to either build it up again or quit - most people quit. They are not arguing about perseverance they are arguing the leveraged instruments do not give a new day trader a fighting chance. An equivalency to your example would be if an Electrician was kicked out of the program for any failure at ANY time in their learning, and had to start all over from the beginning (including re-paying for tuition!)

You can even look to stories of yore from Reminiscences of a Stock Operator to see that this is true there. Jesse Livermore detonated more than enough million dollar accounts before learning anything, and at the end was broke.

Again, they are NOT arguing the SKILL is unlearnable. They are arguing the practicality of LEARNING the skill given the barrier to entry and beginning with no skill is probabilistically virtually impossible. People are attaching far too much of their own experience to this study. Its ridiculous how offended people are at literal science being done on the problem that we all know is true - brokers in general are just commission farms.
 
I tracked down a description of a slightly more optimistic study on Brett Steenbarger's TraderFeed site. This study found that a small number of daytraders "are able to outperform consistently".

Steenbarger's article is pasted below and can be found at
http://traderfeed.blogspot.com/2014/08/what-proportion-of-daytraders-actually.html

What Proportion of Daytraders Actually Makes Money?
I strongly recommend reading the research study of speculator skill from Barber, Lee, Liu, and Odean. They studied the returns of daytraders over a 15-year period, the largest sample I am aware of in such a study. Their study is also unique in that it looks at the ability of traders to make money in a second year after having made money in the first.
The authors conclude that "there is clear performance persistence." The very top traders who make money net of fees tend to continue to make money going forward. The traders who lose money tend to continue losing money.

Here is the most important conclusion, however:

"In the average year, 360,000 individuals engage in day trading. While about 13% earn profits net of fees in the typical year, the results of our analysis suggest that less than 1% of day traders (less than 1,000 out of 360,000) are able to outperform consistently." (p. 15).

In other words, 87% of day traders in a given year lose money after fees are taken into account. About .28%--one in 360--is able to make money after fees year over year.

To be sure, that small group of very successful day traders earns a significant return. After expenses, they average +28 bps per day. Compare that to the 350,000 out of 360,000 daytraders who average a daily loss of 5.7 bps per day after expenses.
The authors conclude that day trading skill genuinely exists. They also conclude that it is very, very rare.

Further Reading: Can Day Traders Be Successful?
 
TheBigShort said:
Ahh, my mistake it was "Tens of Thousands".

But my point is, so many people are focused on chart reading rather than finding miss-priced assets.
For example, a ticket scalper (a trader) does not stare at charts all day. Instead she prices fair value for the tickets and tries to buy them cheaper.

Spending 10's of thousands of hours chart reading, is a waste of one's life and potential to help humanity. You develop no skill that can be applied to the real world and you loose money.
More...
I think I said tens of thousands of chart setups, not hours. I have said 5-10 thousand hours, which is the average amount of time needed to become experienced at anything.

Or you can take a picture of yourself in a suit, slap that puppy up as your profile picture and pretend you know what you're talking about. #amiright
 
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TheBigShort said:
LOL financial freedom? This a term used to make people do stupid things.

Work hard at something you enjoy and get payed. There is a PM on this site who drives a Honda Fit and makes close to 7 figures a year. He get's up and goes to work every single day and works hard to improve.

99% of people would be taking vacations with his salary. Happy that they achieved "financial freedom".

Just remember, there are different levels of poverty....
More...
Let's keep this between us as it may upset some. Those of us who have worked hard to achieve competence actually enjoy trading...yep, enjoy. We speculators are capitalists, in fact we operate at ground zero of capitalism. Our role, collectively is to make markets and provide liquidity. By doing so, we absorb risk for more conservative market participants such as hedgers and investors. In return, we reserve the right to make a profit and certainly make no excuses for it.

That's our role in the marketplace. As to what we can do to "help humanity", it's pretty much what any other professional might do, contribute to charities and do volunteer work. I might suggest rather than show your peculiar blend of ignorance and arrogance, you get cracking to cure cancer and feed the starving children of Somalia. The world needs your largess.
 
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