found this today I think it's bull....what do you think? http://www.businessinsider.com/henry-blodget-heres-what-day-traders-dont-get-2010-3 As we explained earlier, day-trading is one of the dumbest jobs there is: According to one academic study, 4 out of 5 people who do it lose money and only 1 in 100 do it well enough to be described as "predictably profitable." Most of the folks who do it, in other words, would be far better off working at Burger King. As is often the case when we bring up these facts, some readers screamed. One said that our brain-damage was made patently obvious by the fact that Wall Street professionals day-trade all day. If day-trading were so dumb, then why would professionals do it? Here's what that particular reader is missing: Most Wall Street traders get paid to day-trade other people's money.* That's a huge difference compared to what most stay-at-home day-traders do. The average professional trader gets paid somewhere between 1% and 3% of assets per year just to trade those assets all day. The average hedge-fund trader gets paid another 20% on top of that for any "gains" he or she makes (regardless of whether the gains are the result of the trader's trading or the bull market). The average stay-at-home day-trader, meanwhile, trades his or her own money. And while many of these traders do fine on a gross basis (before costs), once the costs of this trading are deducted (commissions, taxes, research and information, time), their performance is usually downright awful. The reason so many professionals day-trade, in other words, is that getting paid to day-trade other people's money is one of the best businesses in the world. Day-trading your OWN money, meanwhile, is one of the worst. * There's another difference, too, of course: Most Wall Street traders have skills, information, and tools that day-traders can only dream of. Trading is a zero-sum game: Market moves aside, every dollar won by one trader comes out of the pocket of another trader. Day traders competing against Wall Streeters is the equivalent of a college football team (or Pee Wee team, depending on the day-trader's skill) competing against a pro team. Is it possible to win? Yes. But it's highly unlikely (1 in 100). Wall Street's winnings do have to come from somewhere, though, so Wall Street thanks the day traders for playing.
4 out of 5 singers never get a record deal, 4 out of 5 basketball players never make it to the NBA, etc ,etc. Should they just give up also? Some people really love the game of trading, solving the puzzle each day and getting paid to do it. If it was easy then everyone would be doing it and the money would not be worth the effort. Being able to do what 90% of people can't in any endeavor is called success.
Let's compare two scenarios... Scenario A: A guy puts $1000 in an "account" that guarantees 10% returns. At the end of the month, he gets a check. He likes checks, so he puts another $1000 in and tells his friends about how smart he is and how they can get smart too. When all the money is in, the checks stop and the "accounts" disappear. Scenario B: A guy puts $25,000 of his own money in an SIPC insured account and proceeds to lose money. He tries hard, throws more money at the problem, and then tries harder. He fails. He then tells all his friends that daytrading is dumb, and they should stay away. Who was doing the right thing for their friends? I tell all my friends to stay away from daytrading. I have lost plenty of money. But... I've worked hard getting here. I've traded smart while in the learning curve. All the time, energy, and money spent have been "tuition." The education is now paying off. This is not an easy job. If you go in thinking it is, you will probably fail. It is one of the hardest mental jobs there is. However, if you thrive on self improvement and conquering challenges, this may be the job for you. I'm no "Elite" trader working for a bulge-bracket investment bank. I am a person who finds joy in seeing personal improvements, in solving problems, in being my own boss (with no employees), and having no salary cap. Such articles as the one above inspire me. To all my daytrading friends... We Rock! We know why we do this!
There are several types of day traders, including recreational traders. Usually, the sample they use to conclude that 4 out of 5 lose includes about 2 recreational traders. Actually, it turns out it is easier to make money daytrading than starting other businesses provided you do your homework before. The thing is that many of those who start as recreational traders and do not do their homework after they lose a lot of money they blame it on trading and not on themselves. Then, there are many who think are serious traders but they are actually recreational traders. You know, data from Yahoo!, free tools, a few indicators, an optimized system, no concept of risk management, etc... This is the reality of the story...80% of serious traders make money.
My real question has always been, why does it matter whether or not individual traders make money? If one thinks they do, great. If one thinks they don't, that's fine too. I wonder what these pundits are out to do when they write these articles. Truth is, trading is one of the last places where someone who is committed can actually change their circumstances without the usual burdens of owning a business. Methinks there is a disinformation campaign afoot. Caveat Emptor, of course.
4 out of 5...dayum they wish...to make it to the NBA there must be 1000's of kids who start of trying for 1 spot in the end and millions of kids who try and there is only one KING JAMES.... one of the main reasons there is such a high failure rate in trading is that anyone with an account can become a trader....You can't be a restaurant owner without a restaurant.. which one cost more money to set up? peace