POLL: According to a well-known study at a major day-trading firm, what do you believe is % of Day Traders who lose money?
Now... really. This question doesn't even make sense. What does it matter what I think if we are speaking about a study?
The # of people who lose their money daytrading is a widely speculated number, and numbers are thrown around as if fact. So what people believe is the main point.
The 95% fail number comes from the 1999-2000 study linked below. http://www.nasaa.org/content/Files/NASAA_Day_Trading_Report.pdf The study cites comments from All-Tech and Block trading among others to back up claims that daytrading is nothing more than gambling, and that the vast majority of retail traders lose money. Personally, I think that the timing of this study (end of the bubble), puts a negative skew on the results. I would think that traders who have been doing this post 2001 are probably a little better at managing risk and therefore a larger percentage are profitable.
I tend to be a little suspicious of studies that set out to back up a claim. That said, it seems to me that a 95% failure rate is not all that much more than the failure rate for all small business startups. For a meaningful study, one needs to define "trading" and "day trading", and also what it means to win or lose. When I traded in a day trading arcade, I broke even on my gross, but lost an amount equal to commissions (which were pretty high). Now I trade from home and am doing o.k. I attribute much of my success to lower commissions and an environment more suitable for trading.
also most claim that 80-90%, (whatever the study says) fail in the first five years, then some just as high number fail in the second 5 years. My suspicion is that most day traders fail much faster than that. i believe that one who actually makes it 5 years, (no prof of this just feeling), has a substantial chance of making it in the second five years. also a study dated 1999 is ancient history in the daytrading world. not sure what, if any conclusion may be drawn on information that old. Just factoring in things like technology advances and commission rates make a huge difference.
What people believe on what % of daytraders fail is irrelevant really. What if everyone though 60% fail? What if everyone thought 90% fail? 100% of the people thought the world was flat for many years.. Investors or traders, we care not what people who do neither think.