Study says Daytrading for a living is virtually impossible.

Discussion in 'Trading' started by traderslair, Sep 11, 2019 at 12:59 PM.

  1. Abstract
    We show that it is virtually impossible for an individual to day trade for a living, contrary to what course providers claim. We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world, and persisted for at least 300 days: 97% of them lost money, only 0.4% earned more than a bank teller (US$54 per day), and the top individual earned only US$310 per day with great risk (a standard deviation of US$2,560). Additionally, we find no evidence of learning by day trading.

    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101
     
    lentus, soulfire and shatteredx like this.
  2. So Brazil speaks for the rest of the world now huh? Fuck Brazil. Also who the @#$% trades the Brazilian futures market??
     
    cornerstone, RicRams, bookish and 4 others like this.
  3. monet

    monet

    The study shows that day trading is virtually impossible for those who haven't persisted very long.
     
    Last edited: Sep 11, 2019 at 1:38 PM
    VPhantom, d08, MarketAddict and 4 others like this.
  4. gaussian

    gaussian

    This is probably right, survivorship bias is really quite strong among traders. Majority of people in all leveraged instruments blow out quickly. I am not surprised at their result, but "virtually impossible" is a little strong. This could be matched up to the overall risk in starting a company (which isn't seen as gambling despite being gambling absolutely). The odds of anyone succeeding at a highly leveraged set of trades (futures, starting a company, options, etc) are vanishingly small compared to the amount of people who fail. Survivorship bias makes you think otherwise, but I'm sure if we gathered account statements from traders on ET we'd find approximately the same distribution.

    Did you RTFA? They measured new traders in the 3rd most actively traded futures contract ON THE PLANET. Their results are absolutely significant for traders everywhere.
     
  5. dozu888

    dozu888

    actually the stats are kinda similar in the US...

    it's not a matter of persistence... like will you be able to fly by flapping your arms? if you practice long enough lol.
     
  6. speedo

    speedo

    Anything is "virtually impossible" if you don't know how to do it and most will not do what it takes to be able to day trade. But hey, it doesn't take much to deduce that something is "virtually impossible". Studies like this don't even know what the confounding variables are, no less understand how to control for them. At least these kinds of things give solace to those who walk away bloodied and feel the need to believe if they couldn't do it, it can't be done.
     
    jeffbader, S-Trader, MattZ and 5 others like this.
  7. bbpp

    bbpp

    If you want to confirm something, you only need to see one of its kind.
    If you want to deny something , you need to go through all of its kind.

    So if you want to conclude that daytrading can not make a living, you need to see all of daytraders in this world.
     
    speedo and traderslair like this.
  8. I find it funny you are throwing this report out without even reading it yourselves.

    ", we follow all individuals who day traded mini-Ibovespa futures contracts for their frst time from 2013 to 2015, a total of 19,646 individuals"

    FIRST TIME TRADERS? wow first time traders trying day trading failed.....genius article.


    elsewhere in the paper "...to identify new retail day traders"

    every year of the study they focused mainly on retail traders who did not day trade the year before. IN other words this is an article focused on annual results of NEW DAY TRADERS, not those who continued to day trade over time.


    The article basically uses SHIT research to declare day trading is a very hard activity to profit from consistently for new traders.

    Well no shit sherlock.


    I am shocked at:

    1. what passes for research these days
    2. at the ability for people to make broad generalizations on specific data.
    3. How foolish people are in believing conclusions of studies without reading the actual report.

    Shit in...shit out is the old adage in studies.

    Personally I think day trading is a waste of time and resources and a miniscule amount of people have the patience, determination and focus, let alone skill and ability to make it work. But this study just shows new traders mostly lose money.
     
    forexpreneur, billv, Calmness and 6 others like this.
  9. gaussian

    gaussian


    They absolutely performed this study properly, controlled mostly properly, and even discussed where the study could be improved. RTFA next time.

    Neither of you understand statistical significance. Go back to university and take an introductory statistics for scientists course. Until then your hot takes are meaningless until you present contrary data. I'm waiting with bated breath for your study. Another case of "internet shit-talker and alleged successful trader knows more about economic studies than a PhD in economics".
     
  10. I just debunked the article....maybe you should read it
     
    traderslair and TreeFrogTrader like this.