Some interesting numbers about day tradersPlenty of people make money in the markets. Not day traders thought. Intermediaries love day traders, they live very wealthy lives thanks to them.
Market participants also love day traders, they provide much liquidity at any time of the day. ~80% of day traders quit within 2 years.
And unlike day gamblers I am going to probably renew my subscription to tradingview for the replay button, the devices at the same time, the saved charts, the 4x more data on chart, the ICE intraday (I think), the alerts.
Day gamblers are going to take their business elsewhere, probably to the casino or to the charity house.
Link to the paper about Japan day gamblers:
www.boj.or.jp
My average probably puts me in the "swing trader" category, I cut my losses very fast and I lose often.
My losses are in "swing trading" my wins are in "long" or even in the "excluded" category.
On average individual investors hold their losses for longer than their wins according to a plethora of reports, so the categories are still the same (just some swing traders might actually be bagholding day traders & "long" bagholding swing traders).
Ah and most of the "automated gambling" community use programs to eliminate emotions, this is why they almost always have low risk to rewards: They make sure to include the bagholding into the algo 👍
Taiwan individual investors paper:
faculty.haas.berkeley.edu
"On average, day traders lose 7 basis points on their day trading before costs (t=-10.2). In the fourth column we see that trading costs more than triple the losses to 23.9 basis points per day. Moreover, we observe reliably negative gross and net performance in all years but 1992."
They talk about lottery and other gambling addictions and mention the other paper about Taiwan day gamblers which I like where "Barber, Lee, Liu, and Odean (2008) document that the introduction of a National Lottery in Taiwan coincided with a significant drop in trading volume on the Taiwan Stock Exchange".
What attracts and keeps day gamblers around for a while they argue might be a taste for gambling as well as overconfidence (I'd call it being delusional).
If you can read french, here is the report about how virtually every one loses in Forex.
Looking at other reports, we see traders with a high RR have a much higher profitability rate,
it is highly likely those high RR are not from day gamblers.
www.amf-france.org
Significant returns on that Bond index...
This was before the tiny to negative euro rates, now the yield is 0.41% with an average life of 8.29 years.
And risk of default is probably higher now too...
Forcing every one to leverage (free money) and buy speculative equities, what could go wrong?
The publication about professional day gamblers during the golden era of day trading in 1998-1999.
www.tandfonline.com
"The most profitable trader made more than $197,000, and the least profitable trader lost more than $748,000. The average gross profit for all traders was more than $8,000, whereas the average net profit was about –$750. 2/3 of the firm day traders lost money."
The study where day gamblers were profitable for 3 months:
www.nuff.ox.ac.uk
The "big boys" that do not make any money day trading like every one else:
www.tickbytickdata.com
Short version of the paper on Brazilian day gamblers:
papers.ssrn.com
Amazing entreprise.
"Bbb... But Rentec made 66% a year".
They run super computers and dozens of top PHDS analyse TBS of data.
And rentec didn't make money with TA future prediction, they actually underperform the market very much but their giant diversification has let them access much cheap leverage which gave them huge returns, and they also have very low execution costs probably, they got a tiny edge but they scale it massively.
Oh, and rentec holds positions for 2 days.
All according to a co-founder.
They say they do some HFT and some positions are held 1-2 weeks.
As a quant trader (1 to 3 hours holding periods himself) says about retail day gamblers in a recent video "If you do not understand exactly what edge you are exploiting it is almost certainly like with poker: if you cannot see the patsy at the table you are the patsy".
