Academic researchers in Sao Paulo, Brazil have studied the likelihood of success in day-trading for a living.
The results weren’t positive.
CCN reached out to its community of day traders to ask them whether they think it’s possible for someone to trade daily for a living. This is what they had to say.
I would say for maybe 2-3% of traders could do it day in and day out. [It is] too emotional for most people.
Investment Manager at Equity Management Associates, LLC Lawrence Lepard echoed Mr. Butterfield’s stance. He said,
I would not recommend it. It is very tough. Very few make it.
Scott Melker agreed. He replied,
It is exceptionally difficult to make a living as a day trader, but not impossible.
However, there are those who believe that it is possible for people to earn their keep while trading.
Trader Max, also known as Bitcoin Jack said,
I know people can, but most can’t.
Some research claims only a very very small portion of people are profitable day trading, but I believe that research was mainly in traditional markets using the entire intersection of assets etc. Traditional markets are very much in the hands of a few large players and as such heavily controlled. You need a very sophisticated calculated approach on lower time frames to be able to lift on the algorithmically induced impulses.
Ian McMillan, CMT, shared his view. The trader replied,
I’ve met people who trade for a living, so therefore I would believe it would not be impossible. At the end of the day, clearly it is possible because people do it. People have been doing it, for all intents and purposes, for decades.
A recent study published in the Social Science Network entitled “Day Trading for a Living?” revealed that it is practically impossible for an individual to trade for a living. The findings come in direct conflict with what many trading course providers claim.
Researchers took it upon themselves to see whether the average Joe can actually make money trading. To do so, they observed the performance of all individuals who day traded in the Brazilian equity futures market (Mini-Ibovespa) from 2013 to 2015. They monitored the performance of 19,646 day traders and computed the net profit of all participants.
The researchers revealed the following results:
In addition, the researchers concluded that there’s no evidence of learning by day trading. Thus, they suggest forgetting about day trading as a possible career path.
Lastly, the researchers compared the results to the patterns usually found in playing a casino roulette. According to the study, “the proportion of successful players also monotonically decreases with the number of rounds played.”
This article was edited by Sam Bourgi.
Last modified: September 24, 2019 15:38 UTC