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Can Day Trading be profitable for retail?

  #63 (permalink)

New York, NY
 
Trading Experience: Beginner
Platform: Vanguard 401k
Broker/Data: Yahoo Finance
Favorite Futures: Mutual funds
 
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kevinkdog View Post
Not sure I fully understand your chart, but does this chart represent individual trades, or traders?

What I am getting at, if you can share it, is what percent of small traders have made money since inception, and what % of large trader have made money since inception?

If you can't share or don't want to, no big deal, just please say so.


For reference, I was talking with a forex broker a while back, and he said that 91+% of accounts were unprofitable...

The horizontal axis is gross (brokerage fees excluded) PnL of individual trades.

The vertical axis is cumulative probability, meaning probability that a trade makes profit of up to the amount on the horizontal axis.

If you see the orange curve, the cumulative probability of making $0 is around 79% for the group of traders in the orange curve. This means that only 21% of trades taken by accounts categorized in that group make positive gross PnL.

I can express this by cumulative profit of individual accounts on the horizontal axis too to arrive at the statistic you asked your broker for, but that isn't as a meaningful as knowing the outcome of individual trades because it's harder to normalize accounts as they have subscriptions and withdrawals, different account length etc.

Trimming it down a lot: 79% of trades taken by small accounts lose money (to market maker). Does this make sense?

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