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Do Individual Day Traders Make Money?
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Do Individual Day Traders Make Money?

  #1 (permalink)
Elite Member
Auburn California
 
Futures Experience: Beginner
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Do Individual Day Traders Make Money?

The question everyone wants answered. Well, at least the newbies I found this reseach paper online that gives you the cold hard facts. Interesting read:

http://faculty.haas.berkeley.edu/odean/papers/day%20traders/day%20trade%20040330.pdf

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  #3 (permalink)
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PDF attached for safe keeping.

It is 8 years old, but some good info.

Mike

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  #4 (permalink)
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More research papers on Day Trading stats

Here are some more up to date research papers from 2011,

The Cross-Section of Speculator Skill
Evidence from Day Trading:

http://faculty.haas.berkeley.edu/odean/papers/Day%20Traders/Day%20Trading%20Skill%20110523.pdf

Overconfident Individual Day Traders: Evidence from
Taiwan Futures Market:

http://www.finance.nsysu.edu.tw/SFM/program/FullPaper/035-1144821883.pdf



From 2005,

The Individual Day Trader:

http://faculty.chicagobooth.edu/juhani.linnainmaa/DTPerformance.pdf



If you do a Google search on Day trading Profitability, research, PDF you will find a lot more. The papers seem to pretty much confirm what the traders on this forum will tell you. Most people lose money and the ones that stick with it and survive make pretty good money, but they are in the slim minority.

I have read a lot of commits from newcomers that are frustrated and just don't believe it is possible. No one said it was probable, just possible....

I think the research here is a good reality check for individuals considering taking up trading, but also a good encouragement for those that don't believe it is possible.


I found a quote from one of the research papers humerous as it rings so painfully true, "In aggregate and on average, trading is hazardous to one’s wealth".

I have been at this for over 1.5 years, and I am still just a babe in the woods, but I do see the light at the end of the tunnel as my trading has improved the longer and harder I work at it. Hopefully, I will become consistant and be in that top 2-5% one day. As I have friends that support their family's via Trading I know it is possible with hard work, determination, proper sef-reflection, and most importatly sound risk management and position sizing relative to your account balance (I also factor in volatity). I'll repeat that, sound money management! I have to repeat that to myself often..... If you cannot swing proper risk and position sizing with your account trading futures move to spot forex. If you can't swing that on spot forex, get a job or quite trading because you will lose everything without proper money management. Goog luck to all.

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Here is a summary of the article

Taiwan has lots of day traders (97% of day traders are individuals, not institutional); day traders are about 20% of the daily volume. Some of these day traders are intense, as 1% of the day traders account for half of the day trading volume. More than 80% lose money, but a small group persistently outperform. The outperformers make about 62 basis points a day (gross), which is enough to cover trading costs.

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