Think of your business in trading like a sandwich shop in a local market. If you are a sole proprietor and you own a great sandwich shop you are going to be competing with the local subway stores in your area... all 100 of them. They have leverage, they have computer systems, they have a human resource strategy, they buy bread and meats cheaper/faster/fresher than you can.... yet.... you can still survive off selling sandwiches.
This means the local sandwich market is rigged. They run flash advertising on TV... 5 DOLLAR foot long... you can't compete with that.....
You can survive by finding your niche. Find out where your place is in the market and exploit it. Don't compete with Subway on their own turf. You will not survive.
With regards to HFT and Algos, use them to your advantage. LOL, I bet if you entered a trade on the GC (like last Friday) short prior to the market opening because you were looking for a "small" pullback just to find yourself in the green by 28 handles 5 seconds later you would be telling us how helpful they are.
This is one of the best periods ever for day trading.Very often there is money left on the sidewalk for traders to pick up. Money coming from the FED. Straight up trends during the day like last week with strong gains. Several day traders I know made large profits last week. Price patterns also work much better than 5 years ago. I have no idea why some people are complaining other than the possibility they lack the skill and they think daytrading means easy money without any work to be done.
Those would be the firms that recruit the brightest quants right out of top-tier univerisities, right?
I think even the most successful day traders usually retire into writing and teaching about trading (like Jim Dalton) and longer term trading as they age, with the exception of Al Brooks and a few unknowns.
... but it says nothing of why they succeed or fail. Day trading firms may fail due to reasons other than day-trading e.g.: poor leadership, poor management of technical details, under capitalization, etc. So, what is it about the activity of "day-trading" that makes firms fail? The answer to this question may get at the core of this thread's discussion ...
So we are none the wiser, and we don't actually know if over "8 years more than 85% of the daytrading firms went bankrupt" and "more than 96% losers". If we had accurate numbers and knew exact why they fail, then we could move forward.
Under capitalization is unlikely considering the leverage large firms use.
If a day trading firm failed because of poor management chances are it would be related to the day trading business, such as in ineffective screening and educational training for hiring potential traders. It is very difficult to gauge performance of how good any potential day trader will be prior to hiring them. This is an extremely difficult business where any negative personality or cognitive impairment can lead to catastrophic losses in a very brief period of time.
Generally, the appeal of daytrading is more in the challenge and adrenaline rush more than the potential for a long lasting career.