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Can Day Trading be profitable for retail?
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View Poll Results: Can Day Trading be profitable, consistently, for retail traders
Yes 72 72.00%
No 13 13.00%
Can't say 15 15.00%
Voters: 100. You may not vote on this poll

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Can Day Trading be profitable for retail?

  #71 (permalink)
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artemiso View Post
This means that only 21% of trades taken by accounts categorized in that group make positive gross PnL.

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

These are extraordinary posts. Thanks for providing exact quantitative data on the question.

It's no wonder that such a small percentage of retail traders will succeed, with stats like this. Of course, there will be some that do, just not many....

This puts it well, and is hilarious, too:

artemiso View Post
The reason is quite simple really, I agree with @Anagami. Daytrading is like being a stay-home writer, most people lose money and it's not that the system is rigged against stay-home writers, it's just good literature is a very competitive and efficient market.

Bob.

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  #72 (permalink)
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artemiso View Post
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?

I'll never be a 1%er, but being a 21%er ain't half bad

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  #73 (permalink)
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retail is at a YUUUGE advantage .....

try moving big money...is not so easy. small money but taking consistently off the mrkts....much much easier. simple math think u can make as much with an acct size 10 or 20times more than current. it may not be that easy. well just my small mind talking at OVN (:

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  #74 (permalink)
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wldman View Post
I read all of your posts that show up in the log. There are a few names I scan for as sources of specific and valuable insight. @artemiso , top of that list.

Me to

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  #75 (permalink)
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Hey @artemiso I just noticed you've finally become a futures.io legend. I've never understood how half the people here were 'legends' (aka "red") but you weren't. Being a member of the club has more value now that your in it.

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

So, basically, if you want to make $100k you have to be willing to lose $100k and you've got ~50% chance of either outcome? and if you try to alter those odds, in general, the probability is that you will lose less than $100k most of the time?

Nate
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  #77 (permalink)
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michaelleemoore View Post
I'll never be a 1%er, but being a 21%er ain't half bad

That's not artemiso meant. He said gross profit. I bet the majority of the top 21 percentege is loosing to commission.

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  #78 (permalink)
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artemiso View Post
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?

To be clear, @artemiso's data shows that 21% of small-account trades make money (pre-commission and fees) -- or 79% lose -- not 21% of small-account traders.

With this data, a given trader in the small-account group could have 100% profitable trades (not too likely), or 0% profitable trades (probably some do.) The data does not group the trades by account, for reasons stated. Most traders will have something in between, but the overwhelming bias will be toward losses, which is the best takeaway from this. (Someone doing no better than the average for the group will have only 21% winners, which is not a good number. There may be outliers who do better, possibly much better, but probably not many.)

Also, these are gross P/L numbers, without commissions and fees, so the actual positive results will be less. However, assuming that most of the 21% of winning trades will be net losers after fees is not something that is in the data, and individual fees will be different for different trades. Certainly the net after-fees number of winning trades will be less by some amount.

This does not show that profitable trading is impossible for the small trader, but it does show that it is difficult and seldom achieved. This is consistent with industry lore (it is often said that "95% of traders fail") and with the general experience on this forum. Traders need to understand the probabilities of what they are attempting, and these are real numbers that address that.

Bob.

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  #79 (permalink)
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also artemiso is quoting figures for fx only for his brokerage. I am not sure the numbers can be extrapolated to cover the entire universe of day-tradable instruments over all brokerages.

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  #80 (permalink)
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Oh my...



jefforey View Post
also artemiso is quoting figures for fx only for his brokerage. I am not sure the numbers can be extrapolated to cover the entire universe of day-tradable instruments over all brokerages.

FFS can't you see the forest through the trees.

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