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Can Day Trading be profitable for retail?
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Created: by jefforey Attachments:6

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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?

  #81 (permalink)
edison new jersey
 
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wldman View Post
FFS can't you see the forest through the trees.

I can't. And if you are making such wild assumptions and extrapolation then I could only guess how your day-trading is going.

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  #82 (permalink)
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This is not for you.

Find a game you can play and try to find some happiness in life. I will take every penny you ever trade in my markets.

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jefforey View Post
I can't. And if you are making such wild assumptions and extrapolation then I could only guess how your day-trading is going.


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  #83 (permalink)
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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.

Chances are, his figures are representative, though.

Which means you can expect a similarly-shaped curve at other FX brokerages. That should give you an idea.

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  #84 (permalink)
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jefforey View Post
That's not artemiso meant. He said gross profit. I bet the majority of the top 21 percentege is loosing to commission.

I know what he meant. Was just trying to bring a little levity to the discussion. But you know what, you don't want levity, or facts, for that matter. You don't seem to want to make money, either. Still, I wish you the best of luck.

I'm not quite up to @wldman standards today, but the figure just below is not bad for a guy sitting in his family room, watching the Olympics and pushing the button every so often. I'm a scalper, so my commission costs are generally about 15% of my gross. This figure is after commission, which are just part of doing business. If you can't triumph over your commission costs, you should do something different.

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Also, these figures are from February, and are a little under my long-term average for success, but here you go:

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  #85 (permalink)
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jefforey View Post
I can't. And if you are making such wild assumptions and extrapolation then I could only guess how your day-trading is going.

Nevermind. I see others have tried to help you understand but you won't listen. Go do something else. You'd only lose all of your money. This isn't for you.


Last edited by TheShrike; February 15th, 2018 at 11:35 AM.
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  #86 (permalink)
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The original question was framed in terms of the thread starter's experience, and his views on the factors that are against the retail trader: essentially, costs and slippage.

There have been other threads asking this sort of question over the years. They tend to end up like this one is doing. There are many successful traders on the forum, but it is hard to be reassured by their experience if you will not accept it.

It looks like this thread will end like they usually do, which is a shame, really. But there it is.

If the question is "how?", that's another matter. It is not likely that this question is going to be answered by a post or two in this thread. Many are working on it -- some succeed and most do not. It will take some work to find an answer to that one, and it may be an individual matter that most will never succeed at.

But to repeat, if the question is, "Can a retail day trader be profitable," the answer is, yes, some can. And many (or most) will not.

Bob.

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  #87 (permalink)
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jefforey View Post
I have tried many strategies some just having one trade per day to as many as 20 trades per day. I have tried trailing stoploss types and profit target types but all of them fail to return consistently. There are 2 or 3 great months but rest of the months give away the gains. But the caveat is that if the same strategy is run by Goldman Sachs then it will be immensely profitable. And this very fact raises my doubt. Is retail day-trading a myth created by Goldman Sachs and others to create liquidity for their own trades. After all even they need a counterparty.

I've checked the original post again and just realized I had not noticed the bits that I have put in bold.

I don't have the figures at hand myself (maybe @choke35 or some other folks can chime in) but if you saw what percentage of the volume is contributed by retail Vs. institutional (I use institutional to class all non-retail), you would appreciate how misguided your premise is.

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  #88 (permalink)
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bobwest View Post
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.

This post is an important addendum to mine if you need further interpretation of the results. There's a few things I'll add to Bob's post.

1. The trade PnLs I've posted are against my firm. There's other trades between these accounts and other market makers, and between these accounts and other such accounts, which are not addressed. However most of the trades on such pools are between these accounts and liquidity providers, and it's fair to assume the other liquidity providers are efficient too.

2. As Bob explains, your account can be wildly profitable even if you have 21% probability of your trade making a gross profit. However if that's the case and the distribution remains unchanged, the probability that your account 'survives' converges to 0 as you increase the number of trades. We see that some accounts don't trade at all, but most accounts trade more than once. So it's well likely that the number of accounts that lose money on a gross basis 1 year out is higher than 79%.

3. These trade PnLs are marked out in some way, so due to trade allocation scheme and path dependence, some of these profitable trades to us are also profitable trades to our counterparties. A naive example is if our counterparty takes a trade, it moves 1 tick in our favor, we get out passively, then it moves 2 ticks in their favor; both parties are profitable in the end.

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  #89 (permalink)
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xplorer View Post
Chances are, his figures are representative, though.

Which means you can expect a similarly-shaped curve at other FX brokerages. That should give you an idea.

Yes, if in doubt, apply the no-arbitrage rule.

If there's magically a much higher win rate trading futures instead of cash FX, then everyone would be trading futures and not cash FX. Otherwise, you usually have to trade off something to get that higher win rate, be it a higher cost of entry (market data, connectivity), higher operational risk, higher regulatory burden, lower liquidity, and so on.

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  #90 (permalink)
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Over-trading is why the numbers are skew like that. Trying to play both sides of the market in one day, then getting stuck against a trend and being leveraged to the hilt is a recipe for disaster.

Anyone with a half-brain (myself included) could make money in this market the last couple years.

I would think the Fx example would be a much lower %profitability than the equities and options markets.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; February 15th, 2018 at 07:29 PM.
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