Funny how there’s always a question like this in a forum somewhere when the bulls are raging the hardest.
Science and data confirms clearly, over the long-term the average joe loses. Many people misunderstand their market gains with stock picking was actually sheer luck and the right circumstances materializing and not because he/she is so good at it. Or do you think me having NVDA since 2015, because being a gamer, NVIDIA always had and has the best graphics cards, was because I’m the greatest stock picker alive and predicting the AI boom? Hell no.
This is also what I think, that’s why I don’t believe it fully
If you have an automated way and you are fast enough, you might try to make some money there as well. No idea how many microcaps they can find profitable, but who knows?
I would question this a bit as well. The big firms can still have many traders each making smaller bets and many many small wins, make a big win again.
Personally I think people with the right skills and risk management could come out ahead (esp when they target the less scalable area of the market), it’s one of the most classic alpha generator.
(edit: tho haven’t read the book and might be more med/long term momentum strategy than what OP is interested in, iirc some of the stockpickers in this forum were doing similar momentum strategies?)
Read some good books (covering the theory like how to do proper backtesting, how to stay market neutral, avoid over fitting, taking transaction cost into account etc.)
(asking chatgpt, got recommendations for e.g. “algorithmic trading” from Ernest Chan, I’d try to read stuff from actual quants or academics)
Backtest your algos and see what works, it can be a cool hobby. Personally I wouldn’t dismiss it out of hand (that said if you’re good at it, probably better to be hired/paid for it, you don’t risk your own money and the pay is rather high).
I have watched the video and I am well aware of the fact that most traders lose money. That however doesn’t mean that the ones that don’t simply are gamblers. The barrier of entry for trading is very low (especially with neo brokers).
Again, I can just take an example I know something about. In language learning, between 1-3% reach a C2 level of fluency in a language. C2 is known as “native-like proficiency” or “mastery” (in vocab, use of language, reading comprehension and speaking correctly - not including accent). If one would look at that statistic one might think that it’s impossible to be one of those 1-3 % but here, the same low entry barrier is at play. I would even go as far as saying any adult who speaks one language can speak another (and even 2 other) languages at a C2 level, provided he does the things necessary to reach that level - and I’d go even further, talent has a much lower effect than people make it out to be (e. g. a “talented” learner may take 5y to get to C2 in Chinese, while a normal dude, doing the same (proven) study methods, may take 6y (most people would think person two would take 15y+ or never reach mastery at all)).
I of course don’t have the competency to judge how far said effect applies to day trading, but these low percentages are a bit of a mixed bag in terms of value of information.
You demonstrated you have the energy to keep studying and learning it. I’d suggest you to open a thread with the info you gathered (sort of diary) and be sure that some (most?) of us will gladly read your adventures.
I think this comparison is dangerous. It implies that success in day trading for retail investors is a matter of effort and dissciplin. While given there is sufficient time, means and discipline almost any language can be learned. So for the question: Can a bad language speaker become a good language speaker through effort? - The answer is yes
Can an unprofitable day trader become a profitable day trader through effort? - The answer seems to be no. At least I have found no research that demonstrates that.
Chague, De-Losso & Giovannetti (2020): “we find no evidence of learning by day trading” ResearchGate
Barber, Lee, Liu & Odean (2011): “our results simply do not support the rational learning models” Haas School of Business
Seru, Shumway & Stoffman (2010): “A substantial part of overall learning by trading is explained by the second type” — where the second type is bad traders quitting, not surviving traders improving. Oxford Academic
How does the research measure effort? How many of the day trader surveyed are using algorithmic/quantitive methods? My bet is that most are doing chart analysis and sentiment based trading.
Anyway as long as OP is doing good risk management and validating the strategy (why it works, what are the risk scenarios, etc) before doing it (and doing it only with small fraction of their portfolio), I’m not sure why they’re seeking validation here.
Iirc it was pretty common for people to have a “fun” non passive allocation.
I find that this is a common trait in many/most people: outside validation brings them confidence. They would do things they’d never do on their own because someone else told them to do them. A good part of leadership/decision making, in my life, is saying it’s ok to other people so that they dare to move forward and do what needs be done.
I would expect, but may very well be wrong on that, that people who don’t need validation and are confident in their own assessment occupy both ends of the spectrum of day trading (that is having positive results and catastrophic ones). While that opens the possibility of truly catastrophic results by going stubbornly deeper and deeper, it also opens up the small window of people who can actually be successful.
Not needing outside validation also minimizes regrets, which helps with discipline. I find it easier to keep a cold head when I’m the only person I can blame and I really can’t nourrish the thought that I have been deceived by bad advice.
I would not try my hand at day trading if I needed outside validation to do it.
I’m more of a “if everybody tells me to go left, I’ll probably go right” kind of persons. I hope this is not true for the original poster of this thread as it seems most here are telling him to not get too excited about day trading. On the other hand, this thread has had a lot of entertainment value!
I understand effort here is defined in terms of just building enough skill through disciplined learning and doing.
E.g research suggests, that an unprofitable recreational poker player can become a fairly profitable recreational poker player through enough effort (as defined above) - while apparently increasingly difficult.
But that seems not to be true for day trading.
DT yt channels suggest that just putting in the work will eventually yield results. But for this there seems to be no evidence. At least i havnt found any.
I’ve talked to an older American gentleman in another forum, he’s been investing for years (decades) but said his best thing was buying nVidia early on, as his grandson told him “they make the best graphics cards”. I even wrote about it here a few times. I’ve been a gamer forever, sadly not even broken the 5 year mark in investing. Other than that, come join us here!
I’m also like that, though I try to get better. That makes us very easy to manipulate. My family knows something about it.
Best is to not care one way or the other and also be able to do the thing we think is best even if people we dislike/whose judgment we distrust came to the same conclusion (potentially for different reasons). It’s a perpetual training exercise.
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