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1) There's a spread between buy and sell prices, so after many trades, both sides can lose. 2) As there is high leverage, traders are encouraged/forced to put
by joosters 10y ago
1) There's a spread between buy and sell prices, so after many trades, both sides can lose.
2) As there is high leverage, traders are encouraged/forced to put up stop loss orders. These limit the amount you can lose on a trade, but effectively kick out a trader at maximum loss in even tiny amounts of market turbulence. Plus in times of volatility, the automatic market sell orders may get even worse prices. The market volatility kills many a trader.
- criddell 10y agoOne thing I've always wondered, if you take a day trader that was wiped out in some time span, and reversed all the trades (ie sell rather than buy and buy rather than sell), would they still be wiped out?
- sidlls 10y agoPossibly. Also, due to the nature of trading, they may have been wiped out in this hypothetical "reverse all trades" scenario before they were in reality. For example, they could have had one potent stochastic windfall early in their career that, had it gone the other way, would have wiped them out.
- 3chelon 10y agoI agree. The nature of the spread acts like entropy.