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10 year old paper on forex trading. 85% of losers here. > The average trader is in the dataset for almost exactly six months (181 days). This is the amount of
by dist-epoch 6mo ago
10 year old paper on forex trading. 85% of losers here.
> The average trader is in the dataset for almost exactly six months (181 days). This is the amount of time between a trader’s first and last trade. About 25% of traders leave the sample within the first 46 days, while 50% of traders exit the sample within 155 days. Of the 181 days on average between open and close, traders are actively trading on an average of 50 of those days. The average trader has an equal-weighted return per trade of -0.035%, and very few traders quit while ahead. That traders have such small average returns per trade is not surprising given that the median trade is open for only 16 minutes, as can
be seen from Panel B. Only 16.2% of traders are profitable upon exiting the sample.
https://www.nber.org/system/files/working_papers/w22146/w22146.pdf https://www.nber.org/system/files/working_papers/w22146/w221...
It's well known in the industry that about 90% of traders drop before 1 year.
> But that's far from representative for most financial-market participants.
I specifically mentioned "bettors" - day traders/speculators, not long time investors. Two different segments.
- JumpCrisscross 6mo ago> specifically mentioned "bettors" - day traders/speculators, not long time investors Forex is zero sum before fees and negative sum after. It’s distinct from capital markets. I wouldn’t extrapolate losses from FX.
- dist-epoch 6mo agoIt's the same loss percentage for stocks day trading. The loses do not come mainly from the zero sum/fees, they come from the lack of alpha. > Depending on the source, only around 3% to 20% of day traders make money. But that 20% estimate probably has as much to do with the time period studied—the dotcom bubble. It's hard to know for sure, but it's probably fair to say that up to 95% of day traders lose money. https://www.investopedia.com/articles/active-trading/053115/average-rate-return-day-traders.asp https://www.investopedia.com/articles/active-trading/053115/...
- JumpCrisscross 6mo ago> same loss percentage for stocks day trading The Investoperia article cites three sources for that claim, the second which claims one third [1]. One fifth to one third is more in line with what I expected. It’s also a range materially higher than 5%. Broadly speaking, you’ll see 90/10 to 95/5 in zero-sum markets like FX and derivatives, and 80/20 to 70/30 for capital markets. [1] https://www.tandfonline.com/doi/abs/10.2469/faj.v59.n6.2578?casa_token=44VQKX7XLX4AAAAA:Z-ejrSFFQhAmUARf8RA_fUJNURf8tTKEbXkMJbDBsBT0hAf2mC6NKkjRgKy861gSWQ9SO8nX7TzY4g https://www.tandfonline.com/doi/abs/10.2469/faj.v59.n6.2578?...