/biz/ - Business & Finance

>>678200
>I never said anything about changing markets
Did you even read the study? These were traders front-running executions in a highly-specialized, limited access market. According to the study, they had real-time direct access (as in actual voice communication) with on-floor traders. That's not something that retail brokers, including IB, offer.

I'm not sure that you're a credible advocate for your position when you can't even be bothered to read the evidence you cite for your case.

Thanks for your posts though. The study was an interesting read, even though it was completely inapplicable to our current discussion.

>>678160
>half were still profitable
You can't assume the lower commissions exist in one market just because they've changed in another market. Not all trades have the same execution structure or cost.

Furthermore, even disregarding commissions (which you can't do), a 50% profitability result is hardly worth writing home about. Its literally a coin flip, at best. It should be obvious, but betting on a coin-flip odds is not a viability investment strategy.

>the study was designed to determine the viability of day trading
How can you decide the viability of an investment strategy without comparing it other strategies, on either an absolute or risk-adjusted basis? Wealth is relative. If I'm making pennies while others are making dollars, I'm getting poorer. That's not a viable strategy, even though I have more pennies than before.

That the author's failed to include this analysis in their study is therefore a relevant and valid critique.

>>678144
Thanks for all your contributions to the thread! You've provided so much helpful information and advice. Your incredible words of wisdom will surely change someone's life.

>>678118
>In other words, most were profitable before the unusually high commission by todays standards and half were still profitable after the high commission.
Taking fees out of the equation is completely inappropriate and unrealistic. Lots of high frequency strategies look good in a white paper, but fail because their uneconomical in the real world.

If the strategy described in that study is still viable, and if the applicable commissions are indeed now lower, let's see the proof. I can only offer critiques on a study that exists, not one in your head.

>Also, the study isn't intended to compare strategies
Then what's the point? Aren't we all trying to determine the optimal approaches to growing our wealth?

Saying that "X works" without doing a risk-adjusted analysis and without comparing it to available alternatives doesn't really advance the discussion.

>>678120
>because nobody would lie on the internet!
https://archive.moe/biz/thread/301031
Hello and welcome to /biz/.

>>678036
>If you think these things are comparable
They're not comparable. You get free drinks when you play roulette.

>there really AREN'T any alternatives to making as much as you CAN make daytrading
Citation fucking missing. Because the studies say the profits of successful day traders are only marginally above index benchmarks.

>>678061
>Here's a study regarding profitable day traders:
"Of the 69 bandits with one or more round trips, 52 were profitable before and 35 were profitable after commissions of $25 per trade"
Only 35/69 profitable after commissions.

This is without making any risk-adjusted comparison to other strategies, which the study doesn't even attempt.

>>678041
>just my way of identifying him
Congrats Sherlock. I didn't trip earlier in the thread because my identity isn't relevant to my arguments.

I only put on the trip when someone argued that my argument was suspect because I am poor. As a point in fact, I am not poor, as you know.

>>678016
I've already said (many times, in fact) that successful day traders do exist. Successful lottery winners exist too. There are successful roulette players too.

You seem to think this somehow validates your world view, when in fact it does the opposite.

If your only choice in life were to day trade or burn your money in fire, then you should choose day trading 100% of the time.

Fortunately, other alternatives do exist.

>>678022
>implying that people in Taiwan day trade any differently than anywhere else in the world

>>677989
I already said above that taking a long shot makes sense when (a) the potential gains outweigh the likelihood of failure, and (b) there are no superior alternatives.

>I know its a long thread, but try to keep up.

Day-trading doesn't pass this test both because the gains are statistically unlikely to outweigh the risk of failure (according to the studies) and because proven alternative investment strategies exist that provide a superior risk-adjusted return.

There is literally no reason to day trade, except for the entertainment value.

>>677961
>We're young, we got plenty of time to bounce back, ain't no reason not to take the long shots now
Actually there's a very good reason not to take long shots now. All wealth is relative. If you gamble away the wealth you make in your 20's, you're going to be ten years behind your peers who followed a sound investment strategy. You'll literally never catch up with them. And thanks to compounding, that gap grows over time. So now you're stuck in a lower wealth tier, with a poorer quality of life. Statistically, this means more health problems, more stress, more work, and shorter lifespan.

Doesn't sound like a great strategy to me.

>>677971
>He caught a bull market and made some money so he's right about everything ever about investments.
I've been investing since 1994, which includes two major crashes. Where is your God now?

>>677960
>You're so full of yourself.
What's funny is that throughout this entire thread I haven't made a single argument based on my intelligence, my wealth, or my experience. Everything I've said -- every point I've argued -- comes from peer-reviewed academic studies.

And all you people can do in response is hurl ad hominem attacks.
>And that's how I know I've won this debate.

>>677942
I don't care what anyone does or doesn't do with their money. Doesn't change the fact that there's good advice and there's bad advice.

If the intelligent browsers of /biz/ can drive off the day-traders like we're doing with the crypto freaks, then the board quality will rise.

Its a struggle, I admit, but it can be satisfying at times. Take this thread for example: there hasn't been a singe cogent argument made for day-trading. This shows the good guys are winning.

>>677933
No, I won't. I'm not going to accept the unsubstantiated, anecdotal report of an anonymous newbie day-trader to dismiss the results of multiple peer-reviewed academic studies.

Anyone who would should take a long look in the mirror.

>>677908
>Why try?
Given the success rate of 10%, day trading would still be a smart strategy IF the marginal gains were 90% or more than other alternatives.

People take correctly a short against long odds when the potential gains are huge. Or, when they have no other choice.

Neither applies in the case of day-trading. The potential gains are proven to be marginal, at best, and alternatives are readily available to all investors with an investment horizon longer than 12 months (which should be everyone not suffering from terminal cancer).

So what's your excuse? Cancer?

>>677857
Statistically speaking, we would expect to see 10% of day traders with performance above the benchmark. That the the study found a small group of successful day traders is perfectly in line with this prediction. You're grasping at straws.

>>677848
>just go to youtube
kek
>Daytrading is not for the timid or weak
double kek

>>677878
>>677882
No one said successful day traders don't exist. They are a statistical inevitability, just as they are a statistical rarity. Please stop making specious arguments. The adults here are going to make you look foolish.

The question is whether day trading is a viable strategy, compared to other alternatives such a long-term low-cost index investing. And what we know is that day trading underperforms 90% of the time, and that even in the 10% of cases the gain is margin. Simple math makes that a patently sub-optimal choice.

Can't argue with math.
>But I bet you guys will try.

>>677770
>You're one of those morons who thinks the stock market is a casino.
I know quite well that the stock market isn't a zero-sum game ... over a meaningful period of time. This is because the stock market is comprised of companies, the aggregate value of which can be increased over time through technology, efficiency, and growth in global GDP.

However, in the short term, the markets do function as a zero-sum game because short-term stock prices can't be reliably influenced by macro-economic factors. This is the primary reason why day-trading, swing-trading, and technical analysis are all failed strategies.

The two primary factors influencing investment performance are (1) time in market, and (2) fees. Day-trading is disadvantaged in BOTH these metrics, which explains why the success rate is so low.

I know its popular to think that effort, willpower, research, and skill positively affect everything in life. They don't. You simply cannot become better as guessing random outcomes.

Now you can get all mad about it, and kick and scream that anyone who disagrees with you is an idiot. But facts are facts, and the studies don't lie. You can't change reality no matter how much you whine. And the reality is that day trading is a losing strategy.

>since you're obviously too poor
kek

Centrist free-spirited millionaire, checking in.

>Thought I'd be more liberal. Oh well.

>>674020
>basis points
A basis point is just financial-speak for 0.01%. Its merely a unit of measurement. One hundred basis points equals 1% (just like 100 cm = 1 m).

>edited for typo

>>674020
>basis points
A basis point is just financial-speak for 0.1%. Its merely a unit of measurement. One hundred basis points equals 1% (just like 100 cm = 1 m).

>>673611
>Target retirement funds y/n
Perfectly fine until (a) you develop the need to fine-tune your risk allocation by purchasing individual funds, and (b) your portfolio is large enough to buy individual funds without incurring incremental fees.

However, be very wary of the fees charged by the fund. All-in-one funds have a bad reputation because some fund families charge significantly higher fees for the fund than the average of its constituent funds. I can't speak to any other fund families, but I've personally run the numbers and can attest that Vanguard's all-in-one funds are fairly priced.

>>673648
>my taxable account is big enough that in an emergency I would just sell stocks if I needed cash
The point of an emergency fund, in part, is that you never want to be forced to liquidate your invested equities. First of all, it might be a terrible time to do so, such as the bottom of a bear market. Secondly, selling equities triggers tax consequences. Gains are taxable, meaning you have to actually liquidate more than you need to cover the incremental tax liability. And even selling a loser is a lost opportunity because you might have been able to more efficiently use that loss in later years to offset gains.

Furthermore, dipping into your invested assets to cover short-term needs is going to make a dent (thanks to lost compounding) in your long-term savings plan.

I understand that putting a larger chunk of cash aside comes with an opportunity cost. But because its a known amount, you can plan around it. Which, again, is part of why you want an emergency fund: so that short-term problems don't derail your long-term plans.

>>671883
Not knowing more about your situation, I'm reluctant to make a specific recommendation. I'm a big fan of the model portfolios described on the bogleheads and Vanguard websites, but you're not starting from square one. I suggest you find the bogleheads wiki article for your country/region and see if there are any recommendations there that make sense to you.

Because facts.

>>671838
I wouldn't be at all comfortable being so over-weighted in tech and biotech. Even if you know the field well, that doesn't mean you can accurately predict tops and bottoms. Consider yourself fortunate to have performed well in the short-term, and now consider diversifying into a much broader portfolio.

No one knows what the next hot sector is going to be. Last year's hero may be this year's zero. Or not. Which is why we diversify.

>>671842
>the remaining 5%
No worries here. I have a play money account too, that also makes up about 4% of my gross portfolio. As long as you're disciplined with the bulk of your wealth, I don't see much harm in taking bolder chances with a small piece.

>>671735
Through a brokerage you're looking at purchasing ETFs, not funds (exceptional cases aside). Vanguard's ETF fees are already extremely low, in most cases equivalent to the Admiral class of their traditional funds.

As for the benefits, its really quite simple: lower fees. Fees are the single-largest influence on your long-term investment performance.

https://investor.vanguard.com/mutual-funds/low-cost