l*****e
发帖数: 3343 | 1 Among all day traders, nearly 40% day trade for only one month. Within three
years, only 13% continue to day trade. After five years, only 7% remain. For
heavy day
traders, survival is much more persistent. Only 5% drop out within one month
, while
survival rates at three and five years are 36% and 23% respectively.
In summary, these analyses provide strong evidence that traders learn about
their
own ability by trading. Those who profit are less likely to quit, though the
effect is most
pronounced for those with steep losses.
The most experienced day traders have the best performance. This is not at
all
surprising as this analysis clearly suffers from a survivorship bias.
However, what is
informative is the observation that experienced day traders – those with as
much as ten
years of experience – still register losses. This suggests that day traders
continue to trade
even when they receive a negative signal regarding their ability.
Unprofitable day traders represent nearly a quarter of the day trading
population, but represent over half of all day trading activity. Thus, many
day traders are
remarkably persistent in their day trading activity despite a history of
losses and do not
appear to be rationally learning about their ability. | l*****e
发帖数: 3343 | 2 So why do investors take up day trading and why do so many persist in the
face of
losses? We consider three broadly defined answers to this question. | l*****e
发帖数: 3343 | 3 First, it could be the case that day traders do not have standard risk-
averse
preferences; they may be risk-seeking or attracted to investments with
highly skewed
20
investments, such as lotteries, that have negative expected returns but a
small probability
of a large payoff as suggested by Kumar (2009).
Second, day traders may be overconfident in their prior beliefs about their
abilities and biased in the way they learn. Several papers
Third, day traders may trade for non-financial motivations including
entertainment, a taste for gambling, and the desire to impress others | l*****e
发帖数: 3343 | 4 V. Conclusion
We test predictions of models of learning by rational traders and find clear
evidence that the decision to continue or increase day trading is influenced
by previous
day trading returns. Nevertheless, rational models of learning do not
explain all or even
most day trading. The most experienced day traders lose money and over half
of all day
trading can be traced to traders with a history of losses. Persistent
trading in the face of
losses is inconsistent with models of rational learning. So, too, is the
decision to try day trading when ex-ante expected lifetime profits are
negative. For prospective day traders,
“trading to learn” is no more rational or profitable than playing roulette
to learn. | W***n
发帖数: 11530 | 5 day traders
r gamblers
. | l*****e
发帖数: 3343 | 6 "After five years, only 7% remain "
means Day traders, only less than 7% has significant profits over the long
run.
This is the hard truth. | l*****e
发帖数: 3343 | 7 He ascribes his own success to being able to recognize when his predictions
are wrong.
I'm only rich because I know when I'm wrong.... I basically have survived by
recognizing my mistakes. I very often used to get backaches due to the fact
that I was wrong. Whenever you are wrong you have to fight or [take] flight
. When [I] make the decision, the backache goes away.[54] George Soros |
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