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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: Mama Bear who wrote (8514)	4/22/2001 10:04:24 PM
From: Tom Hua	Read Replies (2) \| Respond to of 19633

Barb, remember statistics are based on a sample size greater than 1. So it you find the mean differs from your experience, it shouldn't come as a surprise. As a matter of fact, if the mean is 56% and yours is 20%, you're pretty close to 1 sigma, ie., part of the majority. Relax, I highly doubt it's important to anyone that majority of daytraders lose money other than those who actually lost money daytrading. For others, well just another data point that may come in handy when playing Trivia Pursuit. But let me ask others here: Is it important to you that daytraders be failures? My answer is NO, I don't care. Regards, Tom

To: Mama Bear who wrote (8514)	4/22/2001 10:39:33 PM
From: Arcane Lore	Respond to of 19633

The 56% figure is from a report by Ronald L. Johnson analyzing a random sample of 30 "short term trading" accounts at a retail day trading office - so your memory concerning the source of the report is correct. The report can be viewed by going to nasaa.org and clicking on the link "An Analysis of Public Day Trading at a Retail Day Trading Firm by Ronald L. Johnson". Note: The report is in the form of a "PDF" file. To view it, you need software such as Adobe Acrobat Reader. A free download of Adobe Acrobat Reader is available at: adobe.com Here is an excerpt from the report which mentions the 56% figure: [...] Account Performance (All Trading) This initial analysis covered all trading conducted in the thirty accounts (4,339 trades), over trading periods of between 1-10 months. As expected, all of the accounts had extremely large turnovers and cost-to-equity ratios as outlined at Exhibit C. The average account was open 4 months, had an average turnover of 278, and a cost/equity ratio of 56%. The annualized cost/equity ratio measures the amount of profit required on average equity just to pay transaction costs and break even. Few traders can absorb transaction costs of 56% per annum and be profitable on a consistent basis. Exhibit C does not appear to be included in the online version of the report.