The real reason why no one makes money day trading

2021年6月10日

Why don't we ever hear of successful day traders? Why does no one make money with this activity that is advertised as easy and profitable?
Simple. As Kenny father would say: "They took our jobs!" or "Dy-tk-urr-joo!". It is very general, it goes far beyond just finance.

First of all magical robots are not going to take everyone job! These calls are more sci-fi pseudoscience nonsense.
If you take the bottom 15% that do not, or hardly get any job it's nothing new.
The "job losing" is not something new. Just like alarmists screaming the world will end, everyone will lose their jobs, it's nothing new!

Thousands of years ago:
Arabia traders used donkeys for carrying stuff. Camels too I guess. And now they use trucks. Hey actually technology CREATED NEW JOBS.
Farmers very quickly used cows or horses to plow the land rather than farmhands! They lost their jobs thousands of years ago.
How did egyptians build giant pyramids? "Machines" and elephants? Sure weren't slaves picking up 10 ton blocks on their shoulders.

In the early era of the industrial revolution people did not lose their jobs, they got more of it. 80 hours week. Crazy!
Even kids were put to work. It required people to work on these machines.
And know what? Even with this very high demand for workers, the bottom people still had no jobs.



So what did the people at the bottom do historically?
Under the roman republic and empire they were often beggars and had something called "free bread", this is the reason why roman currency was constantly getting devalued, and it contributed to the collapse but it's not the only reason.
During middle age what jobs did they do if they had no jobs? Well primarily they simply died, of natural selection.
The few that survived had a form of welfare given by the church (alm/handout) or taken from islam 2.5% tax (zakat) for the needy (note it doesn't say "the lazy").
And often, or always, the few that did survive were either beggars or "village idiots" with kids throwing tomatoes and them, and the whole village making him their victim, making jokes about him, tricking him into believing a girl likes him, throwing him in the mud and spitting on him, convincing him to walk behind the cow's butt when she's about to...

Middle ages were hard times! Especially for the people at the bottom.
We can also note that the tax preconised in islam is of 2.5%, we are far from the social welfare of demagogues, in France they go as high as 30% of GDP.
It's simply insanity. Obviously it is unsustainable in the long term. Average citizen do not understand that, and it goes slowly, like in the boiling frog story.
Most of the government welfare of France is taking from workers (via their employer so they don't see it), and then give it back to them.
The USA have decided to go even further than the world leader I just mentioned, and are now throwing stimies and benefits around.
Just like Rome where people stopped working, until Julius Caesar put his foot down, many americans have stopped working. They make more sitting at home.



To get back to day trading and other simple trading strategies, I want to remind that while beign quite simple it is not simple to the point a trained dog can do it.
A donkey can carry heavy stuff, but it couldn't operate a cashier machine, or be a day trader.
Just like to be a cashier which is very simple you do need some basic abilities, managing numbers, recognizing different buttons on the machine (or patterns for the day trader), not everyone can do it. As always, the bottom 15% can't do any of this. Society (any society) has nothing it can possibly get them to do.

Day trading, like floor trading, like market making, like basic trend following, like scalping, is all simple (enough) and repetitive average people can do it.
And they all lost their jobs 20 years ago! In some cases 10 years ago. Only the best bank traders kept their jobs after 2008 if I am correct.
Institutions need people with brains, and all the simple entry jobs vanished. Don't worry about the people at the top, they'll always have a job.
It's the "hit a nail and repeat" jobs that go away, AS THEY ALWAYS HAVE I REPEAT IT.

Martin Schwartz is a famous day trader from the 80s. He quit about 20 years ago and today is into ... horse races. Day gamblers...
It "stopped working". Back in the 90s there was a famous group called the SOES bandits, they abused Nasdaq market makers.
As Nasdaq fixed the issue, automating much of the repetitive no-brain process, the "edge" disappeared. Not sure we can call what they did legal.

Richard Dennis was a trader from the 80s, known for his "turtle" trend following strategy. A very dumb, very simple strategy, that made him insane returns when applied to commodities markets like sugar in the era where the saudis & soviets kept buying it, he probably didn't even know why the price was going up.
He really thought he discovered a holy grail (Dunning-Kruger bias), lost a lot of money and quit more than 20 years ago. Now he sells courses.
Most of his "fans" from the time, that did what he did, quit, a few adapted and made it.

You can find some old documentaries, and more recent interviews, of John "Rambo" Moulton. He is a typical (ok, maybe not typical) floor trader that made money screaming "BUY" when he heard George Soros was taking a large position, I think he also did some live stat-arb, which I would not call average and accessible to anyone. He explains he cannot possibly compete with the algos anymore, and could have tried to make money speculating but decided to simply retire as most of his career was behind him.



Sure, at some time people of average intelligence could, with regular 8 hour days, and as long as they "managed their emotions", make money with day trading, scalping, basic trend following, and more. But it has not been the case for at least 20 years. Now the only people making money these ways that we hear about are selling trading signals or courses. Please.

All simple repetitive jobs are destined to disappear. That's the way it is.
And why do so many people absolutely want to go in the dumbest trading job there is, even if it worked? Talk about a lack of ambition. I think it's rather their great ignorance, and being gullible, somehow they think a dumb repetitive job is going to make tons more money than the more difficult jobs, AND big firms won't be running algos that eat all their profits away. "As long as I use indicators and control my emotions" lmao like it's their super power, this idiotic argument that crooks throw at them to justify something that makes absolutely no sense. Like "infinite productivity because it's virtual" during the dotcom bubble, or "but it's a pile of sh*t" "ah but it has sprinkles on it".

I have an explanation. Smart people do not fall for daytrading. It's not 90% of just any group that fall for daygambling.
It is possible (even very likely) that smart people know to stay away, and the people that get attracted in the first place are gambling addicts and average or dumb people.
As if 90% of people that answer scam mails end up scammed, but the people answering the mail in the first place are already not very bright so it's really not 90% of the general population.

Just do what works... 90% of retail traders want to be a hipster. Often even if they do try they don't have the balls to hold their winners and cut their losses.
It goes their way, then comes back against them, and all of a sudden they are sweating and their head turns all red then they explode they can't help but close.
It goes against them they hold and say they are "diamond hands" and feel intense relief when it comes back to breakeven (disgusting noobs).

If you don't have the qualities required like being able to hold winners, go away, shoo shoo.
If you struggle with numbers, aren't intellectually gifted, wtf are you doing? This looks like manual labor to you? The snake oil salesman saying it's simple as long as "eMoTiOnS" just wants your money, shoo shoo.
You are allowed to invest, but go invest in low risk mutal portfolios and diversified index funds, don't aim for the hardest job in the world.
Other than that well welcome to the jungle, and good luck.

I could be much more harsh, I'm just dishing out the truth so please, day traders, no death threats.