Day Trading Becoming Unprofitable
The finance market is infamous for telling individuals that by becoming a broker, they can leave their day job and achieve financial freedom. Everybody who’s gotten rich in this market likes to say that if you educate yourself extensively on day trading, then money will immediately start following into brokerage accounts. However, studies from analytic institutions in Brazil shows that day traders worldwide lose money. This study comes from the Sao Paulo School of Economics and the University of Sao Paulo. Both institutions worked together to create a comprehensive review that showed the activity of day traders.
The Academic Community in Sao Paulo investigated twenty thousand traders. Their study indicated that 90% of the time spent day trading resulted in money being lost. It’s analyzed through the investigation that on average, only 30% of day traders operating turn profits regularly. On a yearly scale, this means day traders only make 3% profit. However, the Sao Paulo Academic Community noted they weren’t able to receive time data for players. This means the estimations could be off. The Academic Team stated: “This peculiar pattern of declining profitability is similar to what we would find, for instance, in the casino roulette, where the proportion of successful players also monotonically decreases with the number of rounds played.”
Additional Findings
The Sao Paulo Academic Study indicated that profitable traders earned such minimal amounts that average daily costs couldn’t be afforded. These minuscule results suggest that in Brazil, America, Europe and other nations, most day traders are considered broke on paper. It’s estimated that the highest earners in the field receive $310.00 a day in profits. However, minuscule day traders make less than $16.00. This is lower than the minimum wager in some countries.
The last thing that the Sao Paulo Academic Team showed in their study was that day traders wouldn’t become better at investing over time. Instead, it’s anticipated that clients will become worse over prolonged periods due to frustration or anxiety. These overall drops in the day trading finance market are because of the growing popularity in digital currency trading. Here, clients can earn thousands daily. Ultimately, those wanting to remain in the standard finance market are better to work with a banking institution than for themselves.
Tom Arran
