>I think one possible explanation is that a small percentage of day
>traders, through sophiticated models, intuition, or whatever, have
>figured out a way to take money from a large majority that start up,
>lose money, and quit. Not much different from all those "get rich quick
>dealing in real state" infomercials, although in a much larger scale.
>But I admit I haven't seen any hard data about daytraders and their
>profit/losses, beyond self-reported anecdotal evidence. Do you have any?
Too soon to know for sure. But, given fairly well-established facts like 1) 80-90% of amateur futures traders lose money, and 2) the more you trade, the worse you do (true of both professional and amateur speculators), I bet they're not doing too well. I think you're right that there may be a gang of survivors that make their money from all the novices, but whether survivorship is the result of luck or skill has yet to be established. My bet is that 90% are there because of luck and 10% because of some kind of skill, but we won't know for some time, until the professors of finance get the time to do some rigorous studies.