In the late 1990’s numerous day trading firms sprouted around the country and there was a great deal of discussion about the practice of day trading. However, for several reasons, there was no definitive answer to the question. Day how much do forex day traders make money may be active multiple asset classes, for instance many focus on forex trading, or commodities, but the term day trading is typically associated with trading in stocks.
There have been many studies that have concluded that most day traders lose money, but there have also been studies that documented successful trading by day traders. The data currently available seems to imply the following results. The majority of new day traders probably do lose money. At some firms a very high percentage of day traders lose money. There have also been a number of studies and press articles that have concluded that the vast majority of day traders lose money.
But there were also some legitimate studies suggesting that day traders do in fact make money buying and selling stocks intra-day. April 1998 edition of the respected Journal of Financial Economics. In The Trading Profits of SOES Bandits, Jeffrey H. 1000 shares was the maximum size allowed in SOES at the time of the study but SOES trading rules changed after 1996, removing some of the day traders’ advantages. Harris and Schultz discussed the fact that SOES bandits were able to trade profitably with market makers even though they had less information. They suggest that because bandits keep the profits and bear the losses from their trades they have greater incentives to trade than the employees of market-making firms.
Its important to note that theoretically, there is a simple reason why it is possible for market makers and traders to make money buying and selling stocks. Ask Spread and Market Makers for more on this topic. Bandits who both initiate and close positions through SOES usually lose money. Interestingly, they found that trading profits declined when the holding period exceeded one minute and twenty seconds. Bandits lost money in positions held for more than five minutes.