Trader Makes $4.2 million from $27,000
Normally, we have to be very skeptical of so-called Gurus claiming to have made an enormous fortune from day trading stocks.
However, this instance has been vetted by Forbes which implies that there is some truth in it.
According to Forbes, a trader named Steven Dux, of Chinese origin, has raked in a massive fortune of $4.2 million.
Steven Dux learnt the ropes of trading from another trader named Tim Sykes, an authority on penny stocks.
A careful study of Steven Dux’s website reveals that his modus operandi is to short penny stocks.
He has also claimed that all of his account statements are verified and genuine.
He has revealed his entire game plan in a youtube video.
Dalal Street Traders are also minting money
Traders in Dalal Street are also raking in humongous amounts of money.
A trader named Jignesh Shah, who is a practicing doctor, has claimed to have earned an eye-popping return of 58% in the past 12 months from trading futures and options.
He is a three time winner of Zerodha’s prestigious ‘F&O Challenge’ which obviously means that he knows what he is talking about.
Compleleted one year with zerodha.
'Thank you Zerodha' for converting me from casual trader to become professional trader…
By trading only in options, I got absolute return of 58% in 1 year on my capital.
I also won third 60 days challenge. pic.twitter.com/Tqkk19YVjr
— Jignesh Shah (@niftydoctor) August 10, 2019
Yet another trader named Mitesh Patel has claimed to have earned a post-tax return on capital of 220% in 16 months.
He has stated that his target in FY 2019-20 is to achieve a mind-boggling return of 300% after taxes.
I started as a full time F&O trader in Dec 2017.
In two financial years after paying taxes my net return on capital is 220% (462% before taxes) within 16 months.
This financial year my target is to achieve 300% compounding overall after paying taxes.
— Mitesh Patel (@Mitesh_Engr) March 30, 2019
A trader named Ronak Unadkat has claimed to have earned 80% return in just 4 months.
Started with 25 lacs this financial year. Now, sitting on around 21 lacs profit. Secured more than 80% return in 4 months. Total capital becomes 46 lacs. Now, will divide my capital in 2 part ( 23 lacs each for positional and intraday). Open separate account for positional trade https://t.co/MTPwxKtMMk pic.twitter.com/u1BnnLpbY4
— Ronak Unadkat (@Ronak_Unadkat) August 8, 2019
Other traders also customarily post screenshots of their massive MTM gains.
— P R Sundar (@PRSundar64) May 30, 2019
This tweet is dedicated to a old man who called me as beggar and his bunch of bullies, can they make this kind of money in their life time?
MTM profit of more than Rs 1.2 Crore. pic.twitter.com/tPpeGnvDtQ
— P R Sundar (@PRSundar64) April 5, 2018
I am a day trader and I trade with tons of flexibility and fastest finger first. For those who don't understand day trading, kindly just watch my mtm screen and enjoy. Those who want to learn what I do and then follow, then https://t.co/aLmyp9aqn5
— CA.Rudramurthy BV (@iamrudramurthy) August 27, 2019
Small profits of Rs.2,74,298 for the day!
Today no calls as we have so many Twitter heros and critics who will give you all levels and trading calls!
What do you all say? I will only show my mtm? What do you all say?
Retweet & show the screen shot to all our Twitter heros.. pic.twitter.com/ny0T2OeiFF
— CA.Rudramurthy BV (@iamrudramurthy) August 28, 2019
Altered expiry trade strategies slightly and reaped fine MTM of 2.25 L. It demands more than 100 punches with ROI ~ 2.25% – CapitalZone https://t.co/gcwgZjHmek
Happy Decoding the Trade logs!!! pic.twitter.com/s5ssjDfnyV
— Jegan (@itjegan) September 5, 2019
97% Day Traders lose money: Academic study
However, a study conducted by three academicians projects a situation which is different from what is seen in the MTM screenshots.
According to the study, a whopping 97% of day traders lose money and only a handful are able to eke out a living.
“We show that it is virtually impossible for an individual to day trade for a living, contrary to what course providers claim. We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world, and persisted for at least 300 days: 97% of them lost money, only 0.4% earned more than a bank teller (US$54 per day), and the top individual earned only US$310 per day with great risk (a standard deviation of US$2,560). Additionally, we find no evidence of learning by day trading,” the academicians have stated.
Study shows that it is virtually impossible for an individual to day trade for a living, contrary to what course providers claim
— GuruLeaks (@Guruleaks1) September 12, 2019
This is corroborated by another study conducted in the Taiwan stock market.
“Less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees,” it is said in a grim tone, implying that 99% traders are wallowing in poverty.
The only decent argument for day trading that I've ever heard is that it's not a substitute for working in another job and investing in index funds, but a substitute for much more destructive forms of compulsive gambling.
— Mike Bird (@Birdyword) September 13, 2019
‘KISS’ strategy works best for trading
According to some experienced traders, the reason the masses fail is because they try complicated strategies instead of keeping it simple.
In contrast, Hedge funds use very simple strategies and are able to consistently generate impressive returns through trading.
Many sophisticated hedge funds which generate humungous Returns deploy very simple Strategies such as those based on simple Moving Averages and greatly outperform those who look for several indicators to perfectly line up before taking a Trade. The tools do not make the Money.
— Pran Katariya (@KatariyaPran) September 15, 2019
Ultimately Successful Trading boils down to placing many small well thought out bets on Price movements with the belief that over many Trades the gains will more than pay for the losses irrespective of the outcome of any one or series of Trades
— Pran Katariya (@KatariyaPran) September 15, 2019
After studying everything from moving average to market profile, I also came to conclusion that simple system work best. Yes no doubt few system has edge over other but efforts required behind that complex system are too high.
— san (@sanstocktrader) September 15, 2019
Simple system and set up works the best! ?️♀️ jaha jayada dimag lagaya wahi loss start ?
— Akash Kumar (@AkashTrader) September 15, 2019
The best traders are not geniuses they are survivors. They last because they keep the ego & emotions in check. Trading is a business it is not a reflection on you personally. Keep losses small. Let your winners run.
— Sunrise Trader (@SunriseTrader) August 14, 2019
Most traders miss the point of having a strategy with rules. It's not to find a magical method that works all the time. It's about operating within a certain framework so you know what to expect good and bad and how to respond. It's about establishing a circle of competence.
— Mark Minervini (@markminervini) June 11, 2019
The secret of trading is not being the smartest one, it is being the disciplined one
— Jegan (@itjegan) May 30, 2019
This theory is well explained by Adam Khoo, the motivational speaker.
Adam Khoo has advised that we should trade like a ‘Casino‘ or the ‘House‘ and place multiple small trades instead of taking the risk on one big trade.
He has also explained the ‘Habits and Trading Psychology of Winning Traders’ and how novices can master them.