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What Makes Day Traders Give Up?

December 15, 2023 • Posted in Animal Spirits, Individual Investing

What trading experience makes individual day traders quit trading? In their November 2023 paper entitled “Why Do Individuals Keep Trading and Losing?”. Fernando Chague, Bruno Giovannetti, Bernardo Guimaraes and Bernardo Maciel study the life cycle of individual traders who repeatedly open and close stock or futures positions on the same trading day. They focus on gross daily profit for individuals who begin day-trading during the sample period, day-trade for at least 30 trading days and then quit day-trading during the sample period. They ignore trading costs, costs of any trading courses taken and taxes. Using anonymized daily trade data for all Brazilian day traders during 2012 through 2018, they find that: (more…)

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