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>As I understand this report, it used a very small sampling of day traders
>from one office in Mass. It samples only 17 individuals of which 6 where
>making money.
It's not quite the way Ray heard it, although the sample was small. Pasted
below is the info from the report.
Brent
Analysis of Customers’ Day Trading Accounts
Thirty (30) short-term trading accounts were randomly selected for analysis
from accounts that had been maintained at the Watertown, Massachusetts
office of All-Tech in 1997 and 1998. Copies of customer account statements
had been obtained in connection with Massachusetts’ proceeding against
All-Tech.
The Project Group retained Erik Sikowitz of STZ Analytical Services in New
York, New York to tabulate account statement data and quantify trading
activity. Mr. Sikowitz made calculations of profits and losses; commissions;
turnover; and cost-to-equity ratios.
The Project Group retained Ronald L. Johnson, a Securities and Futures
Consultant, of Palm Harbor, Florida to analyze and evaluate the trading
performance of the accounts. Mr. Johnson’s findings and conclusions are as
follows:
The average account was open four months, had an average annual turnover of
278, and a cost/equity ratio of 56%. Six of the accounts were traded by two
individuals so four accounts were removed to avoid skewing the performance
analyses.
All trading in the accounts was analyzed and evaluated (4,093 trades in 26
accounts). Seventy percent of the accounts lost money and were traded in a
manner that realized a 100% Risk of Ruin (loss of all funds).
Only three accounts of the twenty-six evaluated (11.5% of the sample),
evidenced the ability to conduct profitable short-term trading.
The statistically significant day trading (2,754 trades in 17 accounts) was
evaluated. Sixty-five percent of the accounts lost money and were traded in
a manner that realized a 100% Risk of Ruin (loss of all funds)
There was only one successful day trading account in the 17 accounts
analyzed, and this account did not have trading returns commensurate with
the risks to which the account was exposed.
The most successful account in the study had limited short-term trading and
no day trading.
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