Just because something is hard doesn't mean it's impossible. Day trading, like many other risky ventures, is something that is very hard and unlikely but for the few who succeed ends up being very profitable.
My interpretation of this, is that those they tracked in this study, it's not even all that profitable for the few that beat the odds while being exposed to significant risk.
What makes commodities easier to trade?
Ed Seykota has been doing it for decades:
You’ll quickly get big or go home.
(However trading on embargoed government press releases is illegal. Though rather than kidnapping Clarence Beeks on the train, you can just interview the Florida farmers yourself.)
You would definitely have an advantage in trading oil/gas futures if you had access to ExxonMobil's seismic exploration reports, for example.
[1] https://www.bloomberg.com/amp/opinion/articles/2018-10-24/it...
But the insider trading you suggest above, is predicated on having material non public information of ExxonMobil’s.
IMO the main difference is that, while in both cases you'll see a small number of successes and a huge number of failures, in startup land the net expected value is positive while in day trader land it is negative.
Imagine we tracked a group of 1000 randomly picked individuals who wanted to be a brain surgeon. I don't know for sure but I wouldn't be surprised if of 1000 randomly chosen people, only 3 people managed to succeed at it after 4 years.
But no one would ever say "Study shows it's impossible for an individual to become a brain surgeon." or imply that it's just random luck to be a brain surgeon. Instead we conclude that being a brain surgeon must be very hard and require a great deal of dedication and commitment.
The reason day trading is singled out whereas brain surgeons are not is that the barrier to entry to become a day trader is very low, anyone can try to become a day trader and many people think they can succeed at it.
The proper conclusion to take from this is isn't that the stock market is pure luck or just a form of gambling... it's that one shouldn't be deceived by the low barrier to entry into thinking that they can succeed at it. It's really hard, soul crushing work to be a successful day trader in much the same way it's really hard work to do anything in life that pays well.
Also your final paragraph seems to imply a causal relationship between how hard you work and remuneration. Hard work doesn't hurt, but luck is very important.
Some group of people are guaranteed to become brain surgeons.. the demand is there, the training is there, so it is a near certainty. In fact in the US at least, you can know very closely how many brain surgeons there can be per year. Who will fill those slots isn’t too kind to all takers. It is dedication, hard work, and luck (ie ovarian lottery).
Also the majority of those that “fail” at obtaining a neurosurgery training. If they were on the path to medical training will end up falling back to any number of high paying jobs in medicine or surgery.
This study found no one did terribly well at day trading. Random chance implies there will be some outlying outcomes, but that is a fundamentally different objective than having too many people for few slots.
Either daily movements of stocks are not at all like a random walk, or I am just one heck of an astronomically lucky guy. Now I do consider myself fortunate and privileged, for sure... but the amount of luck it would take to repeatedly make money on the market day after day that can fund a decently sized team of high paying engineers, data center costs/hardware costs, so on so forth... it's unthinkable.
The stock market, at least to the degree that I am involved in it, very short term market microstructure, doesn't behave anything like what economists say it does.
Which isn't to say day traders can't get those things, it's just that you stop calling yourself a day trader and start calling yourself an investor when you start to intentionally build up structural/institutional advantages.
How would you interpret the phrase "It's impossible for an individual to play the lottery for a living"?
Technically we both know it IS possible, technically. But in the real world? I don't know, but I wouldn't be suggesting anyone out there try make a living playing the lotto.
The market always goes up. Even if right after this comment, if the sp500 tumbles and we enter a recession, your share of vix doesn’t go anywhere. Youd just wait for the market to recover and hit the price you bought it for.
However, day trading isn’t really viable unless you have a lot of money to take advantage of every dip and hill and get around day trading restrictions.
If we consider a tech startup a single gamble, then living off trading is a continuous stream of independent gambles.
While individual gambles may turn out better than the average (even many in a row), repeated gambling will always see the total outcome return to the normal.
This is why the house always wins.
> the top individual earned only US$310 per day with great risk (a standard deviation of US$2,560).
The very best day trader made around the same as an entry-level SWE, which does not scream immense profit to me.
In a major tech hotspot, working 8 hours a day
It would be easy to find data to show that 99.99% of people aren't the best tennis player or fastest runner or best Scrabble player in the world; therefore, nobody can be the best at it. According to this reasoning, at least.
And when I say rational basis, that's its own challenge. There is a huge potential for emotional thinking disguised as rational and for self-delusion. Everyone wants to believe they are the top 0.01%, and most of them are wrong.