LogFAQs > #950233958

The PDT rule is unfair and everyone should be allowed to choose their own trading techniques but it is true that most day traders lose money and most investors make money. Part of that is because the returns for day traders are distributed very unequally - the small percentage of day traders who make money tend to make a lot while many lose. If you had 10 day traders, I expect the first 8 would lose money, the 9th would make less than an average investor with his starting capital, and the 10th would make more than an average investor with his starting capital.

But even on average (arithmetic mean, not median), a day trader will do substantially worse than an investor. Part of that is bad human psychology, part of that is lack of time in market (a day trader has his money in cash a rather large percentage of the time - all the time between trades), and part of that is being constantly front run by HFT algorithms. The last one is not fair, and is a big deal, even if it looks invisible. A few cents a share per trade is not a big deal to an investor who doesn't trade often but to a day trader it is calamitous.

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September 1, 2003; November 4, 2007; September 2, 2013
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