Money Stuff: Playing the Game of Infinite Leverage

2019-05-11 Matt Levine

[A] Reddit user called MoonYachts who claims to have gotten 250x leverage, putting in $4,000 and turning it into a $1,000,000 stock position. You are not supposed to be able to do this; normal stock market games do not allow you to bet a million dollars by putting up only $4,000 of your own. (“We’re aware of the isolated situations and communicating directly with customers,” said a Robinhood spokesperson.)

https://www.bloomberg.com/news/articles/2019-11-05/robinhood-has-a-glitch-that-gives-traders-infinite-leverage

 

 

Day Trading for a Living?

2019-08-22 Fernando Chague, Rodrigo De-Losso, Bruno Giovannetti

“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.”

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101


This looks like a power law distribution or the 80/20 rule: a few people make most of the profit. It’s like writing an ebook or running a YouTube channel.