Is Independent Trading Success Possible? (Part 1)

My “Holy Grail” is consistent profits over time and I use this blog to help me continue moving forward to that end.  While I hope I can one day look back on my performance having realized that goal, whether consistent profitability even exists for independent traders is a question worthy of debate.

As a research project, I can accomplish the first step:  operational definition of trading success.  For me, this is about consistent profits over time and I can certainly quantify that.

The challenge begins in earnest when trying to conceptualize the data collection process.  I have little doubt that large institutions prove successful with their trading activities.  Many publicly-owned corporations must disclose profit and losses in their financial statements, which makes this a matter of public record.

What happens with individuals is extremely private, however, which is why I raise the question of trading success in the first place.  In a previous post I wrote:

> I also want to note that only brokerages and the IRS truly know if
> significant individual trading success even exists.  Only these entities
> see account values over time for thousands of individuals (i.e. an
> adequate sample size).

People can and do exaggerate or lie for various reasons.  Nothing short of authentic brokerage statements and tax returns would be sufficient to scientifically verify profits and losses from trading activity.  We live in a society where details about personal finances are shroud in secrecy.  Merely catching a glimpse of brokerage statements and tax returns belonging to immediate family members is a difficult thing for many.  The thought of broadening this sample to hundreds or thousands of randomly selected individuals may easily be regarded as an impossible feat.

Aside from being an insider for a brokerage or the IRS, I’m not sure how I would ever generate a statistically valid sample.

I will continue this discussion in the next post.