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Characteristics and strategies of a consistently profitable proprietory day trader at bursa Malaysia

Lai, Tian So and Chu, Ei-Yet and Song, Saw Imm (2018) Characteristics and strategies of a consistently profitable proprietory day trader at bursa Malaysia. Management and Accounting Review (MAR), 17 (3). pp. 109-129. ISSN 2600-7975

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Proprietary day trading is relatively new in Malaysia. This study looks into the background characteristics, strategies, and behaviour of an above average proprietary trader and factors that determine her success. Recent literature in the developed markets found that a majority of day traders fail in the first year of trading. Few studies have looked into the winning characteristics and strategies of traders. Contrary to the findings on failed traders, who trade actively, speculatively, and to their detriment, this case study found that a successful trader on the other hand is highly attentive and disciplined. On average the trader had executed approximately 20 counters per day for about 100 transactions. More than 50% of the roundtrip transactions were completed within half an hour and 70% were completed within 2 hours. The trader was most active in the morning for buy transactions and the majority of the roundtrips were completed in the afternoon. The trader usually holds large positions only for shorter periods to minimise huge losses and the disposition effect. It is evident that the trader employs scalping strategies that she profits from in a very short run and small movement of prices rather than employing fundamental analysis which requires a longer-term investment horizon. If the trader made profits in the morning, the likelihood is the trader will be more aggressive in the afternoon trades. The regression results reveal that factors that significantly explain the profitability of the trader were the transaction values and the time of entering the trades. Market sentiment and duration of holding time do not significantly explain the profitability made by the trader. It shows that in a bullish market, the trader tends to trade more transactions; however, that does not contribute significantly to the profits made.

Item Type: Article
Uncontrolled Keywords: Trader; Bursa Malaysia
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 29 Sep 2020 08:26
Last Modified: 29 Sep 2020 08:26

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