Ever wonder why is it so hard to "beat the market"?
This is because the market is extremely efficient. Every new information available in public is instantly reflected by the market price. Therefore, it is close to impossible to arbitrage the market based on news.
This is a widely accepted principle in finance called the Efficient Market Hypothesis. According to wikipedia, "The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information." Thus, strong proponents of EMH believe that short-term trading could never beat "buy-and-hold" investing in the long-run.
According to a study by Standard & Poor's, most actively managed funds do not beat their benchmark.
So if most professional money managers cannot outperform the market, just what chance do retail traders have? Do you have what it takes to "beat the market" as a trader? Or is your money better off passively invested in an index fund?
This is something all traders must seriously consider in their careers. If you cannot come to a point where you consistently outperform the market, then trading is probably not for you.
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