The story so far: Pennyless joe gets a "groundhog potion" that supposedly allows to repeat one day once. He drinks it and proceeds to win the state lottery by memorizing the numbers. He then discovers that he is fated to repeat every day for 3 to 5 times (randomly). He also finds out that other "groundhoggers" are on the search for him.
(formerly pennyless) Joe took to his wandering lifestyle very well. In administering his finances earned through winning the state lottery, he took to day trading.
What a marvel. Since Joe repeats his days, he knows what stocks go up and what stocks go down. His day trading brings in more money than he needs to meet his travelling lifestyle.
And the more, he can trade through the web, from anywhere.
But Joe is really worried that his 99% success rate[note 1] in profits through stock trading will raise some red flags with the government and/or regulatory agencies.
His tinfoil hat is tingling, since he received an enthusiastic email from his broker congratulating him on his successful trading choices and asking him to answer a form and sign some papers about a "trader profile upgrade" to "unlock more profitable trading options". Something like this form but for already-customers (disclaimer: the link above is merely visually informative, no endorsement on either party assumed).
Joe is new to investing, but is afraid that someone might come knocking asking what his "secret formula" is.
So, there are several points I'd like to clear:
- Would a 99% successful day trader really raise some red flags with the government? Assume he is filing all the taxes and papers lawfully.
- Would he be sued for "insider trading"?
- How could Joe change his trading behaviour to better avoid prosecution, if it indeed could happen?
[note 1]: The 1% loss rate is due to other groundhoggers (around 12 in the USA) also trading and the "butterfly effect"