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I wonder how many traders you know who consistently make money on big unhedged bets. I have heard of all the big hedge fund managers who left the business in the last few years. Most of the money made in the markets on a short term basis is made by making markets and providing liquidity.

Most of the traders who didn't know what their economic function in the market was are no longer traders. Traders provide liquidity. That means making the spread. People who think they can guess market moves hundreds of times a day are probably setting themselves up for disappointment.

I know this because I started my career as a trading and budget analyst for one of the largest investment banks. The budgeting process for the desks worked by allocating the bid/ask spread in the product multiplied by the volume of the product.

As the head of a major investment bank recently noted "we are not in the guess what happens next business, we are in the transactional business". On average your profit should be the 1 cent spread. When the market moves in your favor you make 2 or so, when it moves against you might break even...

Since the expected profit from trading should be the bid/ask spread minus commissions and fees, will rebate trading be the future of day trading? Since most stocks are now traded in one cent spreads won't capturing the small spread along with rebates be the most consistent path to profitability?

Which brokers out there have fast executions as well as direct access with low platform fees?