A message to some day traders.
- Thread starter Amahrix
- Start date
Your prediction was nothing more than luck. Don't be fooled by randomness.
T
T-Mex
Thank you for your clarification. I do not wish to nit pick but believe precision is important when we discuss a field as nuanced as trading. What you describe is closer to uncertain (who will be my counterparty) than random.
I'm not aware of any evidence to support this in regard to liquid futures markets - as an empiricist I note there are some data against it. Details of market manipulating size occasionally become public as a result of regulatory action or other disciplinary procedures. I can think of a few examples:
Spoofing cases:
-"flash crash" trader Nav Sarao was estimated to have influenced the S&P 500 futures mid market price by only 1/5th of a tick for a few hours during May 6 2010 despite being around 8% of the daily traded volume. Enough for him to have an edge, but not enough to impact the overall market - just other similar players competing for the same fraction of a tick.
-Optiver and "the hammer",
-Billy Silva/Gelber settlement with the CME,
etc
Error trades:
I don't recall the name of the bank but their London branch had a junior trader who was told to buy a large quantity of "Eurodollars" and erroneously started bidding up the CME EUR/USD futures, trading a significant part of the daily futures volume (20k lots if I recall). There are other examples.
Rogue traders;
There have been a few high profile incidents where a major bank dealt in significant, potentially market manipulating size due to either poor risk & controls or unauthorised trading.
Intentional manipulation:
-Citigroup and their manipulation of cash bonds vs bond futures, fined by the regulator around 2005.
Contra, the successful manipulations seem to have involved coordinated actions e.g. LIBOR fixing; rather than a single entity.
I don't think there is any entity big enough to move the market by themselves, inadvertently and independent from the other participants, and who would also trade randomly. I'm not aware of any data suggesting this but would be happy to see some.
Participants are financially incentivised to minimise the market impact of their orders and there is a very strict and well supervised regulatory regime to prevent market disruption / manipulation by any single entity. Also we must consider that the futures markets are only one part of the total market - arbitrage and basis trades will keep a futures market in line with the underlying (subject to certain conditions) despite aggressive futures dealing in any size.
In brief, even if a 'large' trader executed an outsize marketable order in a liquid futures market, the impact would (in the vast majority of cases) depend on the intent and capacity of his counterparties and may not have a measurable impact on price discovery for more than a few seconds.
I'm not persuaded that such "random" incidents occur frequently enough (the responsible parties will usually incur financial loss and regulatory sanctions) to have any measurable impact on the trading performance of anyone operating in liquid futures markets. Therefore is "randomness" in the markets something that we should be considering as significant, even if it can exist under certain brief and rare circumstances?
I'm not aware of any evidence to support this in regard to liquid futures markets - as an empiricist I note there are some data against it. Details of market manipulating size occasionally become public as a result of regulatory action or other disciplinary procedures. I can think of a few examples:
Spoofing cases:
-"flash crash" trader Nav Sarao was estimated to have influenced the S&P 500 futures mid market price by only 1/5th of a tick for a few hours during May 6 2010 despite being around 8% of the daily traded volume. Enough for him to have an edge, but not enough to impact the overall market - just other similar players competing for the same fraction of a tick.
-Optiver and "the hammer",
-Billy Silva/Gelber settlement with the CME,
etc
Error trades:
I don't recall the name of the bank but their London branch had a junior trader who was told to buy a large quantity of "Eurodollars" and erroneously started bidding up the CME EUR/USD futures, trading a significant part of the daily futures volume (20k lots if I recall). There are other examples.
Rogue traders;
There have been a few high profile incidents where a major bank dealt in significant, potentially market manipulating size due to either poor risk & controls or unauthorised trading.
Intentional manipulation:
-Citigroup and their manipulation of cash bonds vs bond futures, fined by the regulator around 2005.
Contra, the successful manipulations seem to have involved coordinated actions e.g. LIBOR fixing; rather than a single entity.
I don't think there is any entity big enough to move the market by themselves, inadvertently and independent from the other participants, and who would also trade randomly. I'm not aware of any data suggesting this but would be happy to see some.
Participants are financially incentivised to minimise the market impact of their orders and there is a very strict and well supervised regulatory regime to prevent market disruption / manipulation by any single entity. Also we must consider that the futures markets are only one part of the total market - arbitrage and basis trades will keep a futures market in line with the underlying (subject to certain conditions) despite aggressive futures dealing in any size.
In brief, even if a 'large' trader executed an outsize marketable order in a liquid futures market, the impact would (in the vast majority of cases) depend on the intent and capacity of his counterparties and may not have a measurable impact on price discovery for more than a few seconds.
I'm not persuaded that such "random" incidents occur frequently enough (the responsible parties will usually incur financial loss and regulatory sanctions) to have any measurable impact on the trading performance of anyone operating in liquid futures markets. Therefore is "randomness" in the markets something that we should be considering as significant, even if it can exist under certain brief and rare circumstances?
You are looking at it from a perspective as if that one side of the equition is only made by one person. I only say it can be, most of the time it is more then one party on one side. If you look at sellers, or a sell off you see a start with some size that grows bigger and bigger the more the price goes lower untill one or more buyers take the other side. When, how and how many is for you and me a random event, tottaly depended on the participants of the moment and what they think.
I don’t have any connection with Taleb. Never spoke to him, seen him, etc.
Amahrix, the name, was generated randomly in the video game World of Warcraft when I clicked “randomize” and the game create the username. This was manyyyy years ago, perhaps a decade ago. You’re looking too deep into things just like any day trading chartist would.
I thought we were cool!.. it’s cool. No worries.
Thanks for strawmanning me 17th time now? I’ve never said anything you claim I’ve said. Imbecile.
Did I say “you cannot make money”.
Randomness is incomplete information, market has a degree of randomness. The degree of randomness is higher when you’re looking at a 1 day chart and trying to interpret data than if you’re not looking at a 5 year chart. If you look at a 5 year Apple chart, it’ll tell you more about how the company is doing than a one year Apple chart but still it contains randomness (incomplete information) in it, and God forbid trying to interpret Apples daily. Go look at today’s Apple Chart. From our perspective, not Gods, was it constructed randomly or does it carry a precise intended message of the future that we can extract and profit on?
If markets were not random at all, then you can interpret and predict everything because you’d have the information to do so yet we have “black swans” happen all the time. No amount of prediction effort can help you predict a black swan. Such as inverse vix etf collapsing in February 85%. If you looked at thay chart, you wouldn’t be able to infer from past data such a possibility.
I never said you cannot make money in trading.
You’re so stupid.
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