Anyone actually make living from trading?

[lovethetrade]

blah blah blah....it never ends

Double standards right there.

 

[Visaria]

The reason bitcoin isn't attractive to professional investors isn't because they're large investors; it's because they're not stupid. There are a significant number of reasons why trading bitcoin makes almost no sense whatsoever. It's also a poor example since BTC etc has only been around for a few years, but this nonsense that small investors can outperform larger ones has been around much longer. Give me another example.

There's many a large investor who is stupid. I mean seriously dumb. Conversely there are many small traders who are seriously smart. And no doubt vice versa. I guess the point is that the amount of money you control does not define intelligence levels.

You say that trading bitcoin makes no sense. Why not? Please give your reasons. Does day trading e mini S&P500 contracts makes sense? For whom? I would say day trading bitcoin makes far more sense for small traders than ES. The volatility is huge compared to ES.

The second part of your post illustrates exactly why small investors shouldn't be aiming to make large returns. In doing so they'll probably take on too much leverage or trade too often. Unless they are in the tiny percentage of elite traders (sorry for the pun) who can actually consistently achieve a SR of 1.0 or more they're going to be over betting (significantly higher than full Kelly) and end up blowing up.

Doesn't illustrate anything of the sort. A small trader should be aiming to double his/her equity in a year. Might not achieve that. But should definitely be trying to do so. Why bother otherwise?

Your trader on fundseeder is probably looking at managing money and therefore buiding a track record. Most small individual traders aren't looking to do that, are not constrained by sharpe ratios etc.

 

[Visaria]

It's also a poor example since BTC etc has only been around for a few years, but this nonsense that small investors can outperform larger ones has been around much longer. Give me another example.

Can't give you another example since i trade some small trader non scalable strategies and instruments myself and would not want them in the public domain.

 

[Turveyd]

I lived full time of stock trading with 6k usd ish, I was making 1-2k per month only needed 500gbp at the time, exchange was crap to bring back 2:1 area to gbp.

18 ish years ago, these days i need 3xs that just to get by, i try to keep my life style fruggle to

Sure there are places in the world where 1k usd per month would be living like a king, i need to move there

 

[globalarbtrader]

There's many a large investor who is stupid. I mean seriously dumb. Conversely there are many small traders who are seriously smart. And no doubt vice versa. I guess the point is that the amount of money you control does not define intelligence levels.

You say that trading bitcoin makes no sense. Why not? Please give your reasons. Does day trading e mini S&P500 contracts makes sense? For whom? I would say day trading bitcoin makes far more sense for small traders than ES. The volatility is huge compared to ES.

Leaving aside whether anyone should be day trading anything the main factor as to whether someone will be profitable day trading is cost; to be precise cost normalised by volatility. Bid/ask in BTC is about twenty times higher than ES futures; vol is about four times higher, so BTC is about five times more expensive. Otherwise volatility doesn't matter except in position scaling and management. Large vol means you just have smaller positions and looser stops; and vice versa.

At least until BTC can be traded as a cash settled future on a proper exchange the main issue is counterparty risk.

Doesn't illustrate anything of the sort. A small trader should be aiming to double his/her equity in a year. Might not achieve that. But should definitely be trying to do so. Why bother otherwise?

Your trader on fundseeder is probably looking at managing money and therefore buiding a track record. Most small individual traders aren't looking to do that, are not constrained by sharpe ratios etc.

A Sharpe ratio isn't a constraint, it's a way of measuring performance.

Can't give you another example since i trade some small trader non scalable strategies and instruments myself and would not want them in the public domain.

Of course... everyone on ET is making a huge return that a big fund couldn't possibly manage, but there is no way of proving it since it's all down to some secret sauce that only they have discovered.

Discussing this subject is of course pointless. I only keep trying to avoid some poor newbie trader getting suckered into thinking they should be making 25% a year, or 5% a month or whatever, and then when they don't increasing their leverage and / or trading faster in a desperate attempt to reach those benchmarks, resulting in their capital depleting faster till it's all gone.


GAT

 

[VincentvanG]

Sorry, I really don't buy the argument that there are limited capacity strategies that only small traders can use. Any given high frequency strategy has limited capacity, but big HFT shops diversify across thousands of instruments, making it economic for them to use that strategy. Yes, small cap stocks have limited capacity, but decent sized small and micro cap funds exist that hold hundreds of stocks.

The reason bitcoin isn't attractive to professional investors isn't because they're large investors; it's because they're not stupid. There are a significant number of reasons why trading bitcoin makes almost no sense whatsoever. It's also a poor example since BTC etc has only been around for a few years, but this nonsense that small investors can outperform larger ones has been around much longer. Give me another example.

I'm not doubting that there are small number of retail traders who can achieve returns much better than the average institutional trader (and about as good as the best institutions, although not as good as HFT shops), but they are a tiny fraction of the trading population, and nearly all of the people who claim to be in this bracket are (a) lying or (b) have a relatively short track record which isn't statistically meaningful (and are probably trading something with latent blow up risk).

The second part of your post illustrates exactly why small investors shouldn't be aiming to make large returns. In doing so they'll probably take on too much leverage or trade too often. Unless they are in the tiny percentage of elite traders (sorry for the pun) who can actually consistently achieve a SR of 1.0 or more they're going to be over betting (significantly higher than full Kelly) and end up blowing up.

Even very good retail traders are unlikely to be making 25% a year; since they're probably running at a more conservative risk / return target (because they're not morons). The best guy on fundseeder.com with a track record that is actually meaningful has a Sharpe of just over 2.0 with nearly 5 years of trading on an average 250K account (and looking at their account she's regularly withdrawing her profits rather than leveraging up). But she's running at a mere 15% vol which means her annual returns are 67%, 27%, 15%, 16% and 35%.


GAT

Disagree. The smaller the account the more aggressive a trader should be. I trade anything that moves and if bitcoin is moving, I'll trade it. The market for bitcoin is over 100 billion. Unless you have billions, why wouldn't you trade it? The reasons you have given are not good enough for anyone under a billion to trade.

Bitcoin is pure speculation, there is no S/R, no real historical data to go on and macro news like interest rates does not affect it.

If you are not up over 100% year to date on a small account under 1 million, you don't know what you are doing.

No excuses

 

[Visaria]

Of course... everyone on ET is making a huge return that a big fund couldn't possibly manage, but there is no way of proving it since it's all down to some secret sauce that only they have discovered.

There are things in the market that large traders could not take advantage of but a small nimble trader can.

Warren Buffett said in a BusinessWeek Interview in 1999: “I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”

Then he said in 2005: “Yes, I would still say the same thing today. In fact, we are still earning those types of returns on some of our smaller investments. The best decade was the 1950s; I was earning 50% plus returns with small amounts of capital. I could do the same thing today with smaller amounts.”

 

[Visaria]

Leaving aside whether anyone should be day trading anything the main factor as to whether someone will be profitable day trading is cost; to be precise cost normalised by volatility. Bid/ask in BTC is about twenty times higher than ES futures; vol is about four times higher, so BTC is about five times more expensive. Otherwise volatility doesn't matter except in position scaling and management. Large vol means you just have smaller positions and looser stops; and vice versa.

Yes, i tend to agree re day trading. Day traders need large moves otherwise the costs will be prohibitive. Also excessive leverage may have to be deployed to make it worthwhile. And yes, bitcoin atm has large bid offer spreads.

 

[globalarbtrader]

If you are not up over 100% year to date on a small account under 1 million, you don't know what you are doing.

GAT

 

[Visaria]

Discussing this subject is of course pointless. I only keep trying to avoid some poor newbie trader getting suckered into thinking they should be making 25% a year, or 5% a month or whatever, and then when they don't increasing their leverage and / or trading faster in a desperate attempt to reach those benchmarks, resulting in their capital depleting faster till it's all gone.

All well and good, but I still ask what is the point of someone full time trading to make 25% on say $100k (if they even have that much to speculate with in the first place). I mean that is $25k. The newbie trader would be better off being employed somewhere.

That's why I say a small trader must try to make 100% or more on whatever capital he has. That's not to say risk management should not be employed, of course it should.