Anyone ever try the nibble nibble, dribble dribble trading (investing?) strategy?
- Thread starter Saltynuts
- Start date
A major problem with leaving basic limit orders on through the day is other actors are keen to fill them only when they think it benefits them, referred to as adverse selection. I am usually suspicious about simplistic strategies that rely on limit orders for this reason, backtests with inadequate fill simulations will probably look better than the fills you get in reality.
Thanks kmiklas!
On the fees, I'm not too worried about that, I use IB, and they are virtually nothing (and I think you can get IB light or whatever and they are nothing, but they are almost nothing as it is).
The market moving is definitely something to worry about. If for example, I put in every day an order to buy [2%] below market, but whenever the asset drops it drops [5%] on average in a day, that would be bad. I will have to backtest whatever asset I am looking at to see what the right level is to try and catch it as close to just right on average as I can.
Price matches might be an issue too. Although I would guess in the big scheme of things not that big of a deal (unless retail traders are generally getting screwed over).
yw. If you're going to do this make sure you read up on Bollonger Bands, and Mean Reversion. Also, dig out your old Stats textbook and read up on mean median mode standard deviation bell curve moments and the like.
...because ultimately your buy/sell decisions will be based on distance from a standard deviation based on an established mean over some timeframe.
Unless you just want to wing it and "feel" it. In which case, may the force be with you.
Thanks kmiklas, all very helpful. What you say makes sense regarding it ultimately coming down to buying some distance from standard deviation. While in my mind I'm just buying or selling when I think price movement in an asset is unlikely to be reflective of that asset's true value (changes therein really), such as when the S&P 500 is down .2% but a low-volume closed end general equity fund is down 3%, such probably reflects some big holder just needing to liquidate their position for whatever reason and I should be there to buy at the depressed price, that analysis of what price level to buy and sell at ultimate comes down to a standard deviation thing I would guess. Thanks for your ideas!
I have the 1985 edition of the book, and I remember him writing he hadn't made a million dollars yet. Of course, a million dollars was worth a lot more then. I remember liking the idea but not implementing it.
tl;dr: I don't think you're going to find much alpha here.
You really don't have an edge in any trade; each is really a coin toss, with fees. Additionally, this trading style underwent quantitative analysis and was written as an algorithm years ago. Citadel et alia have algos churning in nanoseconds doing exactly the same thing, and a lot more.
In my opinion, I think you're barking up the wrong tree. You seem to fall somewhere in between intuitive and algo trading--without any algorithms--and it's not a good place to be. Instead, try to find your niche; identify some corner of the market where you have an edge. Find a ticker where you have insight that others don't.
That being said, don't let my mediocre experience discourage you. If you're inspired, do give it a try... but don't put too much into it. Maybe backtrade or paper trade it first and see how you do.
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Wholly crap, I might have actually read that book, at Book Stop, a little bit every day before I went to the gym next door, in college! I was looking for a book I read years before that, like How I made $1 million in the stock market, by Nicholas Darvis or something like that. I picked this one up, thinking it was that one, but it wasn't, but I kept reading.
Didn't it involve his system where he'd just buy a little if it went down, and sell a little if it went up? It was pure nonsense lol. But is that the book? Oh, and has he made $1 million in the market yet, any idea hahaha?
I hear you kmiklas. I've got to do some back testing to find out. I have no back testing skills other than Excel, so Excel here I come!!!
His system sounded to me like what you proposed in the first post on this thread. Maybe you are really looking for a book by someone who made twice as much with a breakout system.
To find out if Robert Lichello made a million dollars yet, one might need to invest in some extra hardware like
because
