Daytrading becomes more difficult because of algorithmic trading?
- Thread starter prj
- Start date
you could start by looking into exactly what kind of strategies the algos deploy, that gets you more specifics in execution that would be of more use in bottom line
it's an open secret that many of the famous quant shops haven't been doing too hot in recent years, and those are places stuffed chock full of PhDs in math, physics, computer sci, etc. you figure out why.
2017 was a lean year for many daytraders due to multi decade lows of volatility but 2018 is back to the mean across the board . Although 2017 was pretty dull across many markets there were some good moving instruments to daytrade such as CL . I think ES has been algoed to death and is not great for daytrading . If you build a screener to run across several markets filtering for volatility above a certain threshold you will always find something with enough range to exploit
Other people's advice is irrelevant, as you don't know if you are worse, as good as, or much better then the person who is giving his opinion. Depending of how you are compared to the other person your answer will be different.
If I compare today with 10 years ago is see no difference. My results are even better, but that is probably because I became better over the years.
I often think that "it is now more difficult" is just a fake reason to protect your own ego. Nobody wants to confirm he is not a winner, although that would be better. Because then you would know it is better to stop trading and not to continue in a illusion.
Robert Morse
Sponsor
I have been involved in one way or another in the stock market since 1981. The market evolves continuously and good traders adapt and look for opportunities. Placing blame and pointing to changes as the reason why now it is hard, is not helpful. As long as pricing move and there is volume in the symbols you watch, there is opportunity. You need to have a process to find that opportunity.
Ignore those that complain as to why now they can't make money. Some traders are not able to adapt.
ES is still great for trading, but not for all traders. It is not algoed to death as you can still make +10 points trades intraday on a regular basis.
I traded ES for over a decade and in 2017 i gave it away due to the pathetic range and i think much of that is due to algo's , sure you can make a profit still and it is slightly better in 2018 BUT something like the NQ gives me the volatility i crave . Daily ATR ES is around 0.6% recently with NQ > 1.2% . Anyway its a fact in recent years ES range has been dramatically suppressed .
Anyway the point i am making is that the available range to exploit is becoming smaller in a standardised sense in many instruments and i think algos have a big part in that . There are methods to find instruments with better ranges to exploit , naturally your tolerance/desire for heightened volatility can temper the need to find the movers
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Hi Robert, do you remember what average commissions were for retail individual traders in the 80s, 90s and first part of the 00s?
I belive what I do now wasn’t profitable until mid 00s due to higher commissions prior to that point in time. As I recall (but I didn’t trade much), commissions in the 90s started out around USD 50 and then moved down to USD 20 going into the 00s with the proliferation of online discount brokers. Do I recall that correctly or am I way off?
To the OP:
In that sense there is more opportunity or at least other opportunities today than 20 - 30 years ago.
With regards to investing, i.e. looking long into the future, which is an entirely different discipline, it is as difficult today as it was 20 - 30 years ago. That hasn’t changed.
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Robert Morse
Sponsor
It was not per share or per trade but a commissions based on the dollar about of the trade. It could run from 3% to 5%, but not more than 5%.
Robert Morse
Sponsor
IMO, the smaller range and lower volatility are due to a maturing market, not to automated trading. If you look at foreign markets, many are very volatile and still have automated trading.