Daytrading becomes more difficult because of algorithmic trading?

[PistolPete]

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.

I think the liquidity provided by the large US markets and large US participants attracts more algos than other markets . The maturation is in the use of mathematical models IE there are significantly more of them and they are tuned to BTFD currently so the dips are smaller , its logical , they front run each other . The battle of the algos

 

[Robert Morse]

I think the liquidity provided by the large US markets and large US participants attracts more algos than other markets . The maturation is in the use of mathematical models IE there are significantly more of them and they are tuned to BTFD currently so the dips are smaller , its logical , they front run each other . The battle of the algos

Everyday our scanners pick up stocks that move more than 10%. I would not trade them, but I'm not a trained day trader. They create opportunities. As a lot of "big money" is often moving from one industry group to another, this does not move the needle with the S&P 500, but might create opportunity if you can find those trends as they tend to take time. Momentum is your friend. I think it can be found in sectors more than the 500.

 

[schweiz]

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 . View attachment 191762

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

My conclusion is based on my experience as daytrader, so might be/will be different from traders who trade longer timeframes.

 

[PistolPete]

Everyday our scanners pick up stocks that move more than 10%. I would not trade them, but I'm not a trained day trader. They create opportunities. As a lot of "big money" is often moving from one industry group to another, this does not move the needle with the S&P 500, but might create opportunity if you can find those trends as they tend to take time. Momentum is your friend. I think it can be found in sectors more than the 500.

Agree on the sector aspect and i do do spreads between sectors but we are getting of path here a bit regards to daytrading . I dont daytrade stocks at all as risk is harder to define . Screening different futures to find the levels of vol desired can be a useful tool and ETFs can be part of that but intra stocks of limits for me .

 

[maxinger]

There are two types of day traders;
heavy scalpers and
light scalpers

heavy scalpers trade hundreds of round turn a day. Typically they look at ladders not charts for entry and exit.
light scalpers trade tens of round turn a day.

algo trading impact the heavy scalpers.

I am doing light scalping. I am not bothered by algo traders.

 

[PistolPete]

Maybe there are 3 types of daytrader , i suppose that depends on your definition of daytrader but i believe if you trade intraday and are flat EOD you are a daytrader

I am more of an intraday swing trader and i make 1-3 trades a day and 3 is reasonably rare and algos dont concern me at all outside the fact they have reduced the exploitable daily range and that is just my opinion , i have no real evidence of it outside the fact ranges are decreasing

 

[Maverick2608]

Commissions were lower than I remembered back in the day. This is from June 20 2000:

https://web.archive.org/web/2000062...c+About?gxml=hpc_disc_margin_c.html&lvl=about

 

[southall]

Hi, I'm going into day trading, it looks like it makes sense, there're some working patterns, but I hear sometimes that it's getting harder because of robots, patterns work worse. As a day trader do you feel the same? For how long there're still money?

The success/failure rate is probably the same as it always has been. Your chances of making a good living from day trading are very low. But you never know you could be that 1 in a 100 guy who makes a killing at it.

 

[smallfil]

Hi, I'm going into day trading, it looks like it makes sense, there're some working patterns, but I hear sometimes that it's getting harder because of robots, patterns work worse. As a day trader do you feel the same? For how long there're still money?

Most of the stocks day traded are penny stocks. I do not think those with algorithmic trading models will bother with those stocks. The very low floats makes trading those stocks impractical. Now, the so called gurus teaching day trading, they make a bundle of front running the trades they give out their students. Then, they short it knowing the stock prices will collapse after the huge run up! Now, those so called gurus are making lots of monies at the backs of the students they are mentoring. Maybe, some of those students will figure out at some point?

 

[Turveyd]

Been trading for 15years, it changes don't get me wrong over these years, but it's hard and it's always hard so that's not changed, sounds like just a poor excuse for not making $$$'s to me.