I agree. If you want to make a living at trading, make living doing something else and trade. It;s FAR easier, and, since what you make has month-on-month variance but your cost of living does not (mostly), the way to make a living from trading is to make a living from a job ad trade. This is your surest path to success in trading.
Do you rely on your trading to put food on the table?
- Thread starter Simples
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I agree. If you want to make a living at trading, make living doing something else and trade. It;s FAR easier, and, since what you make has month-on-month variance but your cost of living does not (mostly), the way to make a living from trading is to make a living from a job ad trade. This is your surest path to success in trading.
Ahhh, the old “liquidity provider” argument. How many people on this thread actually know what providing liquidity means versus taking liquidity? Can anyone answer that question? This is a test and if you get it right and second, can apply it to your trading strategies than yes you will get paid by the market and be able to put food on the table.
In fairness, "providing liquidity" in a market making sense is very difference from providing liquidity in risk-warehousing sense. E.g. if you are buying a stock when it's selling off, you might be an aggressor (i.e. taker) from the market-making perspective but you are a liquidity provider by virtue of being a willing buyer of a risky asset.
Limit orders traders are providers of liquidity.
Market order traders are takers of liquidity.
(L. Harris)
Market order traders through want or need are the minority. The wants are smarter than the needs.
This is easily proven at market turning points when the majority of limit orders facing market goes unfilled.
Yes, I put food on the table with mouseclicks. Knowing when and where to make those mouse clicks is what sifting and sorting through contrast on this site is all about. It first starts with eyeballs. Choosing what to put attention and focus upon is entirely within one’s control.
From my view, I tend to give things that have withstood the test of time more validity. There are many older, wiser traders here with diverse orientation to the market.
Researching posting history quickly determines quality of content or lack thereof. Just start with a thought-provoking post and follow the line of inquiry as one develops understanding. These are by definition minority viewpoints. These more experienced traders were posting prior to the rise of ‘likes’ in social media.
The other path is to accept the concepts accepted by the majority and follow that.
Both paths can lead to the top of the mountain for the determined, both have their pros and cons over the other as well as their inherent boundaries of what extracting the full offer of the market means and the structural ability to do so.
Bingo! We have a winner. What strategies do you know that use limit orders? Anyone?
From a market-making perspective, only non-marketable orders add liquidity, i.e. either buy limit orders where limit price is below the market or sell limit orders in which the limit price is above the current market. From a liquidity premium perspective, broadly, any position that is contrary to the prevailing flows is providing liquidity.
So you might be and might not be at the same time. E.g. imagine a hedge fund buying an off-the-run treasury bond. The hedge fund lifting the offer is a liquidity taker from the market making perspective, but a liquidity provider from the liquidity premium perspective.
LOL, what is this, grade school? Tardy students will get a spanking?
Any strategy can use passive or aggressive approach to execution (or a neutral approach, if a mid-market matching venue exists). Even for an UHF market-maker sitting on the touch is only a part of the process, they aggress plenty.Limit orders that hit the bid or offer are taking.
Limit orders resting in the market needing the price to move into them to execute are providing.
Traders who rest their orders in the market would be wise to learn all they can about adverse selection as well as all of their routing options and possible rebates. Of course takers should understand all their routing options as well.
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I disagree limit orders at the bid or the offer price are "taking".
By definition, there is no guarantee whatsoever that a limit order will be executed and filled, regardless of the (limit) price, which includes the immediate bid or ask price. Further, limit orders have less priority than market orders, again price being irrelevant. Additionally, limit orders are queued/prioritized with/against other limit orders. A lot can happen between the time a limit order is placed, received, accepted, prioritized, and (possibly) executed at the appropriate transaction venue.
I would agree however, a limit order placed at the immediate bid or ask price with FoK or AoN conditions could be considered taking, if the order is executed.
Perhaps I'm being stupid, so please correct if I am wrong.