EricP, Lescor, Patrickq, Dustin and gang..

Quote from ChkitOut:

Please tell me how to become an equity trader.

I spent a ton of time on futures, failed miserably. Actually it wasn't all that dramatic. Just coin flip trading at best. I've been had by a guru. Yes, I've learned about patterns, patterns that have a minuscule edge at best only to be wiped away with trading costs and the occasional mistake.

Whats the proper road? Start me on the right road.
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I have a huge problem by you saying "I've learned about patterns, patterns that have a minuscule edge", and yet we use patterns to trade. If you truly spent a ton of time on futures, you should have a grasp something of how to trade longer term stocks.

Patterns aren't just triangles, flags and rectangles, they are distances, pivot points, trend ID, support /resistance and some TA.

Start reading "Getting Started in Chart Patterns" (Thomas Bulkowski), under ten bucks.

http://www.amazon.com/Getting-Started-Patterns-Thomas-Bulkowski/dp/0471727660

Learn to draw trendlines.

http://www.incrediblecharts.com/technical/trend_lines.php

Then backtest your ideas, when price headed up and then comes down to trendline, buy and your backtesting should give clues how much to risk. When prices are declining and price comes up to a declining trendline, sell short.

I prefer to trade off weekly bar charts for much longer term trades but use relative entries.
 
In contrast to most of the other guys I trade futures but I agree totally with EricP's analysis that trading has gotten much more difficult. Not even sure why there would be any dispute here as HFT total revenue has decreased from $10B to $3B and volumes are down everywhere. And to compensate for this exchanges are increasing the cost of their data feeds rather significantly.



Also, from anecdotal experience, back in 2007-9 in the futures market anyone with a pulse could pretty easily make mid 7 figures on a reasonably sized account. This could even be done through IB. My average profit back then at a few thousand contracts per day was 4-5 increments per trade. If I tried running those same strategies today I would get exactly 0 fills. The only way I've been able to maintain/increase profitability was by doing a huge investment in technology and infrastructure. Profits per trade are fractions of an increment and I'll average 50K contracts per day. Even if speed weren't a concern, attempting this on IB would be a commission disaster.

Everyone I know pushing decent volume who has been able to maintain 2008ish numbers has had to go down this path.

The other beast is regulation/new taxes. Back in 2008 there were actual real companies with real problems to keep regulators busy. Nowadays, I can get fined if I don't tell them what I ate for lunch (I'm not even joking). So that's definitely not better. And taxes certainly didn't get better.


Whatever, not trying to win any converts. But for my 2c, if I were starting over now I'd think it would be a better idea to invest in an industry that the government is subsidising rather than one it's trying actively to kill. I think Elon Musk has the right idea.
 
Quote from garachen:

Profits per trade are fractions of an increment and I'll average 50K contracts per day. Even if speed weren't a concern, attempting this on IB would be a commission disaster.

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What about a 0.01% FTT? According to some eminent economists and politicians, you can afford it...LOL

What a great post by the way. I wish 2008 wasn't my first year as a trader and I had the skills and account I have now.
 
Quote from garachen:

....... Not even sure why there would be any dispute here as HFT total revenue has decreased from $10B to $3B and volumes are down everywhere. And to compensate for this exchanges are increasing the cost of their data feeds rather significantly.

.............
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I think this is because many people have never stopped to ask who is giving them money when they trade. In a world where reportedly 95% fail, it is a big ego push to assume they are just "smarter than everyone else". If they went to a casino and were "smarter than everyone else" I think that the results would be different long term. And then there are those who don't want to see the truth because of its implications to their own lives.

Great post. I have given up convincing people what HFT is doing. Those that know, know and those that don't will find out soon enough. I think it is going to get much much worse yet BTW.

I think the reason there is no clampdown is that we will eventually find out that the central banks buying securities are using HFT to do it. There simply is no reason that regulators would stand by without powerful interests forcing them to stay silent. It's similar to congress having insider trading powers when we don't.
 
I'm curious as to these new taxes which you make sound so significant. Could you enumerate them and also give us a sense of how relevant they are to your P/L in percentage terms.

Quote from garachen:

In contrast to most of the other guys I trade futures but I agree totally with EricP's analysis that trading has gotten much more difficult. Not even sure why there would be any dispute here as HFT total revenue has decreased from $10B to $3B and volumes are down everywhere. And to compensate for this exchanges are increasing the cost of their data feeds rather significantly.



Also, from anecdotal experience, back in 2007-9 in the futures market anyone with a pulse could pretty easily make mid 7 figures on a reasonably sized account. This could even be done through IB. My average profit back then at a few thousand contracts per day was 4-5 increments per trade. If I tried running those same strategies today I would get exactly 0 fills. The only way I've been able to maintain/increase profitability was by doing a huge investment in technology and infrastructure. Profits per trade are fractions of an increment and I'll average 50K contracts per day. Even if speed weren't a concern, attempting this on IB would be a commission disaster.

Everyone I know pushing decent volume who has been able to maintain 2008ish numbers has had to go down this path.

The other beast is regulation/new taxes. Back in 2008 there were actual real companies with real problems to keep regulators busy. Nowadays, I can get fined if I don't tell them what I ate for lunch (I'm not even joking). So that's definitely not better. And taxes certainly didn't get better.


Whatever, not trying to win any converts. But for my 2c, if I were starting over now I'd think it would be a better idea to invest in an industry that the government is subsidising rather than one it's trying actively to kill. I think Elon Musk has the right idea.
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Quote from StarDust9182:

I think this is because many people have never stopped to ask who is giving them money when they trade. In a world where reportedly 95% fail, it is a big ego push to assume they are just "smarter than everyone else". If they went to a casino and were "smarter than everyone else" I think that the results would be different long term. And then there are those who don't want to see the truth because of its implications to their own lives.

I think the reason there is no clampdown is that we will eventually find out that the central banks buying securities are using HFT to do it. There simply is no reason that regulators would stand by without powerful interests forcing them to stay silent. It's similar to congress having insider trading powers when we don't.
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Plenty of people have made long term careers in professional gambling, you don't need to be smarter than everyone else...just the vast majority. Your argument is void.
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"There simply is no reason that regulators would stand by without powerful interests forcing them to stay silent."

Lobbyists, political donations. Central banks don't need HFT, you don't need to be technologically inventive/manipulative when you control all of the money.
 
Quote from TraDaToR:

What about a 0.01% FTT? According to some eminent economists and politicians, you can afford it...LOL

What a great post by the way. I wish 2008 wasn't my first year as a trader and I had the skills and account I have now.
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A long time ago I used to think that politicians wouldn't be dumb enough to use a rocket launcher to kill a fly (when they can't even properly study the fly to see if it's beneficial or not). Of course I no longer believe that. Spend enough time with regulators and it makes the IRS nonsense blissful by comparison.

I don't think stock exchanges have been hit quite as hard yet because there are so many of them but over the last few months futures exchanges and anybody doing business with them have been under a microscope.

Part of me thinks we might just be on the wrong side of 'progress'. Doctors and traders had it pretty good for a long time so I guess it's not unrealistic to see us get targeted/consolidated. It's not a point of view I enjoy or that sits well with me but I appreciate the sentiment that targeting us keeps the masses happier => a good political move.

On a more positive note. There are still a few strategies I want to make a run at. And current stuff is still doing pretty well.
 
Quote from Swan Noir:

I'm curious as to these new taxes which you make sound so significant. Could you enumerate them and also give us a sense of how relevant they are to your P/L in percentage terms.
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If I start talking about taxes too much it totally ruins my day. Recent tax increases: CA raised 30%, Fed raised about 30% (taking into account long term and short term cap gains.) Health care tax on passive income if rolled into fed number would bump that to a 45%ish increase.

I employ about 15 people. My expenses are split pretty evenly between salaries, data/infrastructure and taxes. If I paid no taxes (wild dream) I'd hire 5 more people immediately and give everyone a 20% raise.
 
Quote from garachen:

... If I paid no taxes (wild dream) I'd hire 5 more people immediately and give everyone a 20% raise.
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you would have to fight our enemies yourself too....
 
Quote from HurricaneUS:

you would have to fight our enemies yourself too....
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yes that's right. if taxes are an issue, zimbabwe or may be the republic of congo might appear attractive. but then it turns out there might be some benefits to having a stronger government afterall.
 
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