Same learning curve here, but I'm probably more stubborn than you. My walk forward logs are sitting at +20% YTD, but i've extracted just over 1/2 of that. Outside of no fills, slippage, and errors there still lies the problem of me not being able to completely get out of my own way. I tend to be naturally over-intuitive and impulsive always trying to dive in before my systems finish calculations
Grim future for day trading as a career
- Thread starter Q3D
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Same learning curve here, but I'm probably more stubborn than you. My walk forward logs are sitting at +20% YTD, but i've extracted just over 1/2 of that. Outside of no fills, slippage, and errors there still lies the problem of me not being able to completely get out of my own way. I tend to be naturally over-intuitive and impulsive always trying to dive in before my systems finish calculations
Advances in technology has always been a key element on Wall Street especially now in the day of algorithm trading.
Discretionary traders, retail traders, professional traders that are not using automation...they now have access to these tools assuming they have the money for such. That's why I believe the issue isn't about if you're a retail trader. The issue is more about if you have the money to compete via being able to afford these tools when they are available.
Further, quantum computers being designed by companies like Microsoft and Google...they are designing it for the masses so that "anybody" that has money will be able to afford it. Even universities are signing up for projects so that all of their students will have access to the new technology including research departments in many different areas besides mathematics and computers. I'm talking about finance departments, economics, language, chemistry, biology and so on.
More retail traders today are embracing and using advances in technology ever before and I can't imagine that ever stopping. Simply, more retail traders are using algorithms than ever before although its not something a small account trader will consider. Heck, the last two headline stories I've read about an algorithm system causing flash trades or extreme volatility in the markets and then the trader is later arrested...
They are some trader doing such from home...a retail trader (private trader) that had that network and tools to do such.
Simply, if someone really is paranoid about algorithms, its an easy decision to make if they want to continue trading. Get involved in algorithm trading assuming you have the money to do such.
For those not afraid of algorithms because of all the other available technologies that's available to the mass...some of us do find ways to compete and succeed.
There was an international trading competition for university teams...discretionary traders won several asset categories...outperforming algorithms and automation systems. Yeah, there were other asset categories that algorithms and automation systems outperform other traders.
Simply, as long as we have companies like Microsoft and Google investing 100 millions of dollars in advancement of technology like quantum computing for the masses...retail traders, private traders, discretionary traders will have access to new technologies and not just Wall Street.
Effective money management and a positive traders equation is now approaching and soon will be impossible at timeframes affecting day traders, unless you (most retail) will be able to afford the expensive quantum computer technology and pay extreme amounts of money for proprietary self-evolving algorithms.
The marketing of day trading beginning in the late 1990s was that it was a path to financial freedom for middle class and aspiring to be middle-class traders.
I don't know if having internet when I started day trading or not would have made a difference, when I started S&P500 was $500 a point and each nickel was $25, a 4 point range day was huge, so when you had a signal, you either got to by pass the broker, and call the floor to place an order or have to call broker then he place order, so there was not any split second anything and slippage of 1-2 ticks was the norm. You had to figure $100 slippage when doing back testing. But it was easier to bet that trendlines worked better and risk 3-5 ticks. Long term trading commodities was more seasonal than now, more predictable-commodities spreads worked more often then.
Eventually, I learned I was my own worst enemy, ask me my opinion of markets and I am 95% wrong, but I never trade my opinions any more, if not system trade, so be it. What is funny, I am good at chart reading and developed systems based on patterns, but then back tested day trading by the tick and min of ten years, and long term 25 plus years.
It just better to be stubborn than force a trade.
Identify the contest u are referring to. I bet you can't because it never occured.
surf
Yet another Q3D anti-day-trading axe-grinding thread. Dude, you need to examine yourself first before blaming the markets for your inability to adapt to examine what's not working. That's where all the difficulty is coming from.
You are doomed to repeat the same self-fulfilling negative cycles until you come to terms with the fact that the problem is with you, not the markets. There's money out there, but you're probably spending way too much effort chasing it.
Here's a thought experiment for you: what would a 100% efficient market even look like? A straight line? Static on an oscilloscope? It's a market, with machines and humans providing input to the market's output. Patterned movement is *inherent*.
You are doomed to repeat the same self-fulfilling negative cycles until you come to terms with the fact that the problem is with you, not the markets. There's money out there, but you're probably spending way too much effort chasing it.
Here's a thought experiment for you: what would a 100% efficient market even look like? A straight line? Static on an oscilloscope? It's a market, with machines and humans providing input to the market's output. Patterned movement is *inherent*.
We gotta cut the guy some slack. He's admitted to flaws he's had with trading and so on.
He just needs to find a way to channel that negativity into positive thinking to motivate himself to adapt although most of the things he has talked about (e.g. quantum computing) is about 10 - 20 years away for financial applications. In contrast, other things are here today and has been for a good 15 years (e.g. algorithms).
There are traders still succeeding in the era of algorithms.
The idealized and marketed trader's equation offers a seemingly logical explanation for the potential profitability of a day trader's method, it suggests that if a day trader is able to risk half or less of the profit potential of a trade and is able do that around 50% of the time then they can, in theory, have a profitable strategy currently and into the future. Unfortunately a positive trader's equation is no longer valid in HFT-dominated markets for discretionary day traders.
Market noise and speed and and commissions/taxes on income/transactions from short-term trading are the unfactored variables in the trader's equation which will make almost all of US trader's unprofitable or turn career-traders into non-career traders and thus the entire equation is an incorrect and misleading marketing gimmick. The effectiveness of a potentially positive trader's equation does not play out in the current markets for discretionary day traders because there is no longer time for strategizing due to the speed of HFT-based price action. There is no room for raising a stop to breakeven or reducing a profit target by half when the HFT algorithms have moved price quickly to a level where your stop-entry is hit and then quickly revert from there back to the previous HFT volume node. The defunct trader's equation is made worse once one acknowledges the obvious unreliability of classical TA patterns on lower timeframes in HFT-dominated markets, such as the now defunct double top, triangle, wedge, trendline rejection, bull flag, bear flag, etc. All it takes a small reduction in the frequency of the occurence of technical analysis patterns in an intraday context and a trader's equation which was positive in past markets quickly becomes a negative equation in the future.
The future of price action is even more grim for non-HFT and non-technologically advanced entities. Self-learning algorithms exist now (as to above linked in the Discovery article) this is not decades away, quantum computers will soon be available at a price around $15,000,000 and the CME and large banks are in the process of acquiring them, as previously linked in this thread.
The academically-accepted efficient market hypothesis states that all information is priced into the market's current price. As technology brings markets closer to 100% efficiency it is logical that the daily range in markets will often be decided in the first nanosecond of the market open and the market will establish an equilibrium and fluctuate at the nanosecond level within that range throughout the day as information is processed at the quantum level, a logical extension of the new range-based price action now seen in HFT-dominated markets and leaving no room for the discretionary day trader's attempts to provide liquidity as per the logic of the trader's equation.
Aside from technological expenses, increased transaction costs previously mentioned in this thread must also be factored into the trader's equation to produce near-certainty of negative expectancy for any discretionary day-trading strategy in the future, which could start this year if Bernie Sanders is elected as US president or if Hillary Clinton implements a similar transaction tax. For US residents short-term trading of options or stocks instead of futures further reduces the trader's equation due to the different tax rate, as does living in a state with an income tax, around 13% income tax rate is the highest in the USA. Among legal ways of making money, atleast in the USA, trading is beginning to look like one of the worst possible ideas for making money now and definitely in the future.
You seem like a pretty smart guy, but I don't think you have what it takes to adapt in this business. Instead of over-theorizing you need to be more observant. A skilled volatility analyst can easily find intraday setups that provide profits at twice the risk. You just need to figure out where and when to look for them. I actively daytraded over 400 setups last year that provided profits at four times my risk.
Am I the creme of the crop? Maybe
Did I struggle? Yes, for years
Did I work for it? Yes, in a life sucking way
Don't come here and preach the impossible to people who do this everyday, and have what it takes to make it. It's beyond insulting. It's hard enough to build confidence in this business. Developing traders don't need your false assumptions.
If you want help, we are more than willing to steer you straight. Why exactly do you continue posting here? In this business you're either sinking or swimming. If you plan on doing neither, you're adding zero value here.