Has Day Trading Changed?

[d08]

No, the burden is on you, you're making a dumb and illogical claim without evidence. There are numerous academic studies and Nanex studies showing that volatility, decreased liquidity, and decreased non-HFT volume has increased rapidly since 2008 in futures and some equity markets and also a market decrease in non-HFT and non-algorithmic trading activity.

The decreased liquidity is also because there are fewer and fewer listings. I keep track of all US listings daily and I can see their number dropping constantly. Liquidity is typically measured as all shares traded on all equity exchanges, so a drop in listings will have a direct effect.

There is definitely a lot more fake liquidity, orders that are never meant to be filled. But there's real liquidity out there as well.

If you're saying that HFT is stopping you from trading, then I will ask you - why do you compete with them in the short time-frame of seconds? Because if your trades last minutes, HFT guys will only steal one cent from you on exit and entry and that's the worst scenario. They affect your bottom line but they won't turn your otherwise profitable trading unprofitable.

 

[Q3D]

Both. All I'm saying is that all things being equal, futures day trading has an edge over trading equities. However, the real trick is to find your edge to be consistently profitable. You should stick to whatever that is. I would expect that the skills are portable back and forth, unless you are relying on rebates.

That is terrible advice. I recommend daytraders avoid futures due to HFT/algorithm dominance intraday. I advise day traders to develop their skills live with micro contracts of currencies and if trading index futures go a smaller contract like NQ to avoid the leverage RISK of the ES, rather than indulge in leverage as rmorse suggests. Once I developed enough capital to pass the pattern day trader rule I would switch to daytrading SPY or AAPL or even "pennystocks" to avoid the overleveraged HFT-dominated ES futures gimmick market, capital preservation should be the main goal of discretionary daytraders in these new markets, not abusing leverage to fulfill those guru-inspired dreams of income growth.

There is no consistently profitable edge due to entropy of traders and emergent nanosecond-based complexity of AI-dominated markets.

 

[rmorse]

rather than indulge in leverage as rmorse suggests.

I never suggested using excess leverage. We don't offer $500 ES margin and never will. BTW, we are introducing brokers. We offer brokerage and cap-intro. Our clients decide what and how they trade. We facilitate them. I don't advise them how or what to trade.

 

[rmorse]

Futures still don't offer the diversification equities do. Yes, a large part of equities are correlated but during normal volatility the correlation declines.

They do. You don't have to stick to ES. You can trade metals, soft, currency pairs etc.

 

[Humpy]

Just a matter of time before Expert Advisors are written which will make consistant profits. Maybe the big boys already have them but the average Joes won't get to hear of it straight off.

 

[d08]

They do. You don't have to stick to ES. You can trade metals, soft, currency pairs etc.

I know but you'd only get to trade some 20-30 liquid instruments. You can without much effort trade 100-200 equities that don't show much correlation.

 

[wrbtrader]

...The markets still offer wide daily ranges and swings. As long as that remains so, day trading is still as profitable as it ever was. If volatility should dry up radically and the markets stop moving around, then we can talk.

You gotta be careful because stats show the ranges and speed of the price action of the most popular day trading instruments has declined in comparison to the 1990s when day trading was popularized and a hot career. Also, I'm gonna assume that you're talking about the Emini ES futures although I'm clueless to what market the OP was talking about considering he didn't name a specific market.

Involving the Emini ES futures, it was much easier to be profitable back then in comparison to today for many reasons. Fees were lower (I'm not talking about broker commissions), ranges (swings) were almost 2 - 3x larger back then in comparison to today, markets extremely sensitive to economic news, earnings reports, heavy rebates and so on. Back n the day you can easily take a quick -10 points loss on Emini ES futures and the very next trade within the hour you can hit a +20 points on Emini ES futures and that would only represent 1/2 the swing movement.

Try doing such today with the range even if there's a +20 point swing movement. The problem today is that if you spend too much time looking at static hindsight charts in your swing analysis...you'll get caught with an illusion about the swing movement. In contrast, its real-time actual movement in today's markets, there's a problem with the liquidity in comparison when day trading was hot back in the day. Nanex has some very good up to date statistics on this issue...an issue mainly due to the growth in the manipulation tactics of algorithms. Also, Stocks & Commodities magazine (SC) use to keep excellent monthly liquidity data but they stopped doing such last year. Anyways, I use to chart their stats and it too showed the decline in liquidity. I then compare it with the decline in the swings and they correlated very nicely.

Simply, a +20 point movement in the Emini ES futures in today's market conditions is nothing like a +20 point movement in the Emini ES futures in market conditions when day trading was popularized. Today's swings have more chop, more sudden drop in liquidity that seems to come out of nowhere as if something is playing a sick game although price is still moving with lower tick movement and today's movement is much slower in comparison to back in the day when day trading was popular. Some folks blame this on HFT but ironically when price action is moving fast, smooth with increasing liquidity...they also blame that on HFT.

The only time you see movement in today's market conditions that's compatible to movement when day trading was popularized is that price action movement of January 2016 and the first few weeks of February 2016...some loved it and others hated it. It was fast and cover a lot of distance in a very small time duration along with having an increase in liquidity.

Yet, once again, be careful about the statistics. The above deals with U.S. markets. In contrast, the FX markets have been growing in the number of day traders, growing in liquidity and just growing in many other areas which is mainly due to the growth in FX markets of 4.0 trillion to 5.3 trillion per day in the last few years. Yeah, once again, people are blaming it on HFT for the growth in FX including for day trading.

Lastly, most traders are losing regardless if a +20 point movement in Emini ES futures is smooth with rising liquidity or not smooth will declining liquidity...fast moving or slow moving. The choices are simple...adapt in the age of HFT or hang out at forums complaining about them.

P.S. I don't blame algorithms or HFT. In contrast, I'm pointing my finger at several situations that occurred after day trading became popular. The PDT rule in stocks, financial chaos of 2008 - 2009, global economics and the exchange poor response in allowing HFT to exploit old exchange order rules for application in today's markets...order rules that were designed for markets 15 years ago.

Yet, as more retail traders adapt and move into algorithm trading (many have been and firms like Goldman say its not fair)...I bet within about 5 years the exchanges will update those old order rules so that retail traders can not exploit them too and the result will essentially make it more of an even playing ground. Professional algs versus retail algs.

 

[mignonette]

There are no at home day traders who earn a living trading stocks any longer. They simply do not exist.

 

[mignonette]

You gotta be careful because stats show the ranges and speed of the price action of the most popular day trading instruments has declined in comparison to the 1990s when day trading was popularized and a hot career. Also, I'm gonna assume that you're talking about the Emini ES futures although I'm clueless to what market the OP was talking about considering he didn't name a specific market.

Involving the Emini ES futures, it was much easier to be profitable back then in comparison to today for many reasons. Fees were lower (I'm not talking about broker commissions), ranges (swings) were almost 2 - 3x larger back then in comparison to today, markets extremely sensitive to economic news, earnings reports, heavy rebates and so on. Back n the day you can easily take a quick -10 points loss on Emini ES futures and the very next trade within the hour you can hit a +20 points on Emini ES futures and that would only represent 1/2 the swing movement.

Try doing such today with the range even if there's a +20 point swing movement. The problem today is that if you spend too much time looking at static hindsight charts in your swing analysis...you'll get caught with an illusion about the swing movement. In contrast, its real-time actual movement in today's markets, there's a problem with the liquidity in comparison when day trading was hot back in the day. Nanex has some very good up to date statistics on this issue...an issue mainly due to the growth in the manipulation tactics of algorithms. Also, Stocks & Commodities magazine (SC) use to keep excellent monthly liquidity data but they stopped doing such last year. Anyways, I use to chart their stats and it too showed the decline in liquidity. I then compare it with the decline in the swings and they correlated very nicely.

Simply, a +20 point movement in the Emini ES futures in today's market conditions is nothing like a +20 point movement in the Emini ES futures in market conditions when day trading was popularized. Today's swings have more chop, more sudden drop in liquidity that seems to come out of nowhere as if something is playing a sick game although price is still moving and lower tick movement and today's movement is much slower in comparison to back then. Some folks blame this on HFT but ironically when price action is moving fast, smooth with increasing liquidity...they also blame that on HFT.

The only time you see movement in today's market conditions that's compatible to movement when day trading was popularized is that price action movement of January 2016 and the first few weeks of February 2016...some loved it and others hated it. It was fast and cover a lot of distance in a very small time duration along with having an increase in liquidity.

Yet, once again, be careful about the statistics. The above deals with U.S. markets. In contrast, the FX markets have been growing in the number of day traders, growing in liquidity and just growing in many other areas which is mainly due to the growth in FX markets of 4.0 trillion to 5.3 trillion per day in the last few years. Yeah, once again, people are blaming it on HFT for the growth in FX including for day trading.

Lastly, most traders are losing regardless if a +20 point movement in Emini ES futures is smooth with rising liquidity or not smooth will declining liquidity...fast moving or slow moving. The choices are simple...adapt in the age of HFT or hang out at forums complaining about them.

FALSE!


This is nonsense. What stats are u talking about? Name them

Plus How does one "adapt" to HFTs as a day trader? Not to mention, talking about the trillions in the FX markets is complete nonsense for retail traders. Retail traders trade with dealers, not in the interbank market-- are you a FX dealer or educational provider? You sure right like one

 

[Handle123]

Liquidity has dropped in many markets cause of other instruments have popped up. Look at forex and Currency futures, huge drop. And ES has certainly dropped in recent years, the times of bigger traders doing 1000 lots at a clip are gone forever. And why I am going into a new direction of stock/futures/EFTs Options, it is slower but overall but much more money can be had. And I am expanding entries for very long term commodities. Comes down to if you can adapt, those who only trade one market is hurting themselves.

You can see how the exchanges are hurting as well, they drop the margins on markets to entice the real dumb people who are not traders and don't have any education to what they are doing. You can easily see who they are when they get all giddy at $400 margins to trade ES, undercapitalized, under educated. Exchanges are doing this not for the betterment of these traders but to keep seats leased to max, increase value of seats which means more volume of bigger traders and hedge funds. You have to look at exchanges as like the IRS, they will never do anything that is good for common man, they are only looking to make more money. If the exchanges were doing hugely better financially, those margins be going up up up. It is a pain in the ass for brokers to get low income traders as they know they have to kiss much ass to sign people up and knowing they won't be there six months from now as in wiped out.

Some chart patterns are little different than ten years ago dealing with volume studies, since less volume, there are trickier to use, but you have to constantly adapt.

You don't have to trade 2 or 3 other markets, but each nite use what you are doing and mark up 2 or 3 markets to see how you did each night, you might be surprised if a different market might be better.