Have the Algo's accomplished this?

[listedguru]

Quote from MohdSalleh:

The answer is definitely YES. I dont know whether this is due to algos or not and I can only speak for stocks, but what we know as scalping is definitely gone.

Now there are many definitions of scalping, but the prop firm version as those who ever spent time in a traditional prop firm will know which is based on L2 is just not in existence anymore. The flashing island and arcas are now gone, programs which rapidly populate the bid and offer are no longer there, programs which revolve at certain levels i dont see much anymore and even programs which would trigger at certain price levels as you walk the bid up or offer down, nope not there. In this sphere, its not the game has changed, it is there is NO game anymore.

When i scan through ET, some people like NoDoji still seem to be doing well, but the thing is this the turnover is very low if we trade positionally like them, which unfortunately is what I am doing now.

You can make something like what 5-10 trades a day using that kind of strat, whereas in the past I would do something like 500-800 trades a day and there is a limit to how much liquidity one can take at any point in time. I SUPPOSE you can still scalp the mega caps, but it is not easy to read the L2 on thick shit like that. As usual getting in, not that hard, getting out is the hard part.

Anyway most of the guys i know, yeah they have left the game. I dont know if it will ever come back. Are algos to blame? I dont know because I dont even see much algos anymore in the mid small space cap.

Very very good points. I've been at this trading game well over a decade (stocks) and trading is just plain stupid now. I've been tinkering with lots of things lately but they all suck. I know I know adapt or die but I'm afraid things are different now (and probably won't get any better). All the fun (and profit potential) has been sucked out of the market due to HFT's, algos, etc...

-Guru

 

[abattia]

Quote from listedguru:
... trading is just plain stupid now... I'm afraid things are different now.

When was the turning point, in your opinion?

Thanks

 

[listedguru]

Quote from abattia:

When was the turning point, in your opinion?

Thanks

It's been getting worse each year (IMHO) but I would say it's gotten really bad in the last 24 months or so.

-Guru

 

[abattia]

Quote from listedguru:

It's been getting worse each year (IMHO) but I would say it's gotten really bad in the last 24 months or so.

-Guru

Thanks

 

[abattia]

The OP seeks to establish whether Algo’s are to blame for the challenging market conditions for retail day traders.

Assuming it is the case (i.e. that HFT and algorithmic trading have so altered the playing field for retail day traders that many approaches which previously endured for so long, now no longer work), what exactly is it that has changed?

As a simplified hypothetical example which we could look at, assume a retail trader had a good “MA Crossover” (or “Support & Resistance”, or “Price-Volume”, or whatever ...) intraday mechanical strategy that worked reasonably profitably once upon a time over a span of several years on several instruments.

Also assume that, owing to HFT and algorithmic trading, the strategy started performing less well in 2008, worse still in 2009, and has become badly unprofitable in 2010.

What is it that HFT and algorithmic trading did that made the strategy’s performance deteriorate so completely?

Please DON’T BOTHER TO ANSWER with blanket generalisations like “oh, there are algos out there that hunt for stops and take them out” unless:
1) You really know what you are talking about,
2) You can explain in detail to us all
.... a. how the HFT/algo accomplishes this strategy,
.... b. how the strategy has a high Profit Factor / Sharpe Ratio from the HFT/algo perspective (i.e. why it is worth their while to do it), and
.... c. why it is not a strategy that could be followed also by a serious daytrader

Thanks.

 

[intradaybill]

You are speeding down the street driving a mustang and suddenly this guy with a ferrari speeds next to you. You step it on the floor and still you cannot catch up with him. He gets there first and offers a ride to the girl. You are angry. Next day you contact your local rep to outlaw any car that is faster than yours. This is not fair to you. You paid 20K and this guy comes at 200K and stills the girls from you. You bitch and moan in forums that the dynamics have changed and the game is not fair...

Mutate or die..

 

[stock777]

I must be a lot dumber than you guys, or a lot smarter.

I noticed this trend long ago, a lot more than two years , and spoke of it here, when almost no one admitted seeing any problem.


Now all you twits and a few of you dweebs are claiming it's over.

Just as I now see opportunity in the bot wars.

 

[Jackie Treehorn]

Quote from stock777:

I must be a lot dumber than you guys, or a lot smarter.

I noticed this trend long ago, a lot more than two years , and spoke of it here, when almost no one admitted seeing any problem.


Now all you twits and a few of you dweebs are claiming it's over.

Just as I now see opportunity in the bot wars.

How do you see opportunity?


I look at it like this, people are unreliable/ irrational, bots are somewhat predictable, and predictably volatile, so scalping is a thing of the past, but swing trading has become visible...

Take the same scalping methods and increase the time frame from 1 second to 1 day and its the same market place, just make less trades..

 

[Eight]

Don't compete with machines. They are much faster and way more reliable than any trader ever will be...

 

[Ticktaker]

Quote from Jackie Treehorn:

How do you see opportunity?


I look at it like this, people are unreliable/ irrational, bots are somewhat predictable, and predictably volatile, so scalping is a thing of the past, but swing trading has become visible...

Take the same scalping methods and increase the time frame from 1 second to 1 day and its the same market place, just make less trades..

See, I've had this same discussion with many people. In the end, one way or another...the majority think this is easier said than done. Widening the time frame means implementing several new nuances into play. Most of which are extremely painful to former short term traders who took both losses and profits rather quickly. Widen the time frame, and now you're talking about letting trades go against your entry points for a longer period of time, watching winners become losers, vice versa, rinse and repeat. I agree that simply stating increase your time frame from one second to one day, while it sounds nice, is not feasible for most. It actually requires a complete overhaul and restructuring of what some people have practiced every day for years and years. It is a completely different game, with different risk management and different expectations altogether.

Try to tell someone to make less trades, be more selective, etc...Believe me when I say it's a lot easier said than done.