all warfare is DECEPTION.
use a GO strategy instead of chess.
HFT vs Small Traders
- Thread starter emg
- Start date
all warfare is DECEPTION.
use a GO strategy instead of chess.
I have just read the entire 29 pages. I wish I had been too lazy and just read the two lines above.
Put differently:
HFT trading outfits enjoy trading advantages. Trading is a zero sum game. If you compete within their game, their gain will be your loss. Hence, find a different game.
It amazes me that luck or randomness is not mentioned once within the 29 pages. That 90% of day traders lose is entirely what you would expect if no one possesses any real skills and the trading is entirely random - simply due to the burden of commissions involved in heavy-turnover trading.
The remaining 10%, me included, can never be sure whether our success is due to skill or chance. After turning in a profit for many years, I am still not sure whether I am just part of the 10% that by mathematical necessity ends up on top.
(Whether the split is 10-90, 5-95, 15-85 or 2-98, I do not know.)
Well this isn't exactly true. I started in June 2011 and made 5% of my account on my second trade (first was just a $100 test trade to make sure I understood the system that I flipped and had for less than 2 minutes). I cycled through various ideas until I moved into options where it took me another 2 months to get a strategy formalized and check the theory against the back data. I started running that in mid-Jan 2012, and ran my account up ~43,000% by the end of February 2012. Of course it backed down but by the end of my 12 week test period, I was still up ~6,100%. I had a win/loss ratio of 1:1 (half winners, half losers).
I've since switched away from the high stress strategy, to one of much lower strategy which pegs a daily goal of 5.387%/day and I manage that without too much trouble. Then again I end up paying an insane amount in commissions (last week I paid close to 30% of my revenue out in comms).
So it is possible to outstrip the market and do it while not being "lucky". It's more about waiting around for a trade to come to you and not overtrading (which I do still do, boneheadedly).
That said, the biggest problem is that most retail traders have no business doing it because they don't have an appropriate background for trading. This means the odds end up stacking against them. The people running HFT's just have backgrounds in numerical data analysis. This puts them at an advantage above the people without this background. Basically, retail is stupid enough to allow them to feed the HFT's their profits. This is mainly because HFT's are a volume business and if volumes fell too low, they wouldn't be profitable enough to warrant the risk they entail.
Here's the ledger from that experimental trial:
https://docs.google.com/a/holotechs...xYsQIP6ZdEJ0dVVHbUZNT29McXFpZDBUUXllWVE#gid=0
All of those trades are real and can be back checked in the ticker tape. The easiest would be the IBM 210C for 3/29/2012 since it was large enough for you to spot it on the tape without searching really hard. It wasn't a terrible experiment but I was still somewhat disappointed in the overall performance which was due to me overtrading (first time I seriously traded options). If I had known better and avoided the overtrading, I would have been a little over $500k by the end of the period but that was an experience I had to learn first hand.
And up until this week I was holding it fairly well but my broker is totally screwing me this week. They changed clearing houses at the start of the year and the system is still rife with bugs. I've had my order price changed from what I submitted, double booked orders (cost me 20% of my book today), and orders that wouldn't process because the "limit price was out of range" even though it was at or above the ask (been getting these like 50% of the time this week). They said they're "looking into it" but I'm starting to look for a different broker again as I'm paying them wayyyyy too much for the amount of problems I've been getting since they switched clearing houses.
P.S. That's me, or "hampster" as most of the illiterate internet surfers call me.
Mostly true but the market is rife is horrible models that people can exploit if they're smart enough.
https://docs.google.com/a/holotechs...xYsQIP6ZdEJ0dVVHbUZNT29McXFpZDBUUXllWVE#gid=0
All of those trades are real and can be back checked in the ticker tape. The easiest would be the IBM 210C for 3/29/2012 since it was large enough for you to spot it on the tape without searching really hard. It wasn't a terrible experiment but I was still somewhat disappointed in the overall performance which was due to me overtrading (first time I seriously traded options). If I had known better and avoided the overtrading, I would have been a little over $500k by the end of the period but that was an experience I had to learn first hand.
And up until this week I was holding it fairly well but my broker is totally screwing me this week. They changed clearing houses at the start of the year and the system is still rife with bugs. I've had my order price changed from what I submitted, double booked orders (cost me 20% of my book today), and orders that wouldn't process because the "limit price was out of range" even though it was at or above the ask (been getting these like 50% of the time this week). They said they're "looking into it" but I'm starting to look for a different broker again as I'm paying them wayyyyy too much for the amount of problems I've been getting since they switched clearing houses.
P.S. That's me, or "hampster" as most of the illiterate internet surfers call me.
Mostly true but the market is rife is horrible models that people can exploit if they're smart enough.
Good article that will probably answer your questions/thoughts...
In Defense of Automated Trading:
http://www.investfeed.com/articles/detail/72
In Defense of Automated Trading:
http://www.investfeed.com/articles/detail/72