How is retail day trading anything but a gamble?

[NotKnown]

Efficient Market hypothesis

That depends on what you trade and how good your are at doing it. It also depends on your portfolio size and is really for portfolio managers. Not people like us who do not appear on anyones radar.

Thanks for the charts but I have no clue as to how they were derived.

A price change is more or less unpredictable as there are so many participants in the market bidding/selling a particular item (stock, bond, currency, futures etc) but that is not the point. It is like what I said before, you need to know where you are and just take each bar as it comes. As more information (bars) come to hand you can make a further decision on if to buy, hold or sell. I am not trying to predict anything. I just make decisions on what is before me. I have a clue as to where price might go but that is all. If I get hit, fine but if not, I will do something else.

As an example, I am trading the DAX as we speak, I went long at 22:22, took a hedging short at 22:44, cleared the short at 22:56 added to the long at 23:00 with a target of 12,800 (I use obvious price targets) but I am still holding as there is quite a bit of momentum in the index tonight. Efficient Market Hypothesis just does not come into this but a good night on the DAX does

Just closed all at 23:46 @ 12,820. Why? Always leave something for the next person plus it looks like it might roll over... We shall see

edit: It did turn. How far? Maybe not much as this is generally an up night on the DAX

 

[themickey]

....No price pattern is random. It happens and forms because of the pressures in the market at during it’s formation up to, and when, we can recognize and “see”the pattern. There is no noise in the market. If it moves one tick there is a reason for it. We may not know nor ever know the reason but be assured there is a reason......

This statement pure hogwash.
Quote: "It's not random but we may never know the reason".
Snakeoil talk at its finest.
For every tick or bar no one knows the reason! Period!
There's a billion people trading at any one time, are you suggesting Joe Bloggs in NY knows the reason why an unknown person in an unknown city placed a trade and made price move, or 102 people simultaneously somewhere spreadout all across America placed their trades which moved price?

 

[Tradex]

The indicator will then show what price did. It won't show what price will do tomorrow.

An indicator can tell where the price is LIKELY to go next, just like the weatherman uses indicators (temperature, wind velocity, atmospheric pressure, cloud formations, etc...) to predict tomorrow's weather.

Even in life we are constantly using past and current data to make an educated guess about the future.

Well same thing with technical analysis, its uses the past and the present to determine the most likely outcome in the future.

Of course the "efficient market theory" clowns will try to persuade you that the past cannot predict the future. Just let them talk, while we technical analysis traders continue to consistently extract money from the markets.

 

[KCalhoun]

The trader's biggest enemy is himself. He will sabotage his trading by not having any risk management in his trading. A lot of times, he goes against the trend as so many ET trolls love to do then, whine about it? He does not maintain a trading journal so, cannot see his mistakes. Also, does not analyze his past trades to see his numerous errors. Stupidity is doing the same exact thing and expecting different results. Look in the mirror. The enemy is thee.

Exactly right. I still struggle with that daily. Resolving to stop making the same mistakes is important, though easier said than done!

 

[Scalping_Padawan]

Or the ones who blow their accounts many times get hired by wealthy boutique firms as risk managers because they have a MBA or PhD in Finance. I personally know two guys with gambling problems, they that lost millions trading options and biotechs. Now they make sure hedge fund traders don't implode as risk manager. How can that be, it's like a square circle or a married bachelor.

Some people get to fail forward! It is a blessing that most of us do not have
Trump, our current king, is a guy who failed forward. He was amazing and bold in the 70s to late 80s in RE, but after then it was failure after failure. Coming from a rich family helped him stay afloat, and the artful use of loans. His brilliant marketing/branding skills (sometimes unethical) allowed him to have greater fame in the late 90s-2000s with a new TV career.
I'm no Trump hater or Trump fan, but there's a lot to learn from watching a dude like that!

 

[ironchef]

I had two edges; the first is whatever, and the second is tax-deferral. I turned $17K into $7MM over 25Y. I had taxable accounts as well, but nothing touched the organic return on my IRA.

OK we demand you show your audited statement to prove to us it is actually true.

Just kidding. Ignore what I just said, a CAGR of >27% for 25 years is unmatched even by Schwager's market wizards.

It is good to know such outstanding achievements are achievable. We now have a target goal to shoot for.

Finally as a side note, I agree about trading using IRA. Back in Bush's final years of tax cut, one could convert IRA, full or partial into Roth and could spread the conversion into two calendar years. so I took advantage of it and converted $XXX. All my trading profits are tax free!

Best to you sir.

 

[ironchef]

And you can't make a dime trading FX. It's not your fault. Nobody can make any money in FX. We're over 40Y into institutional FX trading. It hasn't been a profit center for banks since 1990 and you're somehow going to make bank in FX at 4-5% realized vol. Right.

Someone must be making money if every institution lost money?

 

[destriero]

OK we demand you show your audited statement to prove to us it is actually true.

Just kidding. Ignore what I just said, a CAGR of >27% for 25 years is unmatched even by Schwager's market wizards.

It is good to know such outstanding achievements are achievable. We now have a target goal to shoot for.

Finally as a side note, I agree about trading using IRA. Back in Bush's final years of tax cut, one could convert IRA, full or partial into Roth and could spread the conversion into two calendar years. so I took advantage of it and converted $XXX. All my trading profits are tax free!

Best to you sir.

Half of it was made in the last 18 months.

 

[ironchef]

But we do have something to thank day traders for. They are paying for our commissions.

Not really, commissions are free. Though they (and I) are providing liquidity.

 

[Dandr39]

Thanks for the charts but I have no clue as to how they were derived.

Here’s an abstract from the 2008 “Day and Night” paper by Cliff, Cooper and Gulen:

We use transaction-level data and decompose the US equity premium into day (open to close) and night (close to open) returns. We document the striking result that the US equity premium over the last decade is solely due to overnight returns; the returns during the night are strongly positive, and returns during the day are close to zero and sometimes negative.

This day and night effect holds for individual stocks, equity indexes, and futures contracts on equity indexes and is robust across the NYSE and Nasdaq exchanges. Night returns are consistently higher than day returns across days of the week, days of the month, and months of the year. The effect is driven in part by high opening prices which subsequently decline in the first hour of trading.

http://www.krannert.purdue.edu/faculty/hgulen/Day_and_Night.pdf

Good luck with the DAX.