Sorry, you were not even born yet.
How is retail day trading anything but a gamble?
- Thread starter kmiklas
- Start date
Sorry, you were not even born yet.
Ug, see, that's going backwards in your message board edumication.
By the way Mr Calhoun, I really enjoyed your article in the June issue of Stocks and Commodities Magazine.
Combining hammers and Macd pivots, brilliant idea!
Thanks, good to hear. I'm finding it's useful to combine entry signals in our current whipsaw markets!
You are quite welcome.
Like I said in a another thread, I only trade trending markets. Each day I scan 28 currency pairs and select only the ones that are clearly trending.
This simple rule prevents me from initiating trades in going-nowhere markets.
The beauty of this approach is that there is ALWAYS a financial instrument in trending mode at any given time, in the Forex, Futures or stock market.
And yes, a hammer that appears when the trend is up is a powerful confirmation signal.
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I think there is a small cohort of retail traders who actually have an edge and can execute on it in the sub 1D time frames to be successful.
The vast majority of day traders have virtually zero idea what they're doing. For example, most technical indicators work because they work. "Fooled by randomness" is absolutely correct in this regard. There's almost zero evidence of the majority of popular technical indicators being anything but tea leaf reading. Of course, people will post counter to this saying they have a super system and to that I say:
1. No you don't
2. Dunning Kruger
3. Law of large numbers
4. Curve fitting
But we do have something to thank day traders for. They are paying for our commissions. We should encourage them to continue to make statistically poor decisions so the rest of us can make money.
The evidence shows that majority of day traders can't make money. The evidence shows further combining some soup of technical indicators also holds no edge over any significant time frame. Brokers regularly post the number of people who made money on their platform. I haven't seen a number higher than 20%. Since technical analysis is quite possibly the easiest form of analysis to get into this can proxy a rough estimate to the number of successful technical analysts, and therefore, day traders.
I would be interested in the 30 year returns of the average day trader. I'm sure investing in t notes would've been a better choice. Unfortunately there are virtually no studies on this because the average day trader blows out so quickly the conclusion is obvious.
The vast majority of day traders have virtually zero idea what they're doing. For example, most technical indicators work because they work. "Fooled by randomness" is absolutely correct in this regard. There's almost zero evidence of the majority of popular technical indicators being anything but tea leaf reading. Of course, people will post counter to this saying they have a super system and to that I say:
1. No you don't
2. Dunning Kruger
3. Law of large numbers
4. Curve fitting
But we do have something to thank day traders for. They are paying for our commissions. We should encourage them to continue to make statistically poor decisions so the rest of us can make money.
The evidence shows that majority of day traders can't make money. The evidence shows further combining some soup of technical indicators also holds no edge over any significant time frame. Brokers regularly post the number of people who made money on their platform. I haven't seen a number higher than 20%. Since technical analysis is quite possibly the easiest form of analysis to get into this can proxy a rough estimate to the number of successful technical analysts, and therefore, day traders.
I would be interested in the 30 year returns of the average day trader. I'm sure investing in t notes would've been a better choice. Unfortunately there are virtually no studies on this because the average day trader blows out so quickly the conclusion is obvious.
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Really?
Studies show that you can beat the markets with simple trend following techniques using nothing but simple indicators like moving averages or Macd.
And these indicators work because the markets are not random.
Just because you are losing monies does not mean every other trader is losing monies. Those who have not figured how to trade properly, just bitch and moan hoping someone is going to teach them how to trade? If you are serious enough, you will figure out how to trade. Now, if you believe you know how to trade when you don't, your arrogance will make sure you lose all your monies. It is a gamble if you are gambling in Las Vegas casinos. You know you are playing negative expectation games and a guaranteed loser. Only the casinos have a positive expectation. Trading stocks if you know what the hell you are doing is a positive expectation endeavor. Those lazy slugs wanting success without working for it, yes, it is a gamble for you. You were stupid enough to trade and lose your monies because you are inept. Accept that fact. Learn to trade properly, instead, of whining and crying like a little baby.
The big players are not stupid. They don't just take huge liquidity in an obvious way. So, the pikers with MACD and fibonacci are not getting ahead of them. Even the biggest traders have internal risk controls.
Trading of any serious size will have algo's that pace and pulse their orders (banks, prop, large spec), and those guys even have automated algos that 'manage' underlying books to facilitate market making in all the structured products they offer to institutional clients. (synthetic equity, D1 desks, total return swaps, etc.)
The biggest money trades the spot/forward (basis) and forward curve in all the largest markets (treasury basis, STIRs, yield spreads, rate fly's, index basis, eurodollar)
The market makers (not obvious who they are) in these things use nice algo's and if you are really good with math, stats ,and coding you can reverse engineer their stuff. I just figured out how to do that recently, and pretty well. It involves denoising the notional spread legs and then detrending aggregated differentials (and using calculus type stuff).
Yea, that's not what retail is doing, and that's why they are the last to know when and where liquidity is getting taken.
Retail would be better served if they started looking at quant.stackexchange, nuclearphynance, wilmott, (some of the smarter guys on this site) and give some time to reading about market structure and financial mathematics.
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The problem I see is that indicators are only that. They indicate what price has done, not what price will do. In order for an indicator to change price has to change first. The indicator will then show what price did. It won't show what price will do tomorrow.
It IS nothing but a gamble if you don't know what you're doing. You're well ahead of many by acknowledging that.
A big player have zero interest in 'smashing' your retail position. It's advisable to use a stop to protect yourself against adverse movements.
Markets are fairly predictable a lot of the time with most days being a variation of a common theme. That's not to say it's easy to monetize this even if you have this knowledge.
That advantage is market knowledge. Takes years and endless studies to acquire it.
Most traders just want to start buying and selling and learn by doing. Usually don't work.
Did you spend years studying intraday charts and compiling statistics already?
I'm guessing no.
There's opportunity cost with everything. If I want to become a proficient programmer that means less time to study the markets.
There's no such thing as steady risk free money outside the 9-5 unless you're on welfare. I'd say most pursuits beyond the 9-5 are a tough racket.
Many are called, but few are chosen.
