How is retail day trading anything but a gamble?

[Tradex]

If they are random on 5 minute then they are random on monthly.

That is simply not true, a 5-min chart is more random than a daily, weekly or monthly chart.

For instance a support level on a monthly chart is much, MUCH more meaningful than a support line on the 1 min chart, simply because the total amount of money committed to the monthly chart, at that support level, is at least 1000 times bigger.

The smaller the time frame, the bigger the noise, not to mention the negative impact of high frequency trading.

PS: That does not mean we cannot make money on the 1 or 5 min charts, far from it.

 

[themickey]

Oh mickey! Cumulatively monthly bars make sense. Ok. Agreed. Now dial down. Cumulatively weekly bars make sense? Agreed. Let’s go lower Cumulatively daily bars make sense? Maybe but questionable per Mickey. But why not step down some more. Cumulatively hourly bars make sense. Let’s get a little smaller. Cumulatively 15 minute bars make sense? Cumulatively 5 minute bars make sense? Cumulatively 1 minute bars makes sense? Anything below a daily TF is an impossibility with Mickey. But the key word here is cumulatively.

Then you throw in a “random factor” with an arbitrary declaration that randomness increases with as TF’s become smaller. Is that really true? Stop and think through it. A monthly chart shows a trend. It may be a 40 month i.e. a 40 bar trend. A weekly TF may show a 20 bar trend. A daily can also show a 30 bar trend. A 5 mind chart shows trends too. They can be also a 40, 20, 30, 10, 5 bar trends. All TF’s show trends. If they are random on 5 minute then they are random on monthly. A five bar bear trend on a 5 minute chart is a 25 bar trend on a 1 minute chart. Guaranteed! There may be some PB’s on the 1 minute chart and it may show up as a 2 or 3 legged bear trend but it WILL be a bear trend. The larger 5 minute TF cannot overrule the lower 1 minute TF. A bear is a bear. A bull is a bull. A bull on a monthly time frame will have PB’s that are bearish on say a weekly or daily TF but overall the daily and weekly are bulls too or the monthly could not be bullish as it is composed of the weekly and daily bars, so to speak. Or if you don’t like that “speaking” the monthly chart is composed of all the transaction taking place on a weekly or daily TF. Even It is even composed of all the transactions on a 5 minute TF.

Since you threw in a “cumulative factor” (Which is true with the exception of you limiting it to monthly charts) and an erroneous “random factor” I will now throw in what I call an “opportunity factor”. If a bull trend on a monthly chart say renders one trade, on say a good PB, and the investor goes long for 4 months selling his position 4 months later all is well and good and he locks in his profit when the monthly trend ends. Well guess what? On a daily time frame that same exact move, over that same Exact time period, will render MANY MORE opportunities to go long on many more PB’s that are created and then sell those long positions on MANY MORE rallies that are created. Plus many more opportunities to short the declines on the monthly ( i.e. the PB’s) so while the long term investor is “holding” long and perhaps adding (scaling up). The daily TF trader is not only trading many more opportunities, but in addition, he is empowered to trade BOTH sides of the market; long and short.

Now a 1 hour trader has MANY MORE opportunities than the daily and monthly trader to do the same. Continue. A 15 minute trader has many more opportunities than a 1 hour trader. Continue. A 5 min trader has many more opportunities than a 15 minute trader. Drop it some more. A 1 min TF trader has many more opportunities than a 5 min TF trader. I like 5 minutes because I am old, not very smart, and it takes me a few minutes to “see” opportunities then run the TE (Traders equation) to structure a good trade. It is harder for me on 1 min TF’s.

In summary, the shorter the TF the many more opportunities to make MORE money, not less. J.M. Hurst discusses all this in his book “The Profit Magic of Stock Transaction Timing”

The premise that any thing below a daily TF is “noise” or random is total BS and erroneous. All TF’s have the exact same things. Rallies, declines, BO’s, PB’s PA patterns, bear bars and bull bars, support and resistance...etc ad nauseam... All can be capitalized upon for profits. To say that only monthly makes sense is in reality absurd. Granted sub min TF is the domain of HFT‘S (at least in part) and super fast algos. That is why I trade outside the 1 minute TF. I basically do “manual HFT” ROFLMAO.

Actually the concepts of noise is total BS. In reality the concept of randomness is BS. Everything that happens happens for a reason. We assign those words when we don’t have access to sufficient knowledge to understand “why” something happens. There is no noise on a 5 min TF. Just like there is none on a monthly time frame. There is NO noise on a SINGLE 5 minute bar. For what is on a single 5 minute bar is a bull trend or a bear trend or a BO or PB or a RANGE on a 1 minute bar. Furthermore, ALL DAY long every minute of the day bullish AND bearish institutions are trading. One side wins for a while then the other side wins. Bullish institution want a bull BO and bearish institutions want a bear BO. The pressures they exert is what moves the market and what forms the PA patterns. They cannot hide their footprint as PA reveals what they are doing. It takes a long time to learn how to read PA pressures and to then be able to structure a successful trade. The primary responsibility of a small trader (or any trader)is to first learn to read the pressures in the market, next structure a trade based upon probability and execute it, third manage that trade dynamically.

What would be perhaps more near to random (but even it isn’t there is always a reason) is that as retail traders we cannot know when an institution might enter or exit the market and we may not know who they are or why they did what they did. But we can see their footprints and what their entry or exit did to price and because of inertia we can capitalize on their entry or exit.

My 10 or 20 lot doesn’t move the market one tick. Even though it may look like it does it doesn’t. I could not buy 10 lots if an institution was not ready to sell me 10 lots. I could not exit 20 lots if an institution (bearish or bullish) did not make it happen. We mom and pop retail traders don’t move the market. We just pick up the crumbs. Look at the decline of the markets with the “covid effect”. Most mom and pop investors were likely long. If they had sufficient capital they survived. If they didn’t they may be crying. They got real quiet. Now investors are AGAIN touting investing as the only real way to make money as the markets are rebounding. I said dozzu888 would be vindicated and the markets would rebound quickly after the covid scare and they are. But an astute trader plays both side up or down on a weekly.,daily chart, 5 min (whatever) while a long investor was wringing sweat off his hands unless he had sufficient capital to hold and add. But guess what now they are singing again...well whats left of them....

"Oh Volpri!".
You mean well, put a lot of effort to your posts but to no avail. LOL.
99.9% of the world's population find it impossible to profit from trading the equities markets.
Doctors, lawyers, scientists, mathmaticians, engineers all predominantly fail to get rich from trading.
Buffett lately is struggling.
Fund managers and hedge funds largely underperform the index.
Algos frequently fail big time.
HFT is a decreasing business.
And you attempt to justify this statement???

......Actually the concepts of noise is total BS. In reality the concept of randomness is BS. Everything that happens happens for a reason......

LMAO
I'm not saying you cannot make money, I'm not saying markets are 100% random.

 

[Real Money]

The smaller the time frame, the bigger the noise, not to mention the negative impact of high frequency trading.

One way of looking at this is that there is a lot of confusion about direction on short time frames. What some people call 'noise' is actually indicative of aggressive trading.

This can be an opportunity. If you learn what the professionals are doing, then you can get a big advantage on the shortest time frame. There are so many algo's executing with contingent orders trying to get positions on, while other traders are trying to force them to trade out of those positions.

Much of the trading is designed to try and induce executions in order to take advantage of the resulting movement in price differentials. A lot of the HFT is trading baskets, index spreads, sector spreads, momentum rank, and similar, and they are feeding on this volatility.

If you can figure out what HFT is doing, then you can get way ahead of this stuff.

Most of HFT is trading the basis spread and cash vs etf, synthetic index vs etf, synthetic index vs futures, etf vs etf, and stock vs stock basket, etc.

Those trades benefit from trending markets that swing up and down over and over and over because it creates opportunity to trade the spreads. Understanding HFT is so important it's not even funny. Most people think HFT is just about order queue, contingent orders, special order types, and so on.

But the truth is that so much of HFT is doing the stuff I talked about, especially the basis trade (spot vs future).

The basis trade is so heavy that it's become the most important thing in the market for ES trading, especially once the vix gets into the teens...

 

[Tradex]

If you can figure out what HFT is doing, then you can get way ahead of this stuff.

Unfortunately HFT algos are trade secrets and, in my opinion, have been designed for the sole purpose of taking money from the public, one penny at a time.

Read "Dark Pools: High-Speed Traders, AI Bandits, and the Threat to the Global Financial System" or "Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market" for example to get an idea of the problem.

The idea that HFT algos provide "liquidity" to the market and serve a useful purpose to the trading community is total bullshit.

 

[ironchef]

First, I don’t know anyone on ET. Secondly, I learned that absolutely nothing will convince non-believers. I was non-believer myself for a long time until I witnessed it. I learned it’s important to have open mind. Personally, I think that people who have not seen what edge looks like are skeptical, and rightfully so, but the ones that had are hooked forever.

I can name at least one. But I won't because he may put me on ignore if I do.

 

[oshjdf]

Unfortunately HFT algos are trade secrets and, in my opinion, have been designed for the sole purpose of taking money from the public, one penny at a time.

Read "Dark Pools: High-Speed Traders, AI Bandits, and the Threat to the Global Financial System" or "Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market" for example to get an idea of the problem.

The idea that HFT algos provide "liquidity" to the market and serve a useful purpose to the trading community is total bullshit.

HFT algos provides liquidity because it trades big size per trade and frequently. That is how companies that run HFT algos able to absorb the operation cost (low commission, infrastructure, staff, etc) assuming that they will make profit in the long run.

 

[Tradex]

HFT algos provides liquidity because it trades big size per trade and frequently.

Sure, it's called fake liquidity, as orders are quickly sent and then cancelled in nanoseconds. They are essentially front running trades between buyers and sellers.

In fact HFT algos are not taking on opposite positions to counterparties wishing to trade (like market-makers do), they are not taking any position at all, period.

 

[ChipShotTrader]

@themickey
"Oh Volpri!
You mean well, put a lot of effort to your posts but to no avail. LOL.
99.9% of the world's population find it impossible to profit from trading the equities markets.
Doctors, lawyers, scientists, mathmaticians, engineers all predominantly fail to get rich from trading.
Buffett lately is struggling.
Fund managers and hedge funds largely underperform the index.
Algos frequently fail big time.
HFT is a decreasing business.
And you attempt to justify this statement???"

*Oh Mickey; I almost forgot about Mickey Mouse!!!

Algos are doing well, which explains why DIS, and UBER, went up considerably (squeezing shorts), in quarters, which historically should have been their worst. Fundamental Analysis is DEAD, and my Bsc. in Economics from Duke University is now worthless, and I accept that.

As for HFT, see how Citadel is doing...

Buffet is simply looking for deals that benefit him, at the cost of others. A shark, whose time is now done. And he has amazing PR. Google his last "successor", who was fired for insider trading. Very far in the Google search. He has dissappeared!

Mathematicians have gotten wildly rich from trading. Google Jim Simons (Medallion Fund), and I highly recommend reading "A Man for All Markets", by Edward O. Thorp. He initially discovered the formula for pricing warrants, then options, which Fischer Black and Myron Scholes later confirmed after being inspired by reading "Beat the Dealer", and "Beat the Market" by Thorp. They went onto win a Nobel Prize (which should have gone to Thorp!!!).

READ, MICKEY MOUSE!!!

And use a Dictionary, as my intuition tells me your vocabulary is on the lesser side?

 

[ChipShotTrader]

@themickey
"Oh Volpri!
You mean well, put a lot of effort to your posts but to no avail. LOL.
99.9% of the world's population find it impossible to profit from trading the equities markets.
Doctors, lawyers, scientists, mathmaticians, engineers all predominantly fail to get rich from trading.
Buffett lately is struggling.
Fund managers and hedge funds largely underperform the index.
Algos frequently fail big time.
HFT is a decreasing business.
And you attempt to justify this statement???"

*Oh Mickey; I almost forgot about Mickey Mouse!!!

Algos are doing well, which explains why DIS, and UBER, went up considerably (squeezing shorts), in quarters, which historically should have been their worst. Fundamental Analysis is DEAD, and my Bsc. in Economics from Duke University is now worthless, and I accept that.

As for HFT, see how Citadel is doing...

Buffet is simply looking for deals that benefit him, at the cost of others. A shark, whose time is now done. And he has amazing PR. Google his last "successor", who was fired for insider trading. Very far in the Google search. He has dissappeared!

Mathematicians have gotten wildly rich from trading. Google Jim Simons (Medallion Fund), and I highly recommend reading "A Man for All Markets", by Edward O. Thorp. He initially discovered the formula for pricing warrants, then options, which Fischer Black and Myron Scholes later confirmed after being inspired by reading "Beat the Dealer", and "Beat the Market" by Thorp. They went onto win a Nobel Prize (which should have gone to Thorp!!!).

READ, MICKEY MOUSE!!!

And use a Dictionary, as my intuition tells me your vocabulary is on the lesser side?

@themickey

And Thorp was Griffin's mentor, showing him everything about his convertible bond strategy, back in 1990!!!

There would be no Citadel, or Nobel Prize, for Black-Scholes without EDWARD O. THORP.

Read, you dumb Mickey Mouse!!!

https://www.citadel.com/leadership/kenneth-c-griffin/

 

[themickey]

@themickey

And Thorp was Griffin's mentor, showing him everything about his convertible bond strategy, back in 1990!!!

There would be no Citadel, or Nobel Prize, for Black-Scholes without EDWARD O. THORP.

Read, you dumb Mickey Mouse!!!

https://www.citadel.com/leadership/kenneth-c-griffin/