Is Trading Itself a Bad Trade? I Analyzed the Industry- Prove Me Wrong
- Thread starter cityboy12
- Start date
You have way too much time on your hands.
See, I'm clairvoyant. You're in this thread because you've got too many years between brokerage gigs to get hired and/or you're not motivated to build a book of clients. I'd say that nobody will give you a decent draw. You're not sitting on enough cash to live off LIBOR so you thought you'd convince yourself, before you start, that trading on the retail level isn't profitable.
I trade professionally and also actively trade my margin-IRA. I pay $0.50 per contract in my IRA. I can trade an asym-fly (132) for three bucks in comms and my typical 100-lot gamma has the microstructure impact of say, 1K shares of spot. Yeah, my markets are a bit wider (NBBO) than spot, but the var (lack thereof) makes it's worthwhile.
YTD, I am up 18% in my IRA. DD of less than 2%, so earning nearly 10x risk. This from a guy sitting in his home office.
See, I'm clairvoyant. You're in this thread because you've got too many years between brokerage gigs to get hired and/or you're not motivated to build a book of clients. I'd say that nobody will give you a decent draw. You're not sitting on enough cash to live off LIBOR so you thought you'd convince yourself, before you start, that trading on the retail level isn't profitable.
I trade professionally and also actively trade my margin-IRA. I pay $0.50 per contract in my IRA. I can trade an asym-fly (132) for three bucks in comms and my typical 100-lot gamma has the microstructure impact of say, 1K shares of spot. Yeah, my markets are a bit wider (NBBO) than spot, but the var (lack thereof) makes it's worthwhile.
YTD, I am up 18% in my IRA. DD of less than 2%, so earning nearly 10x risk. This from a guy sitting in his home office.
I thought I'd add a bit of color beyond that of a retail broker.
I've traded on a Hedge Fund Desk, and I've traded on a big Commercial desk.
Nobody was interested in front running retail traders out of a penny - quite frankly not enough money in it. I got hired to take on a hell of a lot of risk in OTC products. I traded some interest rate basis but mostly I traded energy - power and hydrocarbons. Swaps and options on swaps. As I recall the guys on the equities desk did them in blocks of 10, 20, 40 K at a whack.
Are markets dominated by automation? Sure - been that way for fifteen years or so. Can a retail trader be successful? Absolutely. If you swing trade or position trade you've taken the ECN speed component out of the equation. If you have developed a trading plan that emphasizes solid position (risk) management rules you'll be miles ahead.
Whether you start trading stocks on a retail basis or open a smoothie shop in a beachside resort town or a tropical juice bar on a food truck - there's going to be competition, your overhead will eat you alive, and there's a very real risk of failure. In fact, the failure rate for those three ventures I mentioned are likely about the same I would opine.
The good thing about trading is that the financial entry barrier is quite low, and you can fail a few times before you get it right.
I've traded on a Hedge Fund Desk, and I've traded on a big Commercial desk.
Nobody was interested in front running retail traders out of a penny - quite frankly not enough money in it. I got hired to take on a hell of a lot of risk in OTC products. I traded some interest rate basis but mostly I traded energy - power and hydrocarbons. Swaps and options on swaps. As I recall the guys on the equities desk did them in blocks of 10, 20, 40 K at a whack.
Are markets dominated by automation? Sure - been that way for fifteen years or so. Can a retail trader be successful? Absolutely. If you swing trade or position trade you've taken the ECN speed component out of the equation. If you have developed a trading plan that emphasizes solid position (risk) management rules you'll be miles ahead.
Whether you start trading stocks on a retail basis or open a smoothie shop in a beachside resort town or a tropical juice bar on a food truck - there's going to be competition, your overhead will eat you alive, and there's a very real risk of failure. In fact, the failure rate for those three ventures I mentioned are likely about the same I would opine.
The good thing about trading is that the financial entry barrier is quite low, and you can fail a few times before you get it right.
Thank you for your post.
I was referring to day trading as conducted by retail investors. I agree that investing (long-term buy and hold, value investing , smart beta, compounding etc) has a lot of merits and would recommend it. Swing trading is, in my opinion, more in the area of short time-frame investing rather than day trading. It is certainly a better option than day-trading but still not as good as investing. Interestingly, a friend of mine sent me this video which I never watched before. Anton Kreil agrees with almost everything I have said so far including charlatan educators, fake gurus and retail clients being gamed.
For all my haters...I am not alone in my analysis.
Also, you apparently did not trade equities or FX at your hedge fund which is where the vast majority of retail traders concentrate. You mention some interest rate trading, but mostly energy and OTC derivatives so your comment makes no sense.
What is your opinion of my premise, however? Is retail trading a bad trade?
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Kreil is a fucking hack.
Please Note: Anton is the Managing Partner of the Institute of Trading and Portfolio Management and does not partake in Remote Trader Mentoring Programs due to his busy schedule. Anton only accepts 4X Mentees every 6 months as part of the ITPM Thailand Trader Mentoring Program held in April and October each year for 10 days followed by 12 weeks of Remote Mentoring.
My comment makes perfect sense to someone who knows WTF they're talking about. I stated in my post: "As I recall the guys on the equities desk did them in blocks of 10, 20, 40 K at a whack."
Yes, the HF I was at traded equities. And energy. And interest rates. And FX. Different product spaces are divided into different trading desks at a Fund.
I would agree with a lot of what he says in his presentation based on my research and experience within the industry.
I would still refer anyone to my premise, however, that there are better trades out there than retail day trading. Also, I would never encourage anyone to pay for training at all. I would not recommend Anton Kreil or any educator at all for that matter (based on my analysis of trading in general) as I think there are better places to put your educational money...the exception would be only if you saw an adequate risk/reward to your investment in time and money and an audited P&L of the trader.
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Bone (or Spreadprofessor - I noticed you are marketing your services)...I also noticed that you charge $7500 for teaching people to trade. This is for a full package of 100 hours of webinars and 12 months of mentoring.
Can I ask you, if you are that successful, why you are taking on clients on a non-performance fee basis? Also, why you are taking on clients at all and not attracting outside capital (particularly as you have an institutional background)? Do you provide your clients with an audited P&L?
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