Is Trading Itself a Bad Trade? I Analyzed the Industry- Prove Me Wrong
- Thread starter cityboy12
- Start date
Jus curious, who are your pro boys?
You must be a big shot to have pro boys working for you.
no big shot... I am just on the same page as the pro boys... feels like they work for me now
here is another thought. 1. if you dont have a clearly defined edge then you are guessing. you should see the setup and get excited about knowing with almost certainty that it is time to make money and you trade it. 2. you do not need to trade everyday all day. the sooner you recognize when you are done for the day the better. 3. stocks have way more amateurs than futures traders and stocks have way more short term term edges to exploit and are less noisy due to 1 cent tick price points vs. .25 jumps in ES futures. this allows more defined volume patterns and more precise indicator values. 4. stock index futures are very choppy due to 30,500,100,2000 different stock values all pressuring index vs. 1 stock which has buy sell pressure only news only on the 1 stock. 4. you can play very small in stocks 1 share. or big with margin. 5. you can get 200% 20% moves in stocks that trend for days on a story or mean revert over time not seconds unlike indexes where a 2 or 3 % move is huge. 6. stocks you can trade for free robin hood unlike futures tradeovate where its a 250 month minimum plus exchange fees. this no ticket charge allows you to get in and out on 10 shares at a time if you wanted. 1 es is equivalent to 500 shares of spy. thats huge for beginner and still big if you want to pyramid. you need a large account for futures or you are always scalping not holding. 6. options trading in stocks. you get 200% moves lots of times or 30% drops in 2 days. thats momentum compared to futures and the options will price it! 7. special sutuations which take time to happen..you need to put on trades in these and be able to hold and wait for them to happen. which goes back to position size. this year. pcg, boeing, disney, snd lots of others is more opportunity. Trading futures unless professional with a huge edge is bad for your health unless hedging your stock portfolio.
What do you mean by noise?
Noise as in randomness.
When my pro boys are ready for a campaign. Either a rally or smack down. They gonna use the fire power and media machine to execute it. Over days weeks months. They don’t change their mind every 5 minutes.
That’s why time frame is not just a personal preference. There is an optimal rhythm where you can breath at the same tempo as the market does
Thank you kindly. I agree with a lot of what you say. Sales, you could argue is the ultimate arbitrage (which is why I got good at it).
I think a lot depends on your motivation. If I can quote Mark Cuban , a lot of people are 'wantraprenuers' when starting their business. They 'want', the cars, the house, the social status etc...but they lack the accounting skills, business skills, the work ethic and sheer boring hard work and grind to achieve. They want the dopamine, the fantasy and the 'sugar for the brain.' The want to tell everyone they are a 'founder' or 'CEO' of a funky start-up that...due to the above...soon gets crushed by the market into oblivion.
In the world of trading I think a lot of people are captivated by the image, the films, the status, the delusion,the new self-identity of trading. Looking at multiple screens, talking (often in jargon) about the (ever-moving) markets and describing themselves as an important 'trader/family office portfolio manager etc' are more important to them than the only number that matters ...their performance (objectively measured by money in the bank and risk-adjusted P&L). For want of a better word they are 'wannabe-traders'.
If you take a totally dispassionate view (just like running your own business..or ...ironically, use a trader's mindset) you will find many 'trades' out there that make more sense. Here is an example...
https://www.bloomberg.com/news/arti...ew-pitch-for-blue-collar-workers?srnd=premium
Now I would like to add an exception to the above. And this is an exception for only that fraction of one percentage I think that can succeed in trading. If somebody has the sheer:
1. Talent, passion and potential (high IQ)
2. Superhuman work ethic i.e. 100 hour plus work weeks, sleep in the office etc.
3. The ability to study advanced programming skills and higher level mathematics. The ability to complete elite credentials and degrees.
4. The ability to create the infrastructure of an asset management company - infrastructure, compliance, licensing, operational aspects, marketing etc
5. The ability to assemble (lead and inspire) a team
6. The ability to sell 1-5 above externally...to take rejection like a man, and pitch to 1000s of investors and actually close new funding.
Then maybe, just maybe...the person has a chance...and here I say a tiny chance ... no more of making it big.
If you are not willing to pay that kind of price, you should go back home and stare at your screens and read some book about somebody else who was willing and was rewarded for it. In other words, you will live vicariously through other people. Using an analogy, you will be wearing the shirt of your football hero as you scream his name during a match ...while he scores the touchdown, has sex with a beautiful woman and has all the glory... you could have had if you worked harder.
I would also argue that, as per the title of my post, the idea for 1-5 above wouldn't be to be dumb enough to look for alpha on some sort of systematic long/short equity or stat arb strategy (because this is a crowded trade) but rather something different. Look for another 'game' within the 'game.'
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One more thing, yes ...I did 'trade' with millions of other people's money.I very often had a discretionary mandate and was actually quite good at it, precisely because I managed my emotions and always took a dispassionate view.
Also, as a side note, in my opinion, there is something which I call 'scared money' which has a different effect than 'other people's money'. It is usually very different trading with your own funds and retail traders are at a huge huge disadvantage for that reason. Their whole physiology, neuro-chemistry and brain architecture changes in the wrong way when they trade their own funds. Some of these things cannot be unlearned.
However, I always knew, based on my research, that a long-term buy and hold would beat me in the long-run and that is what I always proposed to those of my clients who were receptive to long-term wealth management. For those who wanted to take risks, I did the more active stuff. Made commissions all the way and either way. I always identified myself more as a broker/adviser/portfolio manager rather than a trader because I wanted to and felt that it was the better place to be.
Oh, and I am not Anton Kreil.
Also, as a side note, in my opinion, there is something which I call 'scared money' which has a different effect than 'other people's money'. It is usually very different trading with your own funds and retail traders are at a huge huge disadvantage for that reason. Their whole physiology, neuro-chemistry and brain architecture changes in the wrong way when they trade their own funds. Some of these things cannot be unlearned.
However, I always knew, based on my research, that a long-term buy and hold would beat me in the long-run and that is what I always proposed to those of my clients who were receptive to long-term wealth management. For those who wanted to take risks, I did the more active stuff. Made commissions all the way and either way. I always identified myself more as a broker/adviser/portfolio manager rather than a trader because I wanted to and felt that it was the better place to be.
Oh, and I am not Anton Kreil.
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to further elaborate the 'breathing tempo'... just think back of all the 'breathing events' in recent memory
- China slowdown august 2015
- oil crash jan 2016
- smooth ascend 2017
- inflation smack down jan 2018
- smack down oct 2018 (and what was the reason anyway lol)
and then there is every earning cycle.
think how the pro boys played these:
- distribution with good news;
- price mark down when there are no more bids;
- introduce the narrative, public start to sell near bottom;
- full scale spread of the narrative, public panic and capitulation; pro boys accumulate;
- almost overnight stoppage of the narrative, price mark up;
and notice they didn't do any of this in 2017 as retail was too short... forexIG data showing 1:9 long/short almost the entire year.
so is trading a bad trade? not if you breath at the same rhythm with these boys... there are plenty of 'tells' I have laid out before and I will summarize again:
- what is the retail dumb money position... I prefer forexIG and AAII as these are almost exclusively dumb money.... the VIX put/call stuff is a mix of smart/dumb money and not easy to read.... COT I don't trust, who knows how they define each group;
- what is the underlying fundamental that you can get from independent thinking, but the pro boys won't advertise.... e.g. 10 year yielding 2.5 and stocks yielding 6 so SP should be a 5000 right now.
- when the market shakes, what narratives are they pushing... watch the relationship between that, and the price movement... the classical price action stuff, W or V bottom, etc.
- what is the dumb money position after a shake down.
when you look at the market like this, you will have no doubt what your action needs to be... and trading should not be a bad trade because there is the underlying plan, a plan that the pro boys agreed among themselves to execute, but now you have read their hands and you know what to do.
of course the trading industry wont' want you to trade like this, where is the commission and slippage if you only trade and handful times a year.... they want you to churn, hence all the stuff about prop trading etc... that kind of trading is definitely a bad trade, because there is no rhyme of reason for the intraday noise.
there is another thread about intraday nets to zero over so many decades... that all makes sense.. during the day session just a lot of crazy people trying to screw each other while the house collects commissions and making the bid/ask spreads...
so if you have been taken by the industry and think this type of churn is 'trading'... then don't do it... makes zero sense to jump into the noise created by thousands of robots trying to screw each other.
but if you step back, and look at the campaigns the pros do... a smack down or 2 a year, or smooth riding like 2017.... you can greatly enhance the performance.
or, if you don't want to bother with all that, buy and hold is just fine, for the foreseeable future.
because the SP should be at 5000 right now. and you know it's true because nobody is advertising it... it must be true.
- China slowdown august 2015
- oil crash jan 2016
- smooth ascend 2017
- inflation smack down jan 2018
- smack down oct 2018 (and what was the reason anyway lol)
and then there is every earning cycle.
think how the pro boys played these:
- distribution with good news;
- price mark down when there are no more bids;
- introduce the narrative, public start to sell near bottom;
- full scale spread of the narrative, public panic and capitulation; pro boys accumulate;
- almost overnight stoppage of the narrative, price mark up;
and notice they didn't do any of this in 2017 as retail was too short... forexIG data showing 1:9 long/short almost the entire year.
so is trading a bad trade? not if you breath at the same rhythm with these boys... there are plenty of 'tells' I have laid out before and I will summarize again:
- what is the retail dumb money position... I prefer forexIG and AAII as these are almost exclusively dumb money.... the VIX put/call stuff is a mix of smart/dumb money and not easy to read.... COT I don't trust, who knows how they define each group;
- what is the underlying fundamental that you can get from independent thinking, but the pro boys won't advertise.... e.g. 10 year yielding 2.5 and stocks yielding 6 so SP should be a 5000 right now.
- when the market shakes, what narratives are they pushing... watch the relationship between that, and the price movement... the classical price action stuff, W or V bottom, etc.
- what is the dumb money position after a shake down.
when you look at the market like this, you will have no doubt what your action needs to be... and trading should not be a bad trade because there is the underlying plan, a plan that the pro boys agreed among themselves to execute, but now you have read their hands and you know what to do.
of course the trading industry wont' want you to trade like this, where is the commission and slippage if you only trade and handful times a year.... they want you to churn, hence all the stuff about prop trading etc... that kind of trading is definitely a bad trade, because there is no rhyme of reason for the intraday noise.
there is another thread about intraday nets to zero over so many decades... that all makes sense.. during the day session just a lot of crazy people trying to screw each other while the house collects commissions and making the bid/ask spreads...
so if you have been taken by the industry and think this type of churn is 'trading'... then don't do it... makes zero sense to jump into the noise created by thousands of robots trying to screw each other.
but if you step back, and look at the campaigns the pros do... a smack down or 2 a year, or smooth riding like 2017.... you can greatly enhance the performance.
or, if you don't want to bother with all that, buy and hold is just fine, for the foreseeable future.
because the SP should be at 5000 right now. and you know it's true because nobody is advertising it... it must be true.
OK, I have my retail boys.no big shot... I am just on the same page as the pro boys... feels like they work for me now
I am just on the same page as the retail boys.... feels like they work for me now
Kidding aside, both yours and cityboy's messages are well taken but taking risk is in our genetic makeup. Most humans are risk takers, failure is not in our vocabulary because that is how we humans survived through history: Sacrificing individuals for the good of the whole. When we go to war, it is always the others who won't make it, we will come back fine.
Best to you.