More bad news for those playing the home game
- Thread starter stock777
- Start date
We can argue all day. I guess the difference here is the retail thing. I don't have stats or know officially how the retail world does. While I am sure a lot of retail daytraders do fail, I would be willing to bet that many retail swing traders/longer term also blow out. I am not sold on the whole "longer term traders do better than short term traders". That daytrading is so much harder. The big difference between the two is time frame,profit goals, loss limits. If one has no plan in place it doesn't matter if he is a daytrader or a swing trader. He will fail.
I have a buddy who says daytrading is impossible and like you said, cant be in front of a screen all day. Thats fine. He went short the euro at 1.30, took a massive hit when it hit 1.40. What's the difference between him blowing out and some guy scalping all day and blowing out after a few bad weeks ? It's called bad trading/no gameplan in both cases.
While daytrading/being in front of the screen is not for everyone, to say it is a losing game compared to your longer term strategy is absurd.
As far as most retail guys being successful? The guys who trade their ameritrade account form their other job and dont have the right time and plan in place will fail...no-brainer. If you have the right discipline/state of mind/plan then no matter if you are a retail guy or a hedge fund guy, you will succeed.
My argument with you isnt retail vs pro traders. It's your daytrading is a losing game vs longer term strategies. That comment is really rather stupid.
Algos are still very simplistic, there are at least two in the market I mainly daytrade and although it's had some impact, the bulk of profits are still there to be made. Basically they pick off *some* (not all) of the "free money" from dumb customer orders. But 80-90% of trades still require pattern recognition that cannot be gleaned from simplistic analysis of the order book alone. I also game both algos when I need to exit, I sometimes get a few ticks better exit price by bluffing them into higher bids or lower offers.
Still, algorithms are very good for certain things like consistency, attendance, speed etc. For simple patterns with fat edge, and for arbs, they are better than a normal trader in many circumstances. Hence why I am now working on some myself, and I am sure most good daytraders are as well. Maths/computer whiz kids are cheap and plentiful, and algos are scalable across multiple markets, so just move with the times and adapt. There will always be a place for top-notch pattern recognition and so far humans are still the best at that.
There will always be progress, innovation, and change in the markets. The losers will make whining posts complaining about them, and lose their income streams and edge. The winners will adapt, use the change to their advantage, and thrive and prosper. This has always been the case in the past and will continue to be in future. You can tell a lot about someone by how they respond to and view change.
Still, algorithms are very good for certain things like consistency, attendance, speed etc. For simple patterns with fat edge, and for arbs, they are better than a normal trader in many circumstances. Hence why I am now working on some myself, and I am sure most good daytraders are as well. Maths/computer whiz kids are cheap and plentiful, and algos are scalable across multiple markets, so just move with the times and adapt. There will always be a place for top-notch pattern recognition and so far humans are still the best at that.
There will always be progress, innovation, and change in the markets. The losers will make whining posts complaining about them, and lose their income streams and edge. The winners will adapt, use the change to their advantage, and thrive and prosper. This has always been the case in the past and will continue to be in future. You can tell a lot about someone by how they respond to and view change.
Some people just don't get the immense impact of adding milliseconds to execution times. If you haven't been there, you don't know.
I don't know why anyone that short-term trades would ever send an order to the NYSE other than an MOC? I trade only thru ECN's for speed and cost. My system looks for best offer, but I start with ARCA. Floor traders on the NY - that's a joke right? Pit traders for S&P are severely disadvantaged right now with electronic markets.
I don't believe 'black boxes' have any advantage in short-term. I have yet to meet a trader that uses one that says he has any more success than trading outright. Maybe someone could enlighten me. As for reduced speed, why is this a bad thing? Do some traders still think they can pick off something because these mls's matter?
Trading successfully is about putting in the time. A good 'daytrader' to me is one that rides momentum and trades around his position continually. I personally try to figure out which way everyone else is and take the opposite. Once an algorithm or basket hits, buys are usually set off into weakness and sells into strength for liquidity purposes, most guys get stopped out exacerbating the opposite move.
Thursday was tough, lost money fighting tape during the day. One thing a machine/box can't see is a seller/buyer in the marketplace. After the 'late' close (4.15pm) there was a NASD seller in SPY showing 100 shares that sold 1mm plus knocking them down from 89.80 (4.15pm close) to 89.35. He was very easy to get in front of. He was locking the ARCA market by a penny continuously. When he left I went long and they went back above 89.70. He came back and knocked them back to 89.37 then left. I did the same trade. I was up nicely on the day after this as they closed at 89.65 in the after hours.
I don't think automation will ever reign in the intraday. Markets are all about emotion and relativity to outside factors like news, USD, commodities, bonds, etc... This is something that computers can't get a grasp on because each day is like a snowflake, no two are alike in how they react to these 'outside' forces. Traders that sell the low and buy the high will never make it.
The reason I wrote such a long post is because I don't want to see anyone fail, but if you are new you picked a difficult profession that no degree or black box will make up for experience. Most quit before putting in the time, hence failure rate is high. If you are on ET, you are making an effort to improve your trading. Yes, there are hugely successful 'daytraders' out there. From my experience, most are graying on top (experience).
Best of Luck, Tide
I don't believe 'black boxes' have any advantage in short-term. I have yet to meet a trader that uses one that says he has any more success than trading outright. Maybe someone could enlighten me. As for reduced speed, why is this a bad thing? Do some traders still think they can pick off something because these mls's matter?
Trading successfully is about putting in the time. A good 'daytrader' to me is one that rides momentum and trades around his position continually. I personally try to figure out which way everyone else is and take the opposite. Once an algorithm or basket hits, buys are usually set off into weakness and sells into strength for liquidity purposes, most guys get stopped out exacerbating the opposite move.
Thursday was tough, lost money fighting tape during the day. One thing a machine/box can't see is a seller/buyer in the marketplace. After the 'late' close (4.15pm) there was a NASD seller in SPY showing 100 shares that sold 1mm plus knocking them down from 89.80 (4.15pm close) to 89.35. He was very easy to get in front of. He was locking the ARCA market by a penny continuously. When he left I went long and they went back above 89.70. He came back and knocked them back to 89.37 then left. I did the same trade. I was up nicely on the day after this as they closed at 89.65 in the after hours.
I don't think automation will ever reign in the intraday. Markets are all about emotion and relativity to outside factors like news, USD, commodities, bonds, etc... This is something that computers can't get a grasp on because each day is like a snowflake, no two are alike in how they react to these 'outside' forces. Traders that sell the low and buy the high will never make it.
The reason I wrote such a long post is because I don't want to see anyone fail, but if you are new you picked a difficult profession that no degree or black box will make up for experience. Most quit before putting in the time, hence failure rate is high. If you are on ET, you are making an effort to improve your trading. Yes, there are hugely successful 'daytraders' out there. From my experience, most are graying on top (experience).
Best of Luck, Tide
You got that right !!
I couldnt agree with you more
As someone said before you can replace floor trader with black box or whatever you like.
My point is simple. The vast majority of retail traders in general lose money, but especially retail traders that are into daytrading since is one of the most exciting yet compulsive way to trade. It is probably one of the most exciting things to do with your clothes on.
Obviously if one does not know what he is doing he will fail, but all things being equal daytrading is still one of the hardest way to make money.
My point is simple. The vast majority of retail traders in general lose money, but especially retail traders that are into daytrading since is one of the most exciting yet compulsive way to trade. It is probably one of the most exciting things to do with your clothes on.
Obviously if one does not know what he is doing he will fail, but all things being equal daytrading is still one of the hardest way to make money.