No one on EliteTrader will beat the market… here is why

[TheJay]

Quote from Szeven:

Granted i didnt read most of that drivel, but i am more than certain you will not only be challenged, but ridiculed, forever to be sectioned off in the 'retards of ET' area of this wasteland.

hahahahahaha

 

[eagle]

Interesting! The first gnikcuf post after one year registration.

Quote from TheJay:

hahahahahaha

 

[neutrino]

I realized that I am wrong and that the market can be beaten. So I opened a new thread "A lot of people on EliteTrader will beat the market… here is why".

 

[Mr J]

Quote from neutrino:

I realized that I am wrong and that the market can be beaten. So I opened a new thread "A lot of people on EliteTrader will beat the market… here is why".

I find this thread interesting, because it's identical with what would happen in discussions on sportsbetting boards. Someone would suggest that you can't profit longterm sportsbetting as no-one is good enough to beat the bookmakers. Like you, they seemed to assume that the market was too efficient, and forget that the market is made up of humans with traits that do not lend well to the financial markets.

Many would agree and that anyone who thinks they can profit are deluding themselves. Many would disagree saying that they know someone or are winners themselves, while that not really being true. A small number would strongly disagree, being profitable bettors themselves. It was always easy to spot these people as they would talk in a way that only a profitable bettor could.

Most on a gambling forum obviously won't take gambling seriously or be profitable, and I believe that would hold true for a trading forum as well. There will be quite a few who aspire to be profitable, quite a few small winners, and then a much smaller number of truly profitable bettors. I assume most here have some interest in trading or aspire to be professional traders, that a reasonable number do grind out a profit, and a small minority actually live off trading.

The talk of "95% of traders lose" is also a little amusing as it used to be "95-99% of gamblers lose". Usually because of character rather than unable to potential learn the necessary skills.

 

[gangof4]

Quote from Szeven:

Granted i didnt read most of that drivel, but i am more than certain you will not only be challenged, but ridiculed, forever to be sectioned off in the 'retards of ET' area of this wasteland.

ditto

 

[Dustin]

Quote from neutrino:

They certainly trade both sides. But since there is a long term economic trend which is up (+8% a year on average), the larger part of trading profits will naturally come from long trades. Of course you can trade the short side in a bull market and make money, but not as much as if you traded more from the long side. You simply have a little bit of tail wind being on the long side.

Another false assumption. Stocks fall faster than they rise. Even in a bull market there is often such thing as panic selling, but rarely panic buying. This makes shorting more profitable at least for myself, even in an up trending market.

 

[neutrino]

Quote from Mr J:

I find this thread interesting, because it's identical with what would happen in discussions on sportsbetting boards. Someone would suggest that you can't profit longterm sportsbetting as no-one is good enough to beat the bookmakers. Like you, they seemed to assume that the market was too efficient, and forget that the market is made up of humans with traits that do not lend well to the financial markets.

Many would agree and that anyone who thinks they can profit are deluding themselves. Many would disagree saying that they know someone or are winners themselves, while that not really being true. A small number would strongly disagree, being profitable bettors themselves. It was always easy to spot these people as they would talk in a way that only a profitable bettor could.

Most on a gambling forum obviously won't take gambling seriously or be profitable, and I believe that would hold true for a trading forum as well. There will be quite a few who aspire to be profitable, quite a few small winners, and then a much smaller number of truly profitable bettors. I assume most here have some interest in trading or aspire to be professional traders, that a reasonable number do grind out a profit, and a small minority actually live off trading.

The talk of "95% of traders lose" is also a little amusing as it used to be "95-99% of gamblers lose". Usually because of character rather than unable to potential learn the necessary skills.

I would only add that in sports betting the spread is much higher which makes it even more difficult to beat the game. It is more acceptable on betting exchanges like betfair.

 

[neutrino]

Quote from GTS:

You stated that an equity trader would yield 8%/yr on average presumably because that is the average yearly market index gain.

Based on your premise, the only way that someone would average gains equal to the market is if they were only long the market.

Taking this to its logical conclusion, someone that traded only short would lose on average 8% per year (according to you).

Someone that did a mix of long and short then they would fall somewhere in the middle of that range, they would not yield 8%. This is basic math.

Well, yes, you are correct. Your returns from going both long and short should be less correlated to the overall market. Intuitively I feel that you would still be able to do some 10% a year, which is what the market averages, but I cannot prove it. May be you will miss half the bull moves and half the bear moves, so the end effect will be that you still make as much as the market and not zero.

 

[Pager]

Long may there will be people who think it impossible to make money or a living on a consistent basis.

I day trade futures using simple systems and to be honest they don't all work all the time, i usually have something in drawdown, currently im getting smashed in the Hang Seng but have had big gains in the Spi and ES, next month the Spi could be getting smashed and im making all my gains in the Nikkei or an overdue Hang Seng.

What i do know and what i believe is the most important aspect to trading is bet small to win big, and when you get a winner don't let go until you reach your target or that market closes.

When i tell people i trade futures for a living most don't believe me, do i care, not really futures after all are the most dangerous of markets to trade, i disagree they are the simplest and safest if done correctly IMO

 

[GTS]

Quote from neutrino:
Well, yes, you are correct. Your returns from going both long and short should be less correlated to the overall market. Intuitively I feel that you would still be able to do some 10% a year, which is what the market averages, but I cannot prove it.

You started with a simple premise: that the average trader would see gains equal to the average market returns.

When I pointed out that traders go short as well as long you changed from a your original mathematically based thesis to "Intuitively I feel".

Frankly I don't care how you feel. Your original premise was badly flawed but it was at least based on a real number - now you've switched to just guessing.

Quote from neutrino:
May be you will miss half the bull moves and half the bear moves, so the end effect will be that you still make as much as the market and not zero.

What you just wrote contradicts your original premise.

The only way traders would match the average market gains while being in and out of the market with both long and short trades would be if they have an edge (which you previously claimed they do not have in the short-term)

If they had no edge then there is no way they could match the average market gain unless they held a 100% long position in the market at all times - again, basic math.