Reality for an Individual Trader

[Zzzz1]

Lol, you surely pick up fast on new threads or is that alias #5?

@Zzzz1 sure all that helps, all I'm stating is that it's not a necessity as in the way OP asks.

As I said earlier, the way you trade defines what you need. I don't do algo's, so also don't have to co-locate. I hate the small speed delays sometimes... but I've had a fair bit of that when I was a pro too.

Anyway, if OP wants to put in hard work and learn... that's a good start. If he wants to go all-in with credit card debt, like other people high on the dumb-scale... (possibly this one too: https://www.elitetrader.com/et/threads/ym-magic.307470/)... than he's going to be f#Dked and this all is a waste of my and your time

 

[JackRab]

Lol, you surely pick up fasten new threads

Just waiting to market close here...
On a side note, are you Australian mate?

 

[sle]

So am i so what? Can you afford Bloomberg, Reuters, Datastream? Do you colocate and trade off hardware rather than software applications for the absolute speed advantage? Do you get the inside scoop from talking to clients? Do you overhear the latest trends in the industry and you hear it first? If not then you are naturally disadvantaged as anyone who is not professional. Again I am not saying an individual non professional cannot make it but it is way harder as depicted in this thread. By the way even with programming skills you are up against an industry that employs hosts of developers to get them whatever a trader/Quant trader needs so a trader can focus on what he/she does best.

I am not, so I can tell you that despite all of the above (Bloomberg, good data sets, solid IT resources) it's hard to make money when your expected revenue is in tens of millions.

My experience has been that people who figure it as private traders do it by using the edge of being small. Once you descend into the world of low capacity opportunities, there is so much to do if you content with making a one to ten grand per opportunity.

 

[JackRab]

it's hard to make money when your expected revenue is in tens of millions. .

F$%^ing overhead!

I'm so glad I'm not trying to cover that shit for the first half year anymore...

 

[Zzzz1]

Nope. But love your country as well as NZ. Australians and Kiwis still enjoy a degree of freedom that Americans and the rest of us have not tasted in more than 2 decades.

Just waiting to market close here...
On a side note, are you Australian mate?

 

[Zzzz1]

Absolutely agree. For the 1 in 10000 or so that may be true. As long as expectations are set in an honest manner and a beginner understands what he or she is up against. It just rubs me the wrong way when I hear some glorified basement roaches make it sound as if you just move into longer holding periods and voila, good times are to be had

I am not, so I can tell you that despite all of the above (Bloomberg, good data sets, solid IT resources) it's hard to make money when your expected revenue is in tens of millions.

My experience has been that people who figure it as private traders do it by using the edge of being small. Once you descend into the world of low capacity opportunities, there is so much to do if you content with making a one to ten grand per opportunity.

 

[sle]

Well, there are two sane ways of thinking about it and unfortunately we rarely see it here on ET.

Way number one - you are working a regular job and trying to do a little bit better then buying passive index ETFs. You start looking at maybe doing this or that, but you still have another source of income and you are not betting the farm on your ability to "follow trends" or whatever. Eventually, you gonna either give up or come up with some way that matches your situation (maybe div collection? maybe some sort of risk premium selling? maybe something smarter?)

Way number two - you do this full time and you come up with a strategy that works for you, something that takes into account your skill set and natural advantages. Don't try to compete with the big boys in highly efficient markets. If you know accounting, you might want to do cap structure arb for all those 20 million market cap companies. If you know options/vol, you look at mis-pricing in stuff that trades five lots a day . If you know biotech, you look at biotech companies that failed an FDA test and try to understand their salvage value. It will bring home the bacon but you not gonna drive a [insert the current fancy car] any time soon.

 

[Zzzz1]

Re 1: if a hedge fund PM cannot outperform a passive index why should a beginner who needs handhold in be able to? I see close to a zero probability from this ever happening. Or did you hear of Mark Zuckerberg or Gates or Buffett who went to ask other suckers in the game how to learn their trade? Successful people are successful for a reason and only a small portion or some portion is attributable to luck.the rest is drive drive drive, and a huge dose of passion. Without it its almost impossible to succeed at anything in life above the average norm.

Re 2, that sounds a lot more realistic.

Well, there are two sane ways of thinking about it and unfortunately we rarely see it here on ET.

Way number one - you are working a regular job and trying to do a little bit better then buying passive index ETFs. You start looking at maybe doing this or that, but you still have another source of income and you are not betting the farm on your ability to "follow trends" or whatever. Eventually, you gonna either give up or come up with some way that matches your situation (maybe div collection? maybe some sort of risk premium selling? maybe something smarter?)

Way number two - you do this full time and you come up with a strategy that works for you, something that takes into account your skill set and natural advantages. Don't try to compete with the big boys in highly efficient markets. If you know accounting, you might want to do cap structure arb for all those 20 million market cap companies. If you know options/vol, you look at mis-pricing in stuff that trades five lots a day . If you know biotech, you look at biotech companies that failed an FDA test and try to understand their salvage value. It will bring home the bacon but you not gonna drive a [insert the current fancy car] any time soon.

 

[sle]

Re 1: if a hedge fund PM cannot outperform a passive index why should a beginner who needs handhold in be able to? I see close to a zero probability from this ever happening.

My point is that it's a hobby. In that regard it's not any different then my passion for rock climbing or my neighbors love for making model airplanes. It costs money but it's fun and you feel like it's improving your life. I guess if you get good at it, you can come up with professional quality stuff eventually, but the probability is low.

Now, nothing prevents the way 1 from taking a few advantages from way 2, but it's largely a question of time. If you working a regular job, it's hard to sit and read prospectuses every night after work.

 

[Buy1Sell2]

I am interested in trading commodity futures, but I question whether it is realistic for an individual investor to compete with pro traders who have decades of experience.

Initially no. You will lose money and perhaps a lot of it, but this is tuition and if you work on controlling risk and reap full benefits, you will eventually be a very successful trader.