Is finding an edge harder when the time frame is shorter? Or, in other words, are there fewer edges to be found in shorter time frames? Allow me to elaborate...
Finding an edge means finding a statistical inefficiency in the market. The trouble is that (1) the market is mostly efficient and (2) everyone and their mother is sitting around looking for the few inefficiencies left to exploit.
So, it can be said, therefore, that once the first problem is over come and you manage to find an inefficiency, the second problem is that others may also find the same inefficiency and arbitrage it away.
Am I right in thinking that the only reason inefficiencies exist, aside from people having not found them all, is because of smaller time frames existing within larger time frames? In other words, everything would be arbed away quickly if everyone traded the same time frame.
If that's the case, then the longer the time frame that one trades, the less likely it is that his edge will disappear because of the multiple time frames that exist within his timeframe.
Is this why daytrading is so hard? Not only are there fewer timeframes within your timeframe to help ward off the arbitraging of your edge, but also only full-time professional traders play the intraday timeframes, meaning the people you are trying to prevent from arbing your edge are that much more skilled at doing so.
If one follows this thinking, then daytrading will only get harder and eventually impossible as more and more sophisticated computers all compete for the same inefficiencies over the same short time frame. After all, couldn't one look at day trading as an activity geared toward making the market efficient? Well, if that's the case, then the better traders become, the more efficient the market will become and the harder it will be for them to make a living.
Finding an edge means finding a statistical inefficiency in the market. The trouble is that (1) the market is mostly efficient and (2) everyone and their mother is sitting around looking for the few inefficiencies left to exploit.
So, it can be said, therefore, that once the first problem is over come and you manage to find an inefficiency, the second problem is that others may also find the same inefficiency and arbitrage it away.
Am I right in thinking that the only reason inefficiencies exist, aside from people having not found them all, is because of smaller time frames existing within larger time frames? In other words, everything would be arbed away quickly if everyone traded the same time frame.
If that's the case, then the longer the time frame that one trades, the less likely it is that his edge will disappear because of the multiple time frames that exist within his timeframe.
Is this why daytrading is so hard? Not only are there fewer timeframes within your timeframe to help ward off the arbitraging of your edge, but also only full-time professional traders play the intraday timeframes, meaning the people you are trying to prevent from arbing your edge are that much more skilled at doing so.
If one follows this thinking, then daytrading will only get harder and eventually impossible as more and more sophisticated computers all compete for the same inefficiencies over the same short time frame. After all, couldn't one look at day trading as an activity geared toward making the market efficient? Well, if that's the case, then the better traders become, the more efficient the market will become and the harder it will be for them to make a living.
