Trading bubble

[Hydroblunt]

I've been thinking about this for a while.

Between all the "I wanna be a trader" threads on ET and the non stop commercials & infomercials about 123 day trading, is there a "trader bubble". The hedge fund mania, the ES retail traders that can start with little capital, and just all these new trader platforms and services, I'm just amazed to see so many more traders come into this market which is losing range, volatility & volume as the days go by. It's not like the market is roaring so why such interest? Investor money both dumb & smart is not active.

Some other things I have thought about. Investors, as a group, rarely short, traders short almost all the time. Investors don't use heavy margin, traders have pretty much in the range of 4:1 to 10:1. I'm not really sure what to make of this but it could set up for some interesting scenarios.

Would love to read some interesting comments.

 

[risktaker]

Hydro, I somewhat agree. I've said it before that I think the ''trader/investor'' ratio is too high (too many traders, too few real investors) hence the low volatility, etc. On many days most stocks have their daily range put in by the first 30 minutes and just screw around the other 6hrs. That's not a sign of investors coming into or leaving a market. It's a sign that nobody cares and all the volume being done is pure speculators, MMs/specialists and all the automated crap out there.

Maybe too many middle class engineering/software and other similar professional types with some time/money on their hands to give it a try fooled by a barrage of advertising that this is an easy way to make it?

 

[let it run]

Everyone wants to be a millionaire and most half-wits believe they have the ability to do it. The only thing that has changed is that with all the media and information we get bombarded with nowadays makes Joe Schmo think he knows what he is talking about and can make money out of his/her superior knowledge.

Club that up with the fact that more members of working society have a spare thousand bucks and they've all seen the big boys on Wall Street make money so a whole new industry got built around 'helping' people realise their dream. Ha ha ha.

There's less money in brokerage than there used to be so sign up Johnny Hotshot with a dogshit newsfeed, 2c analysis and some software that paints pretty pictures with 'candlethingies' and sending them packing with a smile. The beauty of it is that there's no liability on the part of those fantastic gurus/trading packages because if you lose money you obviously weren't listening in class. A perfectly legal swizzle.

Roll up, roll up, everyone's a winner!!!

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[Chagi]

I would argue that the "trader bubble" happened a few years ago during the stock bubble, I don't think that many people these days would view you in quite the same light if you said you are an equities daytrader as they would have back then.

The "next big thing" being aimed at Joe Blow appears to be currency trading, I've been gradually seeing larger and larger mention of it online, in the press, on RobTV etc. Personally I have absolutely zero interest in trading currencies.

I realize that there are some people out there that are able to do it successfully, but I find intraday currency movements to be far too noisy/random for my liking. I may graduate to trading futures at some point, but for the moment I will stick to trading equities (hoping to be able to start doing this more seriously in a year or so...).

 

[Epiphany]

This just begs the question:

Why not morph into an investor and with all that extra free time move into another profession?

 

[let it run]

Epiphany- Bingo!!!! My sentiments exactly.

On a purely lifestyle basis, I think this ensures minimal stress, less risk whilst still (hopefully) getting good returns.

 

[Hydroblunt]

Quote from Chagi:

I would argue that the "trader bubble" happened a few years ago during the stock bubble, I don't think that many people these days would view you in quite the same light if you said you are an equities daytrader as they would have back then.

Well you're talking about a full blown scale bubble. Every "real" bubble starting with the tulip mania had an influx of get rich quick speculators. There was dumb money pushing the prices, unlike today.
I'm talking about all these wanna be day traders/traders today. It makes no sense, if anything the right decision is to take a break from this market instead of rushing into.

Quote from let it run:

There's less money in brokerage than there used to be so sign up Johnny Hotshot with a dogshit newsfeed, 2c analysis and some software that paints pretty pictures with 'candlethingies' and sending them packing with a smile. The beauty of it is that there's no liability on the part of those fantastic gurus/trading packages because if you lose money you obviously weren't listening in class. A perfectly legal swizzle.

Roll up, roll up, everyone's a winner!!!

|

Hehe, good point. Another thing I noticed from this Joe Shmoe turning into a "trader" is the increasing use of stop losses. Hence the relentless chop that does nothing but build up commissions. I'm not advocating not cutting your losses, but the problem is that there is no real push or follow through, yet all these programs, hedge funds and traders keep churning & churning while the market goes nowhere.

I'm not at all surprised to see this market chop higher and higher on nothing. There are few real investor buyers, it's just short covers & bounces. Yet everyone is so ready to short any up move in a stock or indice, even if there is a real strong buyer.

Quote from Epiphany:


Why not morph into an investor and with all that extra free time move into another profession?

Excellent point. I've noticed that I have been doing this slowly. I rarely stay past 1pm, don't come a lot of the days, been putting money aside into investments and I end up working more at my side job that doing "full time trading". The market is just not there to focus 100%, too much risk not enough reward.

 

[Trend Fader]

Hydroblunt... this is a really stupid thread. The real bubble is home flipping and everyone becoming a real estate agent in CA.

Wanna traders is not a bubble. Half the daytraders are emberresed to call themselves daytraders.


Get real.

 

[Hydroblunt]

Quote from Trend Fader:

Hydroblunt... this is a really stupid thread. The real bubble is home flipping and everyone becoming a real estate agent in CA.

Wanna traders is not a bubble. Half the daytraders are emberresed to call themselves daytraders.


Get real.

What is stupid is your response and attitude, but if you really feel the way you do, don't post and ignore the thread.

I'm talking about the influx of day traders/traders for god knows what reason. I did not say "equities bubble" or "RE bubble", I said "trading bubble" meaning way too many traders without any fundamentals.
Just like every other shmoe in CA & FL wants to be a RE speculator, every other Joe Shmoe is being masqueraded as a trader by the brokerage industry. The big difference is that the equities & futures markets are nowhere near the right condition while Real Estate is still on a tear being pushed by first time home buyers convinced by mass media that the HAVE to buy a house & easy mortgages.

 

[Trend Fader]

Quote from Hydroblunt:

What is stupid is your response and attitude, but if you really feel the way you do, don't post and ignore the thread.

I'm talking about the influx of day traders/traders for god knows what reason. I did not say "equities bubble" or "RE bubble", I said "trading bubble" meaning way too many traders without any fundamentals.
Just like every other shmoe in CA & FL wants to be a RE speculator, every other Joe Shmoe is being masqueraded as a trader by the brokerage industry. The big difference is that the equities & futures markets are nowhere near the right condition while Real Estate is still on a tear being pushed by first time home buyers convinced by mass media that the HAVE to buy a house & easy mortgages.

I still dont think there are that many daytraders.. i know plenty of people that are still long term holders. I think your remarks are just based off a narrow view or self biased opinion. I read somewhere that the avg hold time for a stock trade in the US is 9 months from the retail crowd. Yes, that is lower than it used to be in 80' 70's but that is not a daytrader bubble. Also, provide some evidence and facts towards your assumptions.