Quote from Steve Tvardek:
Whether the economy is booming, crapping or stagnant, while others are worried about being downsized, traders will always be there to take advantage of what the market provides. As oil creeps up to $100 a barrel over the next couple years, I will be there everyday buying it up and on the days where it retraces I will be selling it down. Technology isnt hurting traders, as long as you arent in the pit somewhere denying its presence. As a matter of fact, w/o the current technology, many of us wouldnt be able to afford to trade as we do now. Buying a seat on an exchange isnt cheap!
Steve, I will have to slightly disagree.
In regards to the speculators, or to be more specific, prop traders, the effect of computer programs/technology has been detrimental. This is mostly due to the fact that the trader/investor ratio is out of whack but it is also due to the fact that a computer program will trade for much smaller profits than you and I will. These black boxes will fight with each other for pennies and as long as they do enough volume, the $.00001 profit per share will be worth it. Do not forget their speed advantage also.
I've spoken with a lot of guys who have traded for a decade and even excluding the bubble years, there is not even a comparison of how much tougher it is now due to decimalization & shorting of volatility. Note that commissions were very high before 2000 and the technology antique vs today. You can even look back as recent as 2001-2002, I call it bullet time. The commissions were 5 times larger, the technology not so hot yet there were guys making 20k a month which could not even break gross positive last year, let alone today.
There is no rule whatsoever which states that there is always money to be made by speculators in any given market. There will always be money for those in control, such as the big dominating players & privieleged maggots (specialists, MMs, execution traders) but even the top speculators may find themselves unable to make money at times. Refer to ROS's note of the "lean" years, I think 1914-1917.
I'm just refering to US equities, there is obviously a lucrative market in commodities right now, there also seems to be some good action in fixed income. Always Forex and emerging markets as well. Contrary to popular belief, it's all about being in the right place at the right time.
