Who told you commsions are small? Ever hear of overtrading? My commisions every year for the last 4 years have been over $200,000 including sec, take/add liquidity. The best trader I know who often has $300,000 months commisions are incredibly high. I know other instutions can see retail order flow but what can they really do with this in large volume stocks. I mean most professional traders and black box guys are trading out often in milliseconds.
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Who profits when retail traders lose?
- Thread starter Option Trader
- Start date
Who told you commsions are small? Ever hear of overtrading? My commisions every year for the last 4 years have been over $200,000 including sec, take/add liquidity. The best trader I know who often has $300,000 months commisions are incredibly high. I know other instutions can see retail order flow but what can they really do with this in large volume stocks. I mean most professional traders and black box guys are trading out often in milliseconds.
I have a hard time believing retail traders lose money primarily through big stocks; rather, I believe it is thru stocks which are easier to manipulate.Quote from jd7419:
Who told you commsions are small? Ever hear of overtrading? My commisions every year for the last 4 years have been over $200,000 including sec, take/add liquidity. The best trader I know who often has $300,000 months commisions are incredibly high. I know other instutions can see retail order flow but what can they really do with this in large volume stocks. I mean most professional traders and black box guys are trading out often in milliseconds.
I have had the opportunity to see the books of some decent size firms in the stock and futures arena. The results play on my emotions in two ways 1) One out of every 5 - 10 thousand is a consistent winner and then most of them blow out after a year of being on top. ) 2)With so many doing so badly it has to be possible to do something right?? I have been trying for 10+ years. I get a grub stake together and convince myself this time it will be different. Who am I kidding...
The broker and exchange is the winner in this arena.
CL
The broker and exchange is the winner in this arena.
CL
I would say the major loss is: commission. the more you trade, the more the brokage firms make and the exechange, they are the consistent winner. actually they like the market up/down or almost random, that way they can force out lots of trades. today this news, tomrrow the news, make you traders like sit in a hot chair.
I once was with SCottrade, they charge flat fee plus order placing fee, comapred to IB, Scottrade's fee is very high. but oddly, after I moved to IB, I find most time I was making money for IB. becuase of low commision, I traded too frequently and lost lot of money on comiision. but when I was in scottrade, since the fee is high, I traded casually, and I planned trade carefully, almost 90% time I caught big winners, still overrall I did not produce much commision.
I once was with SCottrade, they charge flat fee plus order placing fee, comapred to IB, Scottrade's fee is very high. but oddly, after I moved to IB, I find most time I was making money for IB. becuase of low commision, I traded too frequently and lost lot of money on comiision. but when I was in scottrade, since the fee is high, I traded casually, and I planned trade carefully, almost 90% time I caught big winners, still overrall I did not produce much commision.
the more you trade, the more you lose, the more you lose, the more you want to trade, you are trapped.
Agreed, for someone who really trades a lot, however, even if we're talking less frequent trading, it's quite clear to me the average retail trader still loses badly; he is competing against someone who is aware of his vulnerability (e.g. stop losses being hit, forced margin calls, etc.) and acts against him. The question is which player(s) most consistantly takes advantage of him.
Quote from Option Trader:
Especially for first year traders, there are shocking statistics regarding the percentage of retail traders who lose, and lose large amounts of money or everything.
Who is on the other side of their trades? (I have my own belief about what happens, but would like to hear your input).
This may sound obvious for all the pro's among you, but since you are a "beginner", here goes, fwiw:
Making a few abstractions for simplicity's sake and ignoring commissions (these are simply add-ons and have as such nothing to do with market value being created or distroyed) for a moment, who wins and loses depends on many different things...: what products/markets are we talking about (stocks?, forex?, derivatives such as futures, etc); what time frame are we talking about (long term players, daytraders? etc) ; what type of users are we talking about (real money, leveraged money, hedgers, order executers who take a mark up in the chain but barely any open positions...?)... etc...
Stocktrading is indeed, like mentioned by some of u before, not a zero sum game: everone can be a winner (loser) at the same time, theoretically speaking (Forex however IS a zero sum game and what some people win is lost by others, all of the time).
Overal, the stock market as a whole loses value or increases in value constantly. That value change gets re-distributed constantly between all players with different mandates, different time horizons etc... A long term buyer for a pension fund ("real money") is not bothered about the loss he incurs today, he looks at medium term performance. He is less price sensitive compared to the say intraday heavily leveraged daytrader ('leveraged money"). The intra day loss of the pension fund manager gets charged to all the pension participants and on a per head basis, so it is meaningless, put into perspective. But that intraday price fluctuation for which the pension manager is less sensitive, is the bread and butter for the trade executors, or for the leveraged daytraders like us...
Which brings me to the next dimension: if you want to be a succesful daytrader, you will have to compete first of all with yourself (you are heavily leveraged and as such you wll have serious price sensitivity which others may not have, picking levels becomes much more important), you will have to compete with market makers/order executors who know particular markets very well and who can use their orders to bully the market and steamroll you in no time. You will have to compete with very experienced daytraders. Most daytraders have a proper edge either as a trader or either in a particlar stock, or both. This brings their overal probability and sustainability of success up, compared to starters who have to learn all these things the hard way first...
Quote from Option Trader:
Commissions of online trading are small, & spreads can sometimes be neglible, especially if you try to buy at the bid or midpoint--so this at best explains the losses of people with small accounts. For those with larger accounts, the picture should look much better.
My observation: When a retail trader places an order, his order is noticed by someone or something as a "retail" order, and he is targeted. The question is by who?
Yeah most institutions eagerly await your pathetic little orders (they show up on their screen in yellow!!) before making a move!!! Get a grip on reality you piker.
I suppose my YTD p/l and ROI would make me one of the successful traders.Quote from jd7419:
Who told you commsions are small? Ever hear of overtrading? My commisions every year for the last 4 years have been over $200,000 including sec, take/add liquidity. The best trader I know who often has $300,000 months commisions are incredibly high. I know other instutions can see retail order flow but what can they really do with this in large volume stocks. I mean most professional traders and black box guys are trading out often in milliseconds.
Something to consider: the percentage of my commissions to gross p/l is 1.86%.
Quote from Option Trader:
Agreed, for someone who really trades a lot, however, even if we're talking less frequent trading, it's quite clear to me the average retail trader still loses badly; he is competing against someone who is aware of his vulnerability (e.g. stop losses being hit, forced margin calls, etc.) and acts against him. The question is which player(s) most consistantly takes advantage of him.
Sorry your an idiot. I worked as an institiutional broker/trader over the last 15 yrs at some major houses and crap like your saying is so far off the money. New traders lose their own money because they are
1. New
2. Undiscplined
3. Undercapitailzed
4. Inexperienced
5. Stupid
6. Trade without an edge
7. Have no money management experience
The list can go on and on and on there is no boogey man out there so stop looking for excuses to why you are loosing money and look a bit closer to home it will improve your performance I promise.