Why day traders will never win, Chicago PMI edition

A

ASusilovic

Amid the rise and rise of retail-oriented sites like StockTwits, the declarations of legislators like Senator Ted Kaufman that markets ought to be fair and the continuing (inexplicable) influence of Jim Cramer, it is easy to forget that the odds are inherently in favour of institutional investors.

Life is unfair - and so are markets, especially if you’re a retail investor.

Bespoke Investment Group pointed to a a particularly pertinent example on Wednesday - the timing of the release of the Chicago PMI:
Conspiracy theorists are buzzing this morning regarding the release of the weaker than expected Chicago PMI. Economists were expecting a level of 52.0, but the actual level came in well below 50 (46.1). Even though the report was released to the general public at 9:45 ET, the S&P 500 began its nosedive minutes before the official release of the report. At first glance, most would agree that the report was leaked.

But, as Bespoke point out, nothing nefarious was taking place (emphasis ours):
The S&P 500 certainly did decline prior to the official release, but traders should be aware that anyone who wants early access to this report can do so provided they are willing to pay for it.

On the company’s website, Kingsbury describes the Chicago PMI as, “a proven monthly ‘first look’ at business, government and NGO economic activity in the USA.”

They then go on to say that subscribers to Kingsbury’s data will receive “access to this market-moving data 3 minutes before public release.” In other words, Kingsbury will ‘leak’ the report to anyone who is willing to pay at least $200 per month.

http://ftalphaville.ft.com/blog/2009/09/30/74846/why-day-traders-will-never-win-chicago-pmi-edition/

Get your advantage. Pay 200 USD.
 
Quote from ASusilovic:
.....Kingsbury will ‘leak’ the report to anyone who is willing to pay at least $200 per month.
More...

Fee Schedule:
1) 5 minutes before the release, $500
2) 10 minutes before the release, $1,000
3) 15 minutes before the release, $1,500 :cool:
 
Markets are a hell of a scam.

Take indexes & index data for example...

There' no need for Dow Jones to 'publish' their indexes 3-5 minutes late. No need at all!

But if you have the dough, somebody will get those indexes updated in real-time. Not 5 min behind, not 15 sec late, but real-time.

Fees here, subscriptions there, commish for this guy, charges for that service and it all adds up big!
 
The PMI conference call has been going on for years as has the Michigan one, although that is now rubbish since Reuters sponsored it and release it quicker than she can read it. This is hardly new news and if you trade at a decent firm you're dialed in anyway. Day traders have been winning for many years on this number contrary to the title of this post.
 
Asu, thanks for posting that, I was wondering why it moved prior to the expected release.

While I think it raises moral if not legal concerns as I see it as a form of insider trading, if you're a pure price action trader, it doesn't really matter if a few has the data before the crowd. Actually, most of my trading room fellows - including myself - shorted ES right before the drop on opening weakness signs.

That said, I do agree. It just doesn't feel right.
 
Most (good) non-institutional traders are not going to sit and wait until the "official" time of a release, read the data, analyze, then make a trading decision based on the economic indicator. They are either positioned into it, or react upon the MOVEMENT, not "data" per se'. It's fairly obvious to even those unfamiliar with legal early release and illegal leaks that when there is a decisive move around the time of a release, the data is out somewhere or to someone, and you react. Period.

FYI for the so inclinced:

http://www.kingbiz.com/subscribe.asp
http://www.sca.isr.umich.edu/

There are more seen and unspoken.

Again, however, the money will move the market when it has the data, so be prepared, and react to the tape.
 
Quote from Daal:

Did the pre-release showed up on Bloomberg or Reuters?
More...
it showed up on the charts like it always does. plain as day. real traders were on that move like stink on shit. like they always are. news feeds are for the clueless
 
You must log in or register to reply here.
Back
Top