Why some traders are bitching about the lack of volatility?

Quote from Daal:

I disagree. If you have an edge the more money you throw at it the more money you will make(assuming you wont move the market while sizing it, if thats the case then I agree)

Lots of the whiners around here are like blackjack players who were counting cards betting the table limit(say $50 a hand) then the casino decided the stakes doubled for 1 hour, they started to make more per hr and went into euphoria. Then the casino ended the thing and they started to bitch about the decline in $hr, when all they had to do was head to the $100 limit table and get the same result

Again, the ones who think some edges disappeared, I agree with them. And thats not going to go away(it was like the casino decided to pay 2-1 for blackjacks for 1hr instead of 3-2, 2008 was a bonus, you cant complain about that because its an anomaly thats not coming back) unless the HF industry goes into big trouble(not likely), I also see plenty of examples of people who dont have the stomach to handle big positions, they are the same ones hiding behind the 'blame the volatility' game
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Well, yeah you are probably right. How many here have a 7 figure trading account that they can sling around? I would say a minority.
 
If you take the idea of "bigger money at smaller gains" to an extreme then it indicates that infinite money thrown at no edge at all would be profitable... interesting..
 
Quote from spinn:

why does every post on ET scream "I have never traded in my life" or "I failed miserably and lost my shirt so you cant trade either".
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Haha. You hit the nail on the head. Most traders that know how to trade aren't looking at some message board trying to find tips and hints. ET is purely entertainment for me, as most of the opinions are useless or only effective as contrarian indicators. There are occasional good nuggets by certain traders that I find useful, the proverbial needle in a haystack.
 
For swing trader, current lower volatility is better since overnight risk exposure is lower and commission/spread/slippage do not effect your edge much.

However, for intra-day trading without a meaningful range, the game is much tougher. Commission/spread/slippage cost increases significantly relative to your edge/profit, and HFT, sub-penny trading further compound the problem. Increasing size will make it worst since the fill/slippage will be even worst.

Remember, intra-day trading is a low margin business. Lescor has a great week last week and he made 0.05 per share, and he said on average, he will be happy to make 0.01 to 0.005 per share. If he doubles his postion on every trade, his 0.01 might disappear all together.
 
Quote from Daal:

The ones bitching dont seem to realize you can counter the lack of volatility through increasing your leverage, the two situations are almost equivalent. The difference comes in that when you use leverage to compensate for smaller moves your commission costs as % of your edge makes your overall trading less profitable, also you are more exposed to black swan type events where your leverage might hurt you but I dont believe thats what the whiners are referring to when they say '2009 volatility sucked'. They almost always could increase profitability by increasing leverage

Most of the time they are just unconfortable using more leverage because it became a habit of them to risk a certain amount of money or size their positions a certain way and they dont want to change that, they should be whining about their cowardice. They are letting the market be their risk manager.

Now the ones that complain because edges have dimished since late 2008, I would agree but they are not complaning about the right thing, the problem is not the lack of volatility but the fact the hedge funds and other asset managers have come back to business after the 2008 disruptions(which included Stanley Druckenmiller pulling billions out of Goldman) and they have closed out a number of easy edges out there and guess what, unless the government lets the big financial institutions(like the big brokers) suffer complaining ain't going to do any good because those times are not coming back
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Ha. I think HFs have pulled back massively because the government is creating so many distortions with QE and other schemes. The system is even more fragile than last year
 
There are several nuggets of truth in this post. Instead of the usual nay sayers dismissing it, take another slow outloud read and see what you can find.

Example, if vol is declining you might want to consider more aggressive trading? Look at the recent extended decline in vol. You could take that as a signal, along with the rising market to be more aggressive on the long side and more cautious on the short side.

If you are doing ICs you can be closer with your puts and either leave your calls off or go further out.

I think one of the important points is what is the change of vol relative to price.
 
Quote from maxpi:

If you take the idea of "bigger money at smaller gains" to an extreme then it indicates that infinite money thrown at no edge at all would be profitable... interesting..
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....less clearing fees.

:eek:

i dont go with this theory either. especially the way daal pretty much gives a passing mention to the black swan, seemingly not realising that it is the lower volatility environments when such creatures tend to crop up.

i mean would a wild increase in vol have been considered a black swan in late 2008? no sir.

daal - with all respect, i think you are paying too much attention to game/math theory, and not enough to the trenches.
 
Quote from FredBloggs:

....less clearing fees.

:eek:

i dont go with this theory either. especially the way daal pretty much gives a passing mention to the black swan, seemingly not realising that it is the lower volatility environments when such creatures tend to crop up.

i mean would a wild increase in vol have been considered a black swan in late 2008? no sir.

daal - with all respect, i think you are paying too much attention to game/math theory, and not enough to the trenches.
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As I said, the dudes 'loving' VIX at 80 could have pretty much been wiped out if they got into the wrong side of the gap back then, lots did, you dont hear from those, only the successful ones from the sample
 
Instead of increasing the leverage or position size to compensate for lack of volatility...

Switch trading instruments to something that has more volatility. Yeah, that won't work for those that have an edge that's specific to a particular trading instrument but it will work for others that have an edge that's transferable to a different trading instrument.

Quote from Dustin:

...In trading you want to increase size as r/r is improving...
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Bingo.

Regardless, as volatility changes (up or down)...new edges can be found until the next big volatility change...then rinse...wash...repeat. :cool:

Mark
 
I think there is something wrong with the comments the OP is making when you look at what happened to gold recently. Don't get me started on what silver is doing and this is just me looking at daily price quotes! I don't even have access to the real-time stuff yet!
 
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