Why some traders are bitching about the lack of volatility?

[Buzzed]

I have a question. Please note that I have never traded before.

If volatility becomes too low for someone to trade options, then why not switch to stocks?

 

[gkishot]

Quote from Buzzed:

I have a question. Please note that I have never traded before.

If volatility becomes too low for someone to trade options, then why not switch to stocks?

Which stocks?

 

[rallymode]

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..

Indeed. It's a place where the whole world is one big replication trade. Endless liquidity thrown at smaller and smaller yields. Low to high vol regime shifts become increasingly painful if not deadly. Deja vu?

 

[damon_achey]

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..

Quote from rallymode:

Indeed. It's a place where the whole world is one big replication trade. Endless liquidity thrown at smaller and smaller yields. Low to high vol regime shifts become increasingly painful if not deadly. Deja vu?

Let me fast forward this thread to the end.... LTCM. Your welcome.

 

[Daal]

Quote from damon_achey:

Let me fast forward this thread to the end.... LTCM. Your welcome.

Tons of hedge funds blew up with VIX at 80, your point is?

 

[illiquid]

Agreed to the first part: what lack of volatility? Sure it's thin out there but that's where the volatility is coming from. And earnings season hasn't even started in earnest yet.

Disagreed to the second part: You don't trade size for pennies in this market; you need a correct opinion and a decent pair to take the automation head-on.

 

[Halal Burger]

The reason why there's so many people complaining about a lack of volatility is because they are dumbass losers who trade a moving average cross-over on a 5min chart.

 

[MohdSalleh]

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

volatility does nto concern me as much as liquidity, but actually you have no idea what it means to be a scalper, talk to some of the floor traders if u know any

 

[Momo Gaddafi]

there are literally no pullbacks in this market. it is pure ground and pound. there used to be deep pullbacks but now the market always dies at the high and then after a while grinds higher.

for individual stocks, low volume combined with sub pennying makes trading a lot more difficult. like someone mentioned, you don't get filled unless the whole level goes through.

 

[BSAM]

Quote from Halal Burger:

The reason why there's so many people complaining about a lack of volatility is because they are dumbass losers who trade a moving average cross-over on a 5min chart.

GOSH-0-MIGHTY THIS PLACE IS A HOOT!