gamblers, deceiving themselves they understand the probabilities of each possible outcome and thus falsely believe they are putting on appropriate risk vs reward positions.

I used to be one btw, a day trader.

Now I've shifted my philosophy to "Think like a fundamentalist and trade like a technical analyst"

Developing a thesis first, and then using technical analysis to fine tune my entry and exit.

Day traders simply try to follow other traders, like that one smart kid everyone tries to copy off from. They dont care about any thesis usually.

my 5 cents

 
Best Response
rangerdanger 12:

gamblers, deceiving themselves they understand the probabilities of each possible outcome and thus falsely believe they are putting on appropriate risk vs reward positions.

I used to be one btw, a day trader.

Now I've shifted my philosophy to "Think like a fundamentalist and trade like a technical analyst"

Developing a thesis first, and then using technical analysis to fine tune my entry and exit.

Day traders simply try to follow other traders, like that one smart kid everyone tries to copy off from. They dont care about any thesis usually.

my 5 cents

Lol, I love when people say daytraders are gamblers, but that buy and hold is not. Yet, there evidence for why buy and hold is not gambling, is usually 1) warren buffett, 2) that the market has an upward drift of an average annual return of 9%

But yet Im a gambler, even though 1) I point to a multitude of succesful daytraders, (A great deal of people in books like markets wizards), that have made hundreds of millions if not billions sometimes trading multiple times throughout the day 2) I can historically test the odds, of any pattern, correlation, setup, etc. and show that there are most likely nonrandomness occuring.

And no I dont know where yougot that most daytraders simply follow other traders. Thats probably anecdotal.

Also what do you mean by thesis?

If I can show that for example empirically that whenever event/pattern X occurs, the market then has moved up an average of n% over the next Q time period T% of the time, then thats my "thesis" in this case.

I can also say that fundamental anlysts usually have nothing original to say. and generally go with the consensus. How many F.A.'s said to short AAPL in the beginnning of 2012, besides Gundlach? Answer-less than 5%

The vast majority said that AAPL was a buy. And of course it lost more than 1/3, despite everyone calling for $1,000

Of course I dont actually believe that fundamental analysts just go with what everyone else is saying, But you shouldnt believe that all day traders end up doing the same. Im trying to show that its more likely the other way around if it exists to begin with.

 

I'm sure there's a stat somewhere but i'd say less than 5% of day traders make money in the long run and even less (id say less than 1%) are able to make a living off of it. Day traders are often considered "gamblers" because alot of the guides out there teach you to trade based solely on technical indicators. Buy and hold investors on the other hand are still in theory "gamblers" because the nature of investing itself isn't a sure thing no matter how sure you are, however, value investing based on an investment thesis is proven to be much more effective no matter what you may be able to say based on your experience as it is centered around the "value" of the company itself and whether or not it is undervalued. In saying that,If you've had a track record of success in different market conditions and are consistently making good returns then good on you, but buy and hold will always be a more efficient and safer way of trading in my books.

 

Individuals that predominately trade on a lot of random noise.

I don't doubt that day traders can be consistently profitable but it appears to be a crowded space with the increasing quantification of markets.

I agree with rangerdanger 12... you def need to combine TA with FA. I wouldn't buy a stock that had good earnings if it is up 80% in the last 3 months, strongly beating the S&P. I also wouldn't buy a stock just because it is reaching a "support" level... I would primarily look for signs of it being undervalued. It would give me more confidence that it will bounce off support.

And funds such as Renaissance don't rely on TA as much as mispricings between securities. D.E. Shaw and Citadel def use fundamentals too. No large AUM HF is going to be trading stocks because of some bs that a stock is at its 12-day MA and that an oscillator is indicating that the name is being oversold. Academically, TA has shown significance when used to momentum trade relative strength or to L/S @ support/resistance in a large cap company when the market is going generally sideways.

 
mogel:

I'm sure there's a stat somewhere but i'd say less than 5% of day traders make money in the long run and even less (id say less than 1%) are able to make a living off of it. Day traders are often considered "gamblers" because alot of the guides out there teach you to trade based solely on technical indicators. Buy and hold investors on the other hand are still in theory "gamblers" because the nature of investing itself isn't a sure thing no matter how sure you are, however, value investing based on an investment thesis is proven to be much more effective no matter what you may be able to say based on your experience as it is centered around the "value" of the company itself and whether or not it is undervalued. In saying that,If you've had a track record of success in different market conditions and are consistently making good returns then good on you, but buy and hold will always be a more efficient and safer way of trading in my books.

I would like to see evidence of this statistic you cite. If the market is truly a brownian motion in the short run then by definition all daytraders should break even. Not go broke. They would make money on half of their trades and lose on the other half, Minus commission.

And yes I agree that trading off technical indicators is silly. Thats not what all daytraders do however. And its certainly not what I do. A lot of daytraders use quantitative analysis and hard empirical evidence.

That is like me saying that all F.A.'s simply buy on the basis of a low P/E ratio.

Please show evidence that daytraders are gambling nd that they dont know there odds.

 
mb666:

Individuals that predominately trade on a lot of random noise.

I don't doubt that day traders can be consistently profitable but it appears to be a crowded space with the increasing quantification of markets.

I agree with rangerdanger 12... you def need to combine TA with FA. I wouldn't buy a stock that had good earnings if it is up 80% in the last 3 months, strongly beating the S&P. I also wouldn't buy a stock just because it is reaching a "support" level... I would primarily look for signs of it being undervalued. It would give me more confidence that it will bounce off support.

And funds such as Renaissance don't rely on TA as much as mispricings between securities. D.E. Shaw and Citadel def use fundamentals too. No large AUM HF is going to be trading stocks because of some bs that a stock is at its 12-day MA and that an oscillator is indicating that the name is being oversold. Academically, TA has shown significance when used to momentum trade relative strength or to L/S @ support/resistance in a large cap company when the market is going generally sideways.

I never said that Rentech relies on technical analysis. I think T.A. in the form practiced by most amateurs is silly. Im not arguing in favor of T.A.

 

I think it takes huge balls to rely on day trading to put food on your table. My risk tolerance is nowhere near that high.

That bein said I admire the hell out of people that can day trade in their home office or on a boat.

I know it's anecdotal but the guy across the street from me teaches statistical analysis on the weekend and day trades Mon-fri. He's been doing this successfully for over a decade. He's older and clearly could be an outlier, but he's confident that he can continue to support he and his wife this way.

That being said this guy is obsessive over writing his own programming to test theories and attempt to predict possible outcomes - I'm sure most traders aren't near as diligent as he is.

twitter: @CorpFin_Guy
 

To be fair, I think a lot of people come to the market, thinking they're going to make millions of dollars in easy stress free money by day trading.

The 5% statistic, is interesting, and I think shows ignorance and lack of understanding, when FA supporters, preach this. and here is why I think so- (if any statistician, thinks i am wrong/misled and wants to correct my logic please feel free,). I am also not taking transaction costs into account here-

1)FA supporters generally think that the market follows a random walk in the short term but drifts upward in the very long term.

2) if however the market is random in the short term then this would imply that people are randomly buying or selling, meaning your odds are 50/50 on each trade. -So in the 6 month period most traders will break even in this case,

-and some will be slightly above even,

-and you would also see just as many people slightly poorer as those who broke slightly above even

-and some will lose all their money

-but you would also see the same amount of major winners, as those who lost all their money.

3) so the above would be the result of a random walk in the short term. However if 95% of daytraders are going broke, then you have to agree that the market is not a random walk, and that there is a way to beat the market at least in the short term. Finding out how newb daytraders think and making the opposite bet would be one way of beating the market.

I dont see how its possible in a random walk 95% of participants will go broke in the first few months. I think its just fear mongering, and boy am I glad I didnt listen to it. I tried fundamental investing, and it got me nowhere.

Im sure it works for some, but it does not suit me.

 
jackbnimble:

To be fair, I think a lot of people come to the market, thinking they're going to make millions of dollars in easy stress free money by day trading.

The 5% statistic, is interesting, and I think shows ignorance and lack of understanding, when FA supporters, preach this. and here is why I think so- (if any statistician, thinks i am wrong/misled and wants to correct my logic please feel free,). I am also not taking transaction costs into account here-

1)FA supporters generally think that the market follows a random walk in the short term but drifts upward in the very long term.

2) if however the market is random in the short term then this would imply that people are randomly buying or selling, meaning your odds are 50/50 on each trade.
-So in the 6 month period most traders will break even in this case,

-and some will be slightly above even,

-and you would also see just as many people slightly poorer as those who broke slightly above even

-and some will lose all their money

-but you would also see the same amount of major winners, as those who lost all their money.

in other words, half would make money and half would not.

3) so the above would be the result of a random walk in the short term. However if 95% of daytraders are going broke, then you have to agree that the market is not a random walk, and that there is a way to beat the market at least in the short term. Finding out how newb daytraders think and making the opposite bet would be one way of beating the market.

I dont see how its possible in a random walk 95% of participants will go broke in the first few months. I think its just fear mongering, and boy am I glad I didnt listen to it. I tried fundamental investing, and it got me nowhere.

Im sure it works for some, but it does not suit me.

 

I tried searching for google for any hard evidence, like an academic study or something of the such, and I could not find anything. All I find is the 95% thing requoted over and over and over again on various websites. Seems to me that this is simply a myth, with no real basis in reality.

If someone can show me some actual evidence of this, then I would genuinely love to see it.

 
Martinghoul:

Overwhelming majority of day traders have zero edge and are horribly disadvantaged by their constraints.

Got proof?

I guess long term investors have a real edge, by looking through publicly available SEC files, which everyone can see lol. Quite an edge there.

 

Even simple things like 12 day MA can be profitable, you just need to look at it from the probability view point.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.
 
jackbnimble:
Martinghoul:

Overwhelming majority of day traders have zero edge and are horribly disadvantaged by their constraints.

Got proof?

I guess long term investors have a real edge, by looking through publicly available SEC files, which everyone can see lol. Quite an edge there.

Proof? What sort of proof can I provide that will satisfy you? All I can offer is many years of direct personal experience... Take that FWIW.

And no, what you describe doesn't constitute edge and isn't what I was referring to.

 
Martinghoul:
jackbnimble:
Martinghoul:

Overwhelming majority of day traders have zero edge and are horribly disadvantaged by their constraints.

Got proof?

I guess long term investors have a real edge, by looking through publicly available SEC files, which everyone can see lol. Quite an edge there.

Proof? What sort of proof can I provide that will satisfy you? All I can offer is many years of direct personal experience... Take that FWIW.

And no, what you describe doesn't constitute edge and isn't what I was referring to.

you can provide me with a study that shows that there is absolutely no predictability whatsoever in the market during the day. You would have to show why various anomalies are bunk as well.

Simply telling me that various markets have very low autocorrelations does not cut it either.

If you can show that there are no anomalies that occur during the day, and that there is absolutely no predictability in the market in the short term, then you can say that day traders have no edge.

Anything else would be perpetuating baseless myths built on anecdotal evidence.

 

The common theme here is that day traders have no edge. Im not sure where this idea comes from.

It obviously takes very very hard work, hours upon hours a day, to find an edge. No one is denying that its tough. This does not mean it cant be done however. It takes years to get to the point to be consistently profitable day trading the markets.

 

Clearly, we have a day trader on our hands in Jackbnimble. I don't invest much so I'm not terribly opinionated on this subject. I'm curious though, is successful day trading more art or science? i.e. Can a successful day trader be lucky (time scale up to you)? If I learn a system from a good day trader, and I become proficient within the system, will I likewise be successful? etc...

 
jackbnimble:

The common theme here is that day traders have no edge. Im not sure where this idea comes from.

It obviously takes very very hard work, hours upon hours of research every day, to find an edge. No one is denying that its tough. I think I spend maybe two or three minutes at most putting my trades in. I dont even watch the market, as most of my day is spent testing, and programming.
This does not mean it cant be done however. It takes years to get to the point to be consistently profitable day trading the markets.

 
jackbnimble:
you can provide me with a study that shows that there is absolutely no predictability whatsoever in the market during the day. You would have to show why various anomalies are bunk as well.

Simply telling me that various markets have very low autocorrelations does not cut it either.

If you can show that there are no anomalies that occur during the day, and that there is absolutely no predictability in the market in the short term, then you can say that day traders have no edge.

Anything else would be perpetuating baseless myths built on anecdotal evidence.

Here you go: http://faculty.haas.berkeley.edu/odean/papers/day%20traders/day%20trade… http://faculty.haas.berkeley.edu/odean/papers%20current%20versions/just… http://faculty.haas.berkeley.edu/odean/papers/returns/Individual_Invest…

And might I add that I am generally a big big fan of Terry Odean (and Brad Barber). They have written a lot of really interesting papers.

Pls let me know if there's anything else I can help with.

 
Martinghoul:
jackbnimble:

you can provide me with a study that shows that there is absolutely no predictability whatsoever in the market during the day. You would have to show why various anomalies are bunk as well.

Simply telling me that various markets have very low autocorrelations does not cut it either.

If you can show that there are no anomalies that occur during the day, and that there is absolutely no predictability in the market in the short term, then you can say that day traders have no edge.

Anything else would be perpetuating baseless myths built on anecdotal evidence.

Here you go:
http://faculty.haas.berkeley.edu/odean/papers/day%...
http://faculty.haas.berkeley.edu/odean/papers%20cu...
http://faculty.haas.berkeley.edu/odean/papers/retu...

And might I add that I am generally a big big fan of Terry Odean (and Brad Barber). They have written a lot of really interesting papers.

Pls let me know if there's anything else I can help with.

Thank you for your link to studies showing that in Taiwan this may be the case. I would imagine that in Taiwan there is significantly less transparency than in US markets. Also it says that this may be due to transaction costs. That was written ten years ago, transaction costs have fallen substantially now especially in US markets. Page 4-"In other words, day traders are able to execute trades at favorable prices, though not sufficiently favorable to cover reasonable transaction costs" "Since our analysis focuses on day trading, an important consideration is transaction costs. The TSE caps commissions at 0.1425 percent of the value of a trade. Some brokers offer lower commissions for larger traders – an issue that we discuss in greater detail later in the paper. Officials at brokerage firms and the TSE indicated to us that the largest commission discounts offered are 50 percent (i.e., a commission of roughly 7 basis points); these same officials estimated the trade-weighted commission paid by market participants to be about 10 basis points. Taiwan also imposes a transaction tax on stock sales of 0.3 percent"

But for the most part it looks like you are correct here, I wont continue defending this postion if the evidence does not support it.

 

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

 
Ipso facto:

Clearly, we have a day trader on our hands in Jackbnimble. I don't invest much so I'm not terribly opinionated on this subject. I'm curious though, is successful day trading more art or science? i.e. Can a successful day trader be lucky (time scale up to you)? If I learn a system from a good day trader, and I become proficient within the system, will I likewise be successful? etc...

Im of the school of thought that its definitely a hard science.

I dont put in trades unless there is hard empirical evidence that what I am going to do works. That way everything is rooted in reality, and not just a whim. But I will say that I sometimes go on my gut feeling, despite the what the numbers, tell me, this takes a very long time to acquire. Thats why I wouldn't recommend taking another day traders system and trying to apply the same mechanical rules. Eventually that system will be arbitraged away as well.

Can day traders make a lot of money simply because they're lucky?- absolutely. this can come from random news that gives you a 10% jump even though you're only expecting a few basis points. But the chances of this are on the other side as well. You are just as likely to be unlucky as lucky.

Believe it or not I do pay attention to fundamentals as well. In fact it may sound silly but its part of my risk management. Case in point (this was actually a swing trade however), I bought aapl in the beginning of april expecting to make a quick buck- then boom, it tanked to 385 in a week. I slept like a baby the whole time.There is no way aapl, is worth only 385. anyhow I ended up selling at a nice fat profit.

 
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

 
jackbnimble:
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

I understand that you may feel strongly about how you earn a living but there is hard evidence available through the net, that points to most day traders losing money.

But if you're making money then you've done what most cannot, its not to say it cant be done but most time most day traders fool themselves into thinking they understand the odds before taking the risk.

I know a firm (used to work there) that simply buys and sells stock based on trend lines and support and resistance lines, I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing.

In the end of the day there are two ways to make money in the stock market when you don't involve derivatives.

Either you go long expecting the stock to go higher, or you go short expecting it to do lower.

Its this expectation of direction that is key to your success. You must have a sound basis as to why you believe that stock XYZ will go up or down in the next X time frame.

Some people make it as simple as looks like stock XYZ is approaching support, volume is increasing and the bids are aggressively stepping up, the philosophy of the stock has changed and traders are starting to think its cheaper than it should be, let me buy in anticipation that others will buy this stock too and drive it higher as they will continue to see momentary mis-price of value.

Day trading is a game of musical chairs, just trying to predict what other traders will start thinking and doing before they actually do it, its very psychology based.

But quants have taken it further and improve upon this method of trading by including past data and seeing when the current situation in stock xyz occurred in the past and then see what happened and using statistical analysis decide in an instant what the odds of event xyz happening are again.

But in the end, day trading simply adds no value to the market, since the intent is not to price in new information into the market to assure perfect information, but to take advantage of new information being priced into a stock price.

Say people read a report that puts stock xyz at a certain growth trajectory that leaves its current price at a lower than normal PE multiple, its stock price will be bid up. It is in this process of the stock being bid up that a day trader will try to ride the wave upwards following other traders and their ideas.

Same way next week Stock XYZ reports accounting fraud and that causes traders to sell the stock until people think its fairly valued, incorporating the negative impact to profits that this accounting scandal will have. In this pricing of negative information a day trader can see the psychology of the stock change and play in the obvious direction.

But a day trader is trying to follow others who are actually pricing in new information.

I just dont find day trading to be academic enough for me, it is too much of an art without quantitative science and this goes against my nature of wanting more concrete hard data to make decisions.

Im the guy that likes to calculate probability of success before I approach a woman lol.

 
jackbnimble:
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

You're really confused, amico...

Nobody is saying that you, specifically, are rolling dice. The actual statement is that THE ODDS ARE HIGH that you're rolling dice. And yes, this means that the burden of proof for someone like yourself is greater, but, frankly, that's just how the cookie crumbles. It's not like day traders are being discriminated against in this, either. Generally, if you do something in any field much better than what's statistically feasible, you will face heightened scrutiny and challenge.

Finally, in this whole discussion here, I don't see us talking how you, in particular, make money. Instead, we've been discussing how a broad category of traders make (or, rather, lose) money. Hence, my question and that's why I believe your strong feelings are misplaced.

As to myself, I personally don't care what people say about a broad category of investors into which someone randomly decides to lump myself. So I just ain't bovvered if you tell me that "fundamental investing" (whatever the heck that might be) is garbage.

 

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

"History doesn't repeat itself, but it does rhyme."
 
rangerdanger 12:
jackbnimble:
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

I understand that you may feel strongly about how you earn a living but there is hard evidence available through the net, that points to most day traders losing money.

But if you're making money then you've done what most cannot, its not to say it cant be done but most time most day traders fool themselves into thinking they understand the odds before taking the risk.

I know a firm (used to work there) that simply buys and sells stock based on trend lines and support and resistance lines, I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing.

In the end of the day there are two ways to make money in the stock market when you don't involve derivatives.

Either you go long expecting the stock to go higher, or you go short expecting it to do lower.

Its this expectation of direction that is key to your success. You must have a sound basis as to why you believe that stock XYZ will go up or down in the next X time frame.

Some people make it as simple as looks like stock XYZ is approaching support, volume is increasing and the bids are aggressively stepping up, the philosophy of the stock has changed and traders are starting to think its cheaper than it should be, let me buy in anticipation that others will buy this stock too and drive it higher as they will continue to see momentary mis-price of value.

Day trading is a game of musical chairs, just trying to predict what other traders will start thinking and doing before they actually do it, its very psychology based.

But quants have taken it further and improve upon this method of trading by including past data and seeing when the current situation in stock xyz occurred in the past and then see what happened and using statistical analysis decide in an instant what the odds of event xyz happening are again.

But in the end, day trading simply adds no value to the market, since the intent is not to price in new information into the market to assure perfect information, but to take advantage of new information being priced into a stock price.

Say people read a report that puts stock xyz at a certain growth trajectory that leaves its current price at a lower than normal PE multiple, its stock price will be bid up. It is in this process of the stock being bid up that a day trader will try to ride the wave upwards following other traders and their ideas.

Same way next week Stock XYZ reports accounting fraud and that causes traders to sell the stock until people think its fairly valued, incorporating the negative impact to profits that this accounting scandal will have. In this pricing of negative information a day trader can see the psychology of the stock change and play in the obvious direction.

But a day trader is trying to follow others who are actually pricing in new information.

I just dont find day trading to be academic enough for me, it is too much of an art without quantitative science and this goes against my nature of wanting more concrete hard data to make decisions.

Im the guy that likes to calculate probability of success before I approach a woman lol.

Again, you seem to be putting all day traders in the box of TA. This however is simply not the case. Maybe most amateurs do rely on some technical indicator bullshit, but this is not the case universally I assure you. The firm you worked for is not representative of all shops, especially the reputable ones that pay a salary.

your last few paragraphs are exactly what Im in favor of, calculating your odds, before taking action. Successful traders in general test their ideas empirically. I dont care whether its following others or not, As long as you beat the others.

 
streetwannabe:

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

No one is saying Jim simons is using head and shoulders patterns. Why are you assuming all day traders only use use TA?

 
jackbnimble:
streetwannabe:

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

No one is saying Jim simons is using head and shoulders patterns. Why are you assuming all day traders only use use TA?

It was a simple hyperbole. Granted I'm sure many day traders do a ton of research, it is just my though that when you have truly strong conviction in your idea and a strong thesis that it is usually built off of more material information which does not usually develop in "a day".

Also, the institutions that do trade off of momentum/trends/etc pay massive amounts of money just so that they can get the information faster which puts retail investors at a huge disadvantage.

"History doesn't repeat itself, but it does rhyme."
 
jackbnimble:
rangerdanger 12:
jackbnimble:
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

I understand that you may feel strongly about how you earn a living but there is hard evidence available through the net, that points to most day traders losing money.

But if you're making money then you've done what most cannot, its not to say it cant be done but most time most day traders fool themselves into thinking they understand the odds before taking the risk.

I know a firm (used to work there) that simply buys and sells stock based on trend lines and support and resistance lines, I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing.

In the end of the day there are two ways to make money in the stock market when you don't involve derivatives.

Either you go long expecting the stock to go higher, or you go short expecting it to do lower.

Its this expectation of direction that is key to your success. You must have a sound basis as to why you believe that stock XYZ will go up or down in the next X time frame.

Some people make it as simple as looks like stock XYZ is approaching support, volume is increasing and the bids are aggressively stepping up, the philosophy of the stock has changed and traders are starting to think its cheaper than it should be, let me buy in anticipation that others will buy this stock too and drive it higher as they will continue to see momentary mis-price of value.

Day trading is a game of musical chairs, just trying to predict what other traders will start thinking and doing before they actually do it, its very psychology based.

But quants have taken it further and improve upon this method of trading by including past data and seeing when the current situation in stock xyz occurred in the past and then see what happened and using statistical analysis decide in an instant what the odds of event xyz happening are again.

But in the end, day trading simply adds no value to the market, since the intent is not to price in new information into the market to assure perfect information, but to take advantage of new information being priced into a stock price.

Say people read a report that puts stock xyz at a certain growth trajectory that leaves its current price at a lower than normal PE multiple, its stock price will be bid up. It is in this process of the stock being bid up that a day trader will try to ride the wave upwards following other traders and their ideas.

Same way next week Stock XYZ reports accounting fraud and that causes traders to sell the stock until people think its fairly valued, incorporating the negative impact to profits that this accounting scandal will have. In this pricing of negative information a day trader can see the psychology of the stock change and play in the obvious direction.

But a day trader is trying to follow others who are actually pricing in new information.

I just dont find day trading to be academic enough for me, it is too much of an art without quantitative science and this goes against my nature of wanting more concrete hard data to make decisions.

Im the guy that likes to calculate probability of success before I approach a woman lol.

Again, you seem to be putting all day traders in the box of TA. This however is simply not the case. Maybe most amateurs do rely on some technical indicator bullshit, but this is not the case universally I assure you. The firm you worked for is not representative of all shops, especially the reputable ones that pay a salary.

your last few paragraphs are exactly what Im in favor of, calculating your odds, before taking action. Successful
traders in general test their ideas empirically. I dont care whether its following others or not, As long as you beat the others.

I think since TA is advertised so heavily by guru's trying to sell the public something, it appears as the leading market philosophy of deciding how to buy and sell.

But you are correct that the firms that pay you a salary usually have a more scientific approach to the market, I was not paid at the place I went but I did learn a whole lot about the markets.

I just assume that most day traders trade from home and dont have access to the data feeds and equipment that professional traders have. Nor do they have the mental ability to use statistical analysis to back their traders. But thats my generalization, there are of course exceptions

 
rangerdanger 12:
jackbnimble:
rangerdanger 12:
jackbnimble:
Martinghoul:

TBH, jackbnimble, I don't really understand why you feel so strongly about the subject...

The observation that I originally made (and that research appears to corroborate) is that a large majority of day traders lose money. This isn't to say that they ALL lose money (and, again, that also appears to be Barber and Odean's conclusion).

So if you're one of the very few successful day traders, keep doing what you're doing and more power to you. Otherwise, why do you particularly care about the viability of day trading as a strategy/vocation?

I feel strongly about the subject because it is rather annoying to be told that im rolling dice, and that the countless hours I spend researching, probably more than the average banker, is simply a waste of time.

I feel strongly about how I make money, as you may feel strongly if I told you that for example fundamental investing is actually garbage.

I understand that you may feel strongly about how you earn a living but there is hard evidence available through the net, that points to most day traders losing money.

But if you're making money then you've done what most cannot, its not to say it cant be done but most time most day traders fool themselves into thinking they understand the odds before taking the risk.

I know a firm (used to work there) that simply buys and sells stock based on trend lines and support and resistance lines, I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing.

In the end of the day there are two ways to make money in the stock market when you don't involve derivatives.

Either you go long expecting the stock to go higher, or you go short expecting it to do lower.

Its this expectation of direction that is key to your success. You must have a sound basis as to why you believe that stock XYZ will go up or down in the next X time frame.

Some people make it as simple as looks like stock XYZ is approaching support, volume is increasing and the bids are aggressively stepping up, the philosophy of the stock has changed and traders are starting to think its cheaper than it should be, let me buy in anticipation that others will buy this stock too and drive it higher as they will continue to see momentary mis-price of value.

Day trading is a game of musical chairs, just trying to predict what other traders will start thinking and doing before they actually do it, its very psychology based.

But quants have taken it further and improve upon this method of trading by including past data and seeing when the current situation in stock xyz occurred in the past and then see what happened and using statistical analysis decide in an instant what the odds of event xyz happening are again.

But in the end, day trading simply adds no value to the market, since the intent is not to price in new information into the market to assure perfect information, but to take advantage of new information being priced into a stock price.

Say people read a report that puts stock xyz at a certain growth trajectory that leaves its current price at a lower than normal PE multiple, its stock price will be bid up. It is in this process of the stock being bid up that a day trader will try to ride the wave upwards following other traders and their ideas.

Same way next week Stock XYZ reports accounting fraud and that causes traders to sell the stock until people think its fairly valued, incorporating the negative impact to profits that this accounting scandal will have. In this pricing of negative information a day trader can see the psychology of the stock change and play in the obvious direction.

But a day trader is trying to follow others who are actually pricing in new information.

I just dont find day trading to be academic enough for me, it is too much of an art without quantitative science and this goes against my nature of wanting more concrete hard data to make decisions.

Im the guy that likes to calculate probability of success before I approach a woman lol.

Again, you seem to be putting all day traders in the box of TA. This however is simply not the case. Maybe most amateurs do rely on some technical indicator bullshit, but this is not the case universally I assure you. The firm you worked for is not representative of all shops, especially the reputable ones that pay a salary.

your last few paragraphs are exactly what Im in favor of, calculating your odds, before taking action. Successful
traders in general test their ideas empirically. I dont care whether its following others or not, As long as you beat the others.

I think since TA is advertised so heavily by guru's trying to sell the public something, it appears as the leading market philosophy of deciding how to buy and sell.

But you are correct that the firms that pay you a salary usually have a more scientific approach to the market, I was not paid at the place I went but I did learn a whole lot about the markets.

I just assume that most day traders trade from home and dont have access to the data feeds and equipment that professional traders have. Nor do they have the mental ability to use statistical analysis to back their traders. But thats my generalization, there are of course exceptions

Im not sure what it means to be the leading market philosophy. TA is only one approach to trading(one that is rather silly imho atleast in the form it is most commonly practiced by amateurs). It is not the only way to make money in the short term, in the markets.

You dont necessarily need such data feeds and such equipment to make money daytrading either. Thats usually only for scalping strategies, and market making stuff. some people hold for a few hours, and those data feeds really become irrelevant at that point.

 

Some people trade the drift when news or earnings comes out, and try to predict the price in a few hours.

That is very different from buying and selling on a moving average crossover or support and resistance.

 
Ipso facto:

@jackbnimble: Are you currently a day trader (and make your living this way) or is it more of a hobby?

Im actually an undergrad college student, I dont earn a living off of it, but I can. Ive got a very consistent track record.

Its a lot more than a weekend hobby for me, i spend hours every day doing research,

Im not going to quit college to daytrade, one bad trade can easily wipe me out and ill be left with nothing. Especially since I sometimes hold between days, leaving me exposed to more tail risk.

the I'd have no money and no degree.

 
streetwannabe:
jackbnimble:
streetwannabe:

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

No one is saying Jim simons is using head and shoulders patterns. Why are you assuming all day traders only use use TA?

It was a simple hyperbole. Granted I'm sure many day traders do a ton of research, it is just my though that when you have truly strong conviction in your idea and a strong thesis that it is usually built off of more material information which does not usually develop in "a day".

Also, the institutions that do trade off of momentum/trends/etc pay massive amounts of money just so that they can get the information faster which puts retail investors at a huge disadvantage.

But thats why you need to find your niche, most retail investors obviously do not have the expertise or the capital to put together an HFT robot so they dont do that. But there are other areas retail traders can find opportunities and make money, the space of holding for a few hours, or even days is one example.

 
jackbnimble:
streetwannabe:
jackbnimble:
streetwannabe:

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

No one is saying Jim simons is using head and shoulders patterns. Why are you assuming all day traders only use use TA?

It was a simple hyperbole. Granted I'm sure many day traders do a ton of research, it is just my though that when you have truly strong conviction in your idea and a strong thesis that it is usually built off of more material information which does not usually develop in "a day".

Also, the institutions that do trade off of momentum/trends/etc pay massive amounts of money just so that they can get the information faster which puts retail investors at a huge disadvantage.

But thats why you need to find your niche, most retail investors obviously do not have the expertise or the capital to put together an HFT robot so they dont do that. But there are other areas retail traders can find opportunities and make money, the space of holding for a few hours, or even days is one example.

Yes there are some area's that you can take advantage of the best being when large players price in changes to their thesis and subsequently unwind or bulk up on positions. Swing trading its called

I used to trade based on reports and tried to determine how the big players were responding to understand any shift in psychology used level 2 metrics to confirm if in fact any large players were behaving differently, (aware that orders are icebergd) it worked well, I would simply trade in the direction of the trend, but again not something that I want to do as a career. Dont have the balls really to eat what I kill.

 
rangerdanger 12:
jackbnimble:
streetwannabe:
jackbnimble:
streetwannabe:

Agree with the gambling sentiment; of course there is a lot of different ways to look at it though. It seems that people try to justify it by breaking gambling down into some sort of black and white scenario where all investing is gambling.

Granted, you could look at it that way, but you could also say that crossing the street is a gamble...

...and it is, if you don't look both ways which is essentially the difference (in my mind) between day trading and actually investing off of a thesis. To me there is a large discrepancy between trading off of technical indicators and using quantitative theory to invest. Jim Simons uses a little more sophisticated techniques than head and shoulders, and I believe was even given the blessings of Nassim Taleb (which is a pretty big deal in my mind).

No one is saying Jim simons is using head and shoulders patterns. Why are you assuming all day traders only use use TA?

It was a simple hyperbole. Granted I'm sure many day traders do a ton of research, it is just my though that when you have truly strong conviction in your idea and a strong thesis that it is usually built off of more material information which does not usually develop in "a day".

Also, the institutions that do trade off of momentum/trends/etc pay massive amounts of money just so that they can get the information faster which puts retail investors at a huge disadvantage.

But thats why you need to find your niche, most retail investors obviously do not have the expertise or the capital to put together an HFT robot so they dont do that. But there are other areas retail traders can find opportunities and make money, the space of holding for a few hours, or even days is one example.

Yes there are some area's that you can take advantage of the best being when large players price in changes to their thesis and subsequently unwind or bulk up on positions. Swing trading its called

I used to trade based on reports and tried to determine how the big players were responding to understand any shift in psychology used level 2 metrics to confirm if in fact any large players were behaving differently, (aware that orders are icebergd) it worked well, I would simply trade in the direction of the trend, but again not something that I want to do as a career. Dont have the balls really to eat what I kill.

And that is an example of a whole different strategy in and of itself. The thing is with that specifically, its not a new idea, in fact there are many algorithms and market making strategies that are designed to capitalize on that same thing.

But this proves my point, not all of daytrading is TA. There are many different ways to approach the market. Its very ignorant to write off all daytraders as a bunch of TA's and only TA's.

 
jackbnimble:
Ipso facto:

@jackbnimble: Are you currently a day trader (and make your living this way) or is it more of a hobby?

Im actually an undergrad college student, I dont earn a living off of it, but I can. Ive got a very consistent track record.

Its a lot more than a weekend hobby for me, i spend hours every day doing research,

Im not going to quit college to daytrade, one bad trade can easily wipe me out and ill be left with nothing. Especially since I sometimes hold between days, leaving me exposed to more tail risk.

the I'd have no money and no degree.

This is off topic, but after reading through this thread, I've got to chime in.

I've been in your shoes. My sophomore year, I used to swing trade options. I managed to flip 10k into just under 50k in about 6 months. Then, all of a sudden, the magic was gone and my trades were no longer clicking like they used to. It only took me 6 weeks to lose what it took me 6 months to build.

From what I gather, you have yet to experience your first major wipe-out. These are an inevitable part of life for every young trader. If you read Market Wizards, you'll find a majority of those featured tell some anecdote about making and then losing a lot early in their career. Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

But it will.

Having said that, my biggest piece of advice is to not define yourself by your work. If you start to do that, the smallest hiccup in your P&L is gonna erode your confidence and cause you to trade poorly. And when you do eventually blow-up, take a break for a week or two, gather up the pieces, and try to figure out where you went wrong. Blowing up is a great learning experience that most of us have to go through; it helps us learn what we're made of and helps us shed the hubris, feelings of invincibility, etc.

I'm sorry for going off on a tangent and offering my unsolicited advice, but its painfully obvious from the way you've talked in this thread that you have yet to be humbled by the markets.

 

Day traders are professional coin flippers that pay a lot of transaction costs, so you would expect to hear that at least 95% lose money. If you're day trading by looking at charts and praying for the best, I suggest you cut your losses now (or less likely, take your gains) and look for a real job.

 
Datsik:
jackbnimble:
Ipso facto:

@jackbnimble: Are you currently a day trader (and make your living this way) or is it more of a hobby?

Im actually an undergrad college student, I dont earn a living off of it, but I can. Ive got a very consistent track record.

Its a lot more than a weekend hobby for me, i spend hours every day doing research,

Im not going to quit college to daytrade, one bad trade can easily wipe me out and ill be left with nothing. Especially since I sometimes hold between days, leaving me exposed to more tail risk.

the I'd have no money and no degree.

This is off topic, but after reading through this thread, I've got to chime in.

I've been in your shoes. My sophomore year, I used to swing trade options. I managed to flip 10k into just under 50k in about 6 months. Then, all of a sudden, the magic was gone and my trades were no longer clicking like they used to. It only took me 6 weeks to lose what it took me 6 months to build.

From what I gather, you have yet to experience your first major wipe-out. These are an inevitable part of life for every young trader. If you read Market Wizards, you'll find a majority of those featured tell some anecdote about making and then losing a lot early in their career. Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

But it will.

Having said that, my biggest piece of advice is to not define yourself by your work. If you start to do that, the smallest hiccup in your P&L is gonna erode your confidence and cause you to trade poorly. And when you do eventually blow-up, take a break for a week or two, gather up the pieces, and try to figure out where you went wrong. Blowing up is a great learning experience that most of us have to go through; it helps us learn what we're made of and helps us shed the hubris, feelings of invincibility, etc.

I'm sorry for going off on a tangent and offering my unsolicited advice, but its painfully obvious from the way you've talked in this thread that you have yet to be humbled by the markets.

I dont appreciate the condescending tone. As it is rather disrespectful.

First of all, If indeed I havent experienced any large , thats not a bad thing. In fact it is obviously a very good thing, I dont know where you get this idea that having large drawdowns for anyone, of any level, may be a good thing, or that its necessary to have a large drawdown to earn your stripes. And actually if you do read market wizards for example there are a few guys that have never been wiped out,(though I cant think of them off the top of my head). Also there are people that have been wiped out and were never to be able to get back up to where they were. There have been stories of people committing suicide bc they did not have the money to pay their brokers for margin. Thats the type of shit on peoples minds when they blowup.

Second, I use a lot of leverage, and trade with a few seperate accounts. so FYI some of my accounts have had very large drawdowns on several different occasions, the most memorable being after the debt downgrade, where everyone saw big swings. Many traders got wiped out, I didnt and its a very good thing that I didnt lose 100% of my capital as if I recall correctly I had open positions on long calls, I was hedged of course. I dont need to earn my stripes this way by going all in on aapl calls at 600, thank you.

I have also had times where I was down more than half my equity, and have been "humbled" several times. Fortunately I did not go to zero, and was able to get back up thankfully with what i had. Its a good thing I was smart enough during those times to diversify not just my holdings, but my strategies as well. I am more speculative in some places than in others. So most of these drawdowns are largely expected in an account that mostly makes directional bets by buying naked puts and calls. I am not in a position where blowing up will be a great experience for me. Blowing up will be very bad for me. that means I wont have any money to trade with.

And no I dont think im invincible. I have had very very large hiccups in my pnl. Please point out exactly where I give off this vibe of hubris, or that I think im invincible.

EDIT- in fact in the post you quoted I explicitly stated that one bad trade can wipe me out, where do you think I came up with that idea?

 
jackbnimble:
I dont appreciate the condescending tone. As it is rather disrespectful.
That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

 
SirTradesaLot:
jackbnimble:

I dont appreciate the condescending tone. As it is rather disrespectful.

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

 

I'll point out where where he is condescending.

Datsik:

From what I gather, you have yet to experience your first major wipe-out. These are an inevitable part of life for every young trader.

this to me is very condescending, as A) it is false, and B) it lumps me in the same basket as a lot of other young amateur traders, most of the ones I know use very silly strategies like looking at chart patterns, and technical indicators.

Datsik:

Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

this is also very condescending. Because I dont think I am invincible. I thought that was very clear, in the post he quoted me, where I said,- "one bad trade can wipe me out"

Datsik:

but its painfully obvious from the way you've talked in this thread that you have yet to be humbled by the markets.

Again, I find this very condescending, and also not true.

 
jackbnimble:
SirTradesaLot:
jackbnimble:

I dont appreciate the condescending tone. As it is rather disrespectful.

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.
 
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:

I dont appreciate the condescending tone. As it is rather disrespectful.

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

 
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:

I dont appreciate the condescending tone. As it is rather disrespectful.

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

Not condescending. He's telling the truth.

Experienced trader: at least 5 years trading professionally, probably longer.

 
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:

I dont appreciate the condescending tone. As it is rather disrespectful.

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

Not condescending. He's telling the truth.

Experienced trader: at least 5 years trading professionally, probably longer.

He is not "telling the truth" he is simply wrong about me not experiencing bad times in my trading. You just want to think he is right, but if he is wrong so are you. Show how all of the things I pointed out are wrong, and that he is right.

How did you come up with this definition?

 
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:

That guy was not being condescending or disrespectful at all. You're way off base. Given the time of the post, I'm going to guess you were drunk.

He is right and you are wrong.

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

Not condescending. He's telling the truth.

Experienced trader: at least 5 years trading professionally, probably longer.

He is not "telling the truth" he is simply wrong about me not experiencing bad times in my trading.
You just want to think he is right, but if he is wrong so are you. Show how all of the things I pointed out are wrong, and that he is right.

How did you come up with this definition?

I'll leave you with this: if you're highly levered, have little experience, and really have no edge whatsoever, you're going to throw away whatever little amount of money you currently have.
 
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

Not condescending. He's telling the truth.

Experienced trader: at least 5 years trading professionally, probably longer.

He is not "telling the truth" he is simply wrong about me not experiencing bad times in my trading.
You just want to think he is right, but if he is wrong so are you. Show how all of the things I pointed out are wrong, and that he is right.

How did you come up with this definition?

I'll leave you with this: if you're highly levered, have little experience, and really have no edge whatsoever, you're going to throw away whatever little amount of money you currently have.

Again, i trade in several different accounts with different strategies for more than 3 years. Thank you, though.

If I was wrong here btw, I would have admitted it. Just like when martinghoul brought up the study showing that most day traders lose money. I dont have problem admitting Im wrong. But you are clearly wrong in saying that datsik was not condescending, and you dont want to admit it.

You also would rather think that all college students dont know what they are talking about, and will all eventually go broke, rather than face the reality that not all of them fall into this category.

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

 
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:
SirTradesaLot:
jackbnimble:

somehwat, but i think im right over here.

This is exactly the problem: you are clearly wrong, yet you think you're right. It's not like you're some experienced trader, you're still in college.

No. I am right over here. You said he was not condescending and I showed how he is wrong about me not seeing major drawdowns, and how exactly he is condecending.

Please define "experienced trader"

Not condescending. He's telling the truth.

Experienced trader: at least 5 years trading professionally, probably longer.

He is not "telling the truth" he is simply wrong about me not experiencing bad times in my trading.
You just want to think he is right, but if he is wrong so are you. Show how all of the things I pointed out are wrong, and that he is right.

How did you come up with this definition?

I'll leave you with this: if you're highly levered, have little experience, and really have no edge whatsoever, you're going to throw away whatever little amount of money you currently have.

Ill leave you with this: if you are not willing to admit when you're wrong, and think that passing an exam and trading for 5 years will give you an edge in the stock market, you're going to throw away away whatever little amount of money you currently have.

 

I was being condescending to contrast it against his post which wasn't. He was trying to help you. I think it's a waste of time. It's not that I think a college student can't know something (even if it's exceedingly rare), it's just clear that you don't. Part-time trading a couple of thousand bucks for three years does not make you an expert investor/trader. That you don't realize that is the problem. You're just getting started and you haven't even been through one bear market yet. If you're really interested in becoming good, you need to get a strong mentor while doing it full time, ideally through a paid job.

 
SirTradesaLot:

I was being condescending to contrast it against his post which wasn't. He was trying to help you. I think it's a waste of time. It's not that I think a college student can't know something (even if it's exceedingly rare), it's just clear that you don't. Part-time trading a couple of thousand bucks for three years does not make you an expert investor/trader. That you don't realize that is the problem. You're just getting started and you haven't even been through one bear market yet. If you're really interested in becoming good, you need to get a strong mentor while doing it full time, ideally through a paid job.

Lol thank you sir trades a lot.

 

I think most people would agree that a very strong majority of day traders do not come out winners in the long run (by this I mean consistent alpha generation), but this is definitely also true of fundamental investing.

There are two notable differences in my mind between the likelihoods of long-term success in day trading vs. fundamental research. One is the technological obstacles that day traders face as institutional capital will always have faster access to info and more tools at their disposal in general. The other is significantly higher transaction costs. As a result, day trading probably has a lower proportion of long-term winners than fundamental investing, but they're both very difficult anyway.

I don't think there's any real point to arguing over whether jackbnimble's success has been luck or skill as that's tough to determine even when you know all the specifics of a portfolio/trading record. There's a pretty low likelihood yes, but whatever.

He probably should have a thicker skin about all this though...

 
reformed:
jackbnimble:

. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

No one is looking down on you because your a college student.
They're looking down on you because your posts are completely clueless.

I sent sirtrades alot a pm. Ill post my trades real time provided he does the same. If im truly clueless I should go to zero, he should at least beat the s&p.

 
jackbnimble:

I'll point out where where he is condescending.

Datsik:

From what I gather, you have yet to experience your first major wipe-out. These are an inevitable part of life for every young trader.

this to me is very condescending, as A) it is false, and B) it lumps me in the same basket as a lot of other young amateur traders, most of the ones I know use very silly strategies like looking at chart patterns, and technical indicators.

Datsik:

Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

this is also very condescending. Because I dont think I am invincible.
I thought that was very clear, in the post he quoted me, where I said,- "one bad trade can wipe me out"

Datsik:

but its painfully obvious from the way you've talked in this thread that you have yet to be humbled by the markets.

Again, I find this very condescending, and also not true.

Jack - Didn't mean to come off as condescending. But if you look at the post above, you may be able to understand where I'm coming from.

You got offended because I "lumped you in the same basket as a lot of other young amateur traders", and then outlined how THEY are stupid/silly and YOU are smarter. That's exactly the kind of attitude I was trying to isolate when I said "Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

I guess this was to be unexpected when I come in and offer unsolicited advice. Forget I said anything. Best of luck with your trading and I sincerely hope you prove everyone wrong.

 
Datsik:
jackbnimble:

I'll point out where where he is condescending.

Datsik:

From what I gather, you have yet to experience your first major wipe-out. These are an inevitable part of life for every young trader.

this to me is very condescending, as A) it is false, and B) it lumps me in the same basket as a lot of other young amateur traders, most of the ones I know use very silly strategies like looking at chart patterns, and technical indicators.

Datsik:

Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

this is also very condescending. Because I dont think I am invincible.
I thought that was very clear, in the post he quoted me, where I said,- "one bad trade can wipe me out"

Datsik:

but its painfully obvious from the way you've talked in this thread that you have yet to be humbled by the markets.

Again, I find this very condescending, and also not true.

Jack - Didn't mean to come off as condescending. But if you look at the post above, you may be able to understand where I'm coming from.

You got offended because I "lumped you in the same basket as a lot of other young amateur traders", and then outlined how THEY are stupid/silly and YOU are smarter. That's exactly the kind of attitude I was trying to isolate when I said "Everyone thinks their invincible when they're 21, and you're probably thinking, "that won't happen to me, because I don't do XYZ."

I guess this was to be unexpected when I come in and offer unsolicited advice. Forget I said anything. Best of luck with your trading and I sincerely hope you prove everyone wrong.

I appreciate that datsik. again I dont think im invincible at all. If I did, I would have quit college. There is a reason I have not done so.

 
GoodBread:
jackbnimble:

Jim simons, david shaw,ken griffin, dont understand there odds, and they're just fooling themselves.

Only fundamental analysts understand their odds.

Jim Simons is just fooling himself? Who in the world are you?

I was being clearly being sarcastic here. I cant tell if you are/arent being sarcastic yourself.

 

I'd argue that day trading is less of gambling and less risky than swing or position trading. Rangerdanger is right that most day traders follow other traders. However, successful ones follow the big ones who make themselves obvious. Why? Because they are the ones who move the market. Almost all successful day traders I know, know how to read the tape. Most don't use any indicators at all. If trading was as simple as a moving average crossover when the stochastic is below 20 or above 80 then any monkey could do it. Technical indicators lag order flow and don't give out the complete details.

 
jackbnimble:

I would like to see evidence of this statistic you cite. If the market is truly a brownian motion in the short run then by definition all daytraders should break even. Not go broke. They would make money on half of their trades and lose on the other half, Minus commission.

if it were a standard brownian motion you'd ALWAYS go broke eventually, as it hits zero an infinite number of times and never tends off to infinity

now if it were a brownian motion with drift you would stand a chance of becoming infinitely wealthy...

but nobody (I hope) actually believes the markets behave like this. it's a model used to make intelligent decisions in lieu of perfect knowledge

 
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

Further proven: "I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing."

Just because it's GS and JPM doesn't mean anything. These firms have been proven wrong many times. You are caught up in prestigiousness of these firms. Leading me to believe you hold value to them because of their name. Again, you wanted to be associated with big firms so you could feel important= Thin Skinned.

  1. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

  2. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

 
awawgoian:
jackbnimble:

I would like to see evidence of this statistic you cite. If the market is truly a brownian motion in the short run then by definition all daytraders should break even. Not go broke. They would make money on half of their trades and lose on the other half, Minus commission.

if it were a standard brownian motion you'd ALWAYS go broke eventually, as it hits zero an infinite number of times and never tends off to infinity

now if it were a brownian motion with drift you would stand a chance of becoming infinitely wealthy...

but nobody (I hope) actually believes the markets behave like this. it's a model used to make intelligent decisions in lieu of perfect knowledge

Wouldn't any academic that believes in the weak form efficient market hypothesis (malkiel), agree that its a brownian motion with drift?

Technically there is a chance that you can become infinitely wealthy, after all there is no limit to how high the s&p or any individual stock can go.

 

im actually reading markets wizards now and find this thread funny

to quote Ed Seykota "Like turtles, many answer the calling, few will make it"

It's true. Most day traders don't make it and only a few ca be profitable over the long run.

Im surprised you guys are only talking about traders who participate in US equity markets. IMO, trading Forex & Futures/Commodities is where it's at and many trade forex by day for profit. I know of some who trade options profitably as well as they are a bit more volatile at times since equities are moving flat.

alpha currency trader wanna-be
 
madmoney15:
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

2. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

3. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

1) kk

2) So what?many day traders try to make money from deviations of the price caused by imbalances of supply and demand, this may be due to the repeated buy orders for example of a company during the open for example.

most opponents usually give the argument that stocks have very low autocorrelations, and so therefore there is no future predictibility from past prices. But really the bottom line is whether or not prices are random or not,

and the answer is that they are not random. andrew lo does a great job at this. I have not read it cover to cover

http://press.princeton.edu/books/lo/chapt2.pdf

" For example, using 1216 weekly observations from September 6, 1962, to December 26, 1985, we compute the weekly first-order autocorrelation coefficient of the equal-weighted Center for Research in Security Prices (CRSP) returns index to be 30 percent!"

The following is also a great read. It shows that stocks do in fact trade differently during different times of the day because of the exact effect I described above.I have not read this it in its entirety.

http://www.rhsmith.umd.edu/cfp/pdfs_docs/papers/IntradayPatterns.pdf

"A growing literature suggests that institutional investment áows ináuence asset prices (e.g., Harris and Gruel (1986), Coval and Sta§ord (2007), Boyer (2008), He and Krishnamurthy (2008), Lou (2008), Vayanos and Woolley (2008)). We postulate that systematic trading and institutional fund áows lead to predictable patterns, not only in trading volume and order imbalances, but also in returns of common stocks. We study the periodicity of cross-sectional di§erences in returns using half-hour observation intervals in the period from January 2001 through December 2005. We document pronounced intraday return reversals due to bid-ask bounce, and these reversals last for several trading days. The market recovers from shocks to depth in less than 60 minutes. However, we Önd signiÖcant continuation of returns at intervals that are multiples of a day and this e§ect lasts for at least 40 trading days. This daily periodicity is of the same order of magnitude as current institutional commission rates and the quoted half-spread"

Here is a good zerohedge post showing again that history repeats itself, using very recent evidence, this wont show up in a standard lag 1 autocorrelation test.

http://www.zerohedge.com/news/primer-intraday-market-moves

 
madmoney15:
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

Further proven:
"I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing."

Just because it's GS and JPM doesn't mean anything. These firms have been proven wrong many times. You are caught up in prestigiousness of these firms. Leading me to believe you hold value to them because of their name. Again, you wanted to be associated with big firms so you could feel important= Thin Skinned.

2. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

3. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

In your edited post with jpm and gs, you are talking to ranger danger right? Also please link me to a study that says what you suggest the prices 100% depend on micro and macro, and that microstructure does not play a role in the short term.

 
jackbnimble:
GoodBread:
jackbnimble:

Jim simons, david shaw,ken griffin, dont understand there odds, and they're just fooling themselves.

Only fundamental analysts understand their odds.

Jim Simons is just fooling himself? Who in the world are you?

I was being clearly being sarcastic here. I cant tell if you are/arent being sarcastic yourself.

I thought you might be, but trust me when I say it wasn't all that clear.

 
jackbnimble:
madmoney15:
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

Further proven:
"I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing."

Just because it's GS and JPM doesn't mean anything. These firms have been proven wrong many times. You are caught up in prestigiousness of these firms. Leading me to believe you hold value to them because of their name. Again, you wanted to be associated with big firms so you could feel important= Thin Skinned.

2. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

3. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

In your edited post with jpm and gs, you are talking to ranger danger right?
Also please link me to a study that says what you suggest the prices 100% depend on micro and macro, and that microstructure does not play a role in the short term.

No, I'm not talking to rangerdanger. Why would you think that?

Source:

"In a research study titled “What Drives Firm-Level Stock Returns?” financial analyst Tuomo Vuolteenaho looked at the valuations of a large sample of U.S. stocks using over 36,000 firm-year observations over the years 1954– 96. His conclusions imply that about two-thirds of the variability of individual company stock prices stems from responses to genuine information about the expected future cash flows of the firms, and only about a third of the variability can be attributed to changes in investor attitudes toward risk and time. He did not enumerate what might change these attitudes, but influences probably would include speculative bubbles, or possibly other factors that change investor willingness to pay, such as fashions or fads in investing, changing liquidity, publicity for individual stocks, market manipulation, or changing availability of shortable shares. But since these account for only about a third of the variability of individual stock prices, Vuolteenaho confirms that individual stock price movements mostly do make basic sense in terms of information about the future." 11

Shiller, Robert J. (2012-03-20). Finance and the Good Society (p. 186). Princeton University Press. Kindle Edition.

 
madmoney15:
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

Further proven:
"I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing."

Just because it's GS and JPM doesn't mean anything. These firms have been proven wrong many times. You are caught up in prestigiousness of these firms. Leading me to believe you hold value to them because of their name. Again, you wanted to be associated with big firms so you could feel important= Thin Skinned.

2. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

3. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

Once again jim simons, ken griffin, and david shaw are not fooling themselves. But you are.

 
madmoney15:
jackbnimble:
madmoney15:
jackbnimble:

rather than admit you are clearly wrong on this issue, you implicitly resort to appeals to your own authority, because you cant possibly fathom a college student might actually know a thing or two. When you are ready to show that his post was not condescending and that I have never had bad times in my accounts, im right here. That is the only way you will be right.

Ok, let's get some perspective here...

1.I don't understand how you can be so thin skinned even on the internet. Tells me you care too much what other people think and that's not going to be good for your pocketbook when you're trading.

Further proven:
"I left shortly after realizing they are too far behind the times and I wasnt going to learn anything what the big boys at GS or JP are doing."

Just because it's GS and JPM doesn't mean anything. These firms have been proven wrong many times. You are caught up in prestigiousness of these firms. Leading me to believe you hold value to them because of their name. Again, you wanted to be associated with big firms so you could feel important= Thin Skinned.

2. It has been academically proven that stock prices trade in correlation to 2/3 of the micro (e.g. company beating earnings) and 1/3 through macro. Day trading has absolutely no information in regards to either of this information. So you are at a huge disadvantage. But you may get lucky; who knows.

3. Day Trading is a gamble and fundamental investing is not. You were saying that you could make a living off of it, so in essence you would need to allocate a lot more capital than if you were just investing on the side. So if both get wiped out you're in a financially better situation with the latter.

In your edited post with jpm and gs, you are talking to ranger danger right?
Also please link me to a study that says what you suggest the prices 100% depend on micro and macro, and that microstructure does not play a role in the short term.

No, I'm not talking to rangerdanger. Why would you think that?

Source:

"In a research study titled “What Drives Firm-Level Stock Returns?” financial analyst Tuomo Vuolteenaho looked at the valuations of a large sample of U.S. stocks using over 36,000 firm-year observations over the years 1954– 96. His conclusions imply that about two-thirds of the variability of individual company stock prices stems from responses to genuine information about the expected future cash flows of the firms, and only about a third of the variability can be attributed to changes in investor attitudes toward risk and time. He did not enumerate what might change these attitudes, but influences probably would include speculative bubbles, or possibly other factors that change investor willingness to pay, such as fashions or fads in investing, changing liquidity, publicity for individual stocks, market manipulation, or changing availability of shortable shares. But since these account for only about a third of the variability of individual stock prices, Vuolteenaho confirms that individual stock price movements mostly do make basic sense in terms of information about the future." 11

Shiller, Robert J. (2012-03-20). Finance and the Good Society (p. 186). Princeton University Press. Kindle Edition.

bc I never said anything about jpm and gs. He did. Read the author of the post in the quote you copy and pasted.

Anyhow, there is nothing here that says you cant extract, short term predictibility from past prices intraday. Shiller is not saying anything about that here. Much of the information incorporation occurs bc of news, which is primarily before and after the market close. Not intraday where people are trying to make money off of supply and demand imbalances.

 
madmoney15:
jackbnimble:

Here is a good zerohedge post showing again that history repeats itself, using very recent evidence, this wont show up in a standard lag 1 autocorrelation test.

Funny you cite that, what generally do you think your YTD returns would be up until this point if you followed Tyler Durden's word?

That logic is kind of fallacious dont you think? where is he wrong in what I posted. Tyler durden is also more than one person most likely.

 

Let me sum it up.

Looking through your posts and clearly seeing how you portray yourself to be a very defensive, insecure, quick-to-lash back, and other behaviors that can be attributed to attitude problems...you'll never make it as a trader.

Sorry bud.

One more thing. You're in college. The fact that you vehemently try to defend yourself is laughable. 3 years of day trading experience??!! You're practically an EXPERT!

 
GrandJury:

Let me sum it up.

Looking through your posts and clearly seeing how you portray yourself to be a very defensive, insecure, quick-to-lash back, and other behaviors that can be attributed to attitude problems...you'll never make it as a trader.

Sorry bud.

One more thing. You're in college. The fact that you vehemently try to defend yourself is laughable. 3 years of day trading experience??!! You're practically an EXPERT!

how insighful and well written, I love the data and evidence you have presented, to show how baseless i am.

 
jackbnimble:

i searched for the study shiller references.
http://teaching.ust.hk/~fina790c/stock_vuolteenaho...

It has very little if anything at all to do with whether or not day trading is gambling

  1. My bad I thought you post that on JPM and GS.

  2. According to the theory, 2/3 are connected to the expected cash flow and the other connected to macro and sentiment. Yes, it's not specifically targeted to intraday but intraday and long term valuation are connected. I'm not going to go further you don't see that. Since your focus is intraday, you go on no basis beside guessing what the sentiment is. Leaving you at huge disadvantage (guessing), like I said in the original statement.

 
madmoney15:
jackbnimble:

i searched for the study shiller references.
http://teaching.ust.hk/~fina790c/stock_vuolteenaho...

It has very little if anything at all to do with whether or not day trading is gambling

1. My bad I thought you post that on JPM and GS.

2. According to the theory, 2/3 are connected to the expected cash flow and the other connected to macro and sentiment. Yes, it's not specifically targeted to intraday but intraday and long term valuation are connected. I'm not going to go further you don't see that. Since your focus is intraday, you go on no basis beside guessing what the sentiment is. Leaving you at huge disadvantage (guessing), like I said in the original statement.

1)I think you are heavily discounting the fact that alot of the fundamental macro and micro changes primarily occur during after hours. The paper discusses cash flow for example. usually the market incorporates this after earnings realeases, Yes there can sometimes be a drift, but in the arena of predicting where the price will be in an hour from now there is rarely a connection between cash flow for example, and reversal of a short term trend because of liquidity imbalances.

If i have misunderstood your perspective, please educate me.feel free to PM me.

2) just because the markets are primarily driven by fundamentals, does not mean that there are no deviations, away from the intrinsic value of the price, largely caused by a multitude of factors.

3) how do explain the performance of top prop shops that have done very well not trading off fundamentals.

edit-point2

 
  1. Let me be clear. Regardless if its in the futures and open markets, stock prices are connected to the underlying firm (expected cash flow and other aspects of the fundamentals) every minute. But when you trade on a minute or hour basis, you are GUESSING what the sentiment is for the day. A losing proposition because you're trading on only (1/3-- According to the theory connected to macro/sentiment) of what the stock price reflects; instead of a wider scope of whats going on with the firm (the rest of the 2/3).

  2. Yes, this is found through fundamentals. Sentiment is driven through the fundamentals. When you day trade, you're following others sentiment. And it could change on a dime without you knowing anything about what fundamentally is going on; you bearing a huge risk.

  3. It's natural for people to join in markets where people have a chance to get lucky. For example, people play the lottery all the time and a few people have gotten extraordinarily rich. But the vast majority fail. Much like the lottery, the probability of failing is much higher than winning in day trading. NOT ATTRACTIVE RISK/REWARD RATIO.

 

To sum up: both day traders and investors can make money, but they go about doing it differently.

Day traders fiend at charts to make money and constantly put in time to adapt to the markets, etc.. and the amount of effort to succeed in day trading is high. I think we can all agree that day traders are able to exploit the movement in charts and make $$$.

On average traders make less than investors (because of liquidity constraints, vulnerability to changing markets, etc...), but theoutliers to make big $$ is usually from trading.

 

Several reactions here:

1) No skilled and successful day trader would agree to post his/her positions in real time

2) You take offense for being compared to college students trading their personal accounts using TA and charting, yet your own description of your "strategy" is exploiting "supply and demand imbalances". Could you possibly be more vague? And what possible value-added insight could you have into the balance of supply and demand, given that you have absolutely no unique access to information or data that the rest of the market doesn't possess

3) I don't see what your hesitation to trade full-time is, if indeed you are as successful and confident as you claim

4) You say you spend "hours everyday doing research" - what exactly are you researching? This mysterious "supply and demand imbalance"?

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
madmoney15:

1. Let me be clear. Regardless if its in the futures and open markets, stock prices are connected to the underlying firm (expected cash flow and other aspects of the fundamentals) every minute. But when you trade on a minute or hour basis, you are GUESSING what the sentiment is for the day. A losing proposition because you're trading on only (1/3-- According to the theory connected to macro/sentiment) of what the stock price reflects; instead of a wider scope of whats going on with the firm (the rest of the 2/3).

2. Yes, this is found through fundamentals. Sentiment is driven through the fundamentals. When you day trade, you're following others sentiment. And it could change on a dime without you knowing anything about what fundamentally is going on; you bearing a huge risk.

3. It's natural for people to join in markets where people have a chance to get lucky. For example, people play the lottery all the time and a few people have gotten extraordinarily rich. But the vast majority fail. Much like the lottery, the probability of failing is much higher than winning in day trading. NOT ATTRACTIVE RISK/REWARD RATIO.

Well you have not really understood my perspective. No tudy that you have presented shows any inconsistency with the fact that there are supply and demand imbalances intraday that open up money making opportunities.

1) stock prices may be connected to fundamentals- i agree but not every minute-this is simply false. there was nothing that has caused amzn to fall 8 cents on friday. Nothing besides people hitting the sell button. Nothing caused it besides a fluctuation in supply and demand. No cash flow, or fundamental issue, caused amzn to fall until 12:00 and then reverse upward.

The bottom line is whether or not this can be predicted, and whether or not we are guessing. the study I linked to from 2010 suggests yes. An example would be when there is a big institutional buyer coming into the market and constantly putting in buy orders at the open for a string of 40 days on average.

on other time frames Lo's work suggests that there is nonrandomness as well.

furthermore the presence of bubbles suggest that there is often a disconnect between the fundamentals and reality.

Here is something you can try: download the historical prices since 2011 of aapl shares and compare the return and deviations of aapl stock to that of QQQ in the same time period for each weekday. the results are actually very interesting. I understand this is crude, but at least it gives you an idea. For some reason the sentiment of aapl traders is pretty good on monday and tuesday, but rather poor on thursday and friday. wednesday seems to go either way. i dont really care why this is case, just that it exists.

2) "your following others sentiment"- so what?

if I can show that the others have empirically consistently reacted the same way to a given move, then I can and should be able to capitalize on that. the word "gambling" here is rather meaningless.

I dont care as to whether im following there sentiment, I care about whether I can test for their sentiment empirically, and that they usually react the same way.

3) I dont think its a lottery, I think its a matter work you are putting in. But I will agree with the evidence that most people lose is consistent with the study that martinghoul posted.

 
NorthSider:

Several reactions here:

1) No skilled and successful day trader would agree to post his/her positions in real time

2) You take offense for being compared to college students trading their personal accounts using TA and charting, yet your own description of your "strategy" is exploiting "supply and demand imbalances". Could you possibly be more vague? And what possible value-added insight could you have into the balance of supply and demand, given that you have absolutely no unique access to information or data that the rest of the market doesn't possess

3) I don't see what your hesitation to trade full-time is, if indeed you are as successful and confident as you claim

4) You say you spend "hours everyday doing research" - what exactly are you researching? This mysterious "supply and demand imbalance"?

You're the best!... one of the best.

 
jackbnimble:

2) "your following others sentiment"- so what?

if I can show that the others have empirically consistently reacted the same way to a given move, then I can and should be able to capitalize on that. the word "gambling" here is rather meaningless.

I dont care as to whether im following there sentiment, I care about whether I can test for their sentiment empirically, and that they usually react the same way.

I'm going to benchmark the chances that you have discovered a novel behavioral inefficiency in the marketplace among a crowd of hundreds of academics searching for the very same patterns at just about nil. Moreover, this type of analysis reeks of TA and sounds nothing like "exploiting supply and demand imbalances".

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
NorthSider:

Several reactions here:

1) No skilled and successful day trader would agree to post his/her positions in real time

2) You take offense for being compared to college students trading their personal accounts using TA and charting, yet your own description of your "strategy" is exploiting "supply and demand imbalances". Could you possibly be more vague? And what possible value-added insight could you have into the balance of supply and demand, given that you have absolutely no unique access to information or data that the rest of the market doesn't possess

3) I don't see what your hesitation to trade full-time is, if indeed you are as successful and confident as you claim

4) You say you spend "hours everyday doing research" - what exactly are you researching? This mysterious "supply and demand imbalance"?

1) thats not true, I know of several traderswho have sone this. Go on seekingalpha and lookup rocco pendola, He posted his trades real times, where he turned 10k into 40k in a matter of months. Elite trader and other forums also have a few examples, of good traders streaming their trades, live, same for twitter as well.

2)this is simply not something I am willing to share.

3)I think I am very clear in saying, I can easily lose everything In 1 bad trade. Then I would have no degree and no money. I also dont claim to be extremely successful or confident either, I do however claim to know what I am talking about, however, and I do claim to know a thing or two about trading. I dont know how much I can boil it down.

4) see#2 I constantly empirically test various correlations and outcomes of various situations under certain conditions, which indeed is determined by supply and demand imbalances. that is what drives prices after all. As any successful trader does the same.

 
NorthSider:
jackbnimble:

2) "your following others sentiment"- so what?

if I can show that the others have empirically consistently reacted the same way to a given move, then I can and should be able to capitalize on that. the word "gambling" here is rather meaningless.

I dont care as to whether im following there sentiment, I care about whether I can test for their sentiment empirically, and that they usually react the same way.

I'm going to benchmark the chances that you have discovered a novel behavioral inefficiency in the marketplace among a crowd of hundreds of academics searching for the very same patterns at just about nil. Moreover, this type of analysis reeks of TA and sounds nothing like "exploiting supply and demand imbalances".

the fact that researchers and academics have found them does not mean no one else can. old opportunities may get exploited, but new ones always opens up.

Most of them are looking for much shorter term moves than I am btw. I am not competing in the arena of HFT, itry to find predictibility over a few hours.

 
jackbnimble:
Go on seekingalpha and lookup rocco pendola, He posted his trades real times, where he turned 10k into 40k in a matter of months

lol.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
NorthSider:
jackbnimble:

Go on seekingalpha and lookup rocco pendola, He posted his trades real times, where he turned 10k into 40k in a matter of months

lol.

indeed.

Of course I love the data you put forth and rigorous analysis you used to demonstrate what ive said to be fluff. Quite insightful indeed. I must specifically applaud your use of the variance ratio test clearly showing that stock prices exhibit a random walk over all intervals

 
jackbnimble:

lol.

indeed.

Of course I love the data you put forth and rigorous analysis you used to demonstrate what ive said to be fluff. Quite insightful indeed. I must specifically applaud your use of the variance ratio test clearly showing that stock prices are clearly exhibit a random walk over all intervals

This is the kid who was previously complaining about people condescending to him.

It's so blindingly obvious that you have no idea what you're talking about that "lol." is my only reaction, and it really isn't worth the effort arguing with you.

Rocco Pendola turned a fake $10k into a fake $40k in his simulated, paper trading account (i.e., he did not invest real money). His "strategy" was to toss out random, directional options bets on companies pre-earnings. Due to the effects of leverage, a couple of those paid off in multiples of what the initial position cost was. He wasn't generating a penny of alpha, just taking on copious amounts of risk in fake options positions, in which he explicitly admitted he is unsure if he would ever invest real money. What a prodigy, indeed.

Seeking Alpha? Is this real life?? Please, stop doing this before you cause real damage to your own future.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
NorthSider:
jackbnimble:

lol.

indeed.

Of course I love the data you put forth and rigorous analysis you used to demonstrate what ive said to be fluff. Quite insightful indeed. I must specifically applaud your use of the variance ratio test clearly showing that stock prices are clearly exhibit a random walk over all intervals

This is the kid who was previously complaining about people condescending to him.

It's so blindingly obvious that you have no idea what you're talking about that "lol." is my only reaction, and it really isn't worth the effort arguing with you.

Rocco Pendola turned a fake $10k into a fake $40k in his simulated, paper trading account (i.e., he did not invest real money). His "strategy" was to toss out random, directional options bets on companies pre-earnings. Due to the effects of leverage, a couple of those paid off in multiples of what the initial position cost was. He wasn't generating a penny of alpha, just taking on copious amounts of risk in fake options positions, in which he explicitly admitted he is unsure if he would ever invest real money. What a prodigy, indeed.

Seeking Alpha? Is this real life?? Please, stop doing this before you cause real damage to your own future.

well, that wraps that up

 

Geez... this sounds intense. But it's also a somewhat familiar scenario. You have one guy who's had some success, whether by luck or skill, who now feels like their success has validated their knowledge on the industry and someone who's done more academic research. I really doubt you'd find any good economist who's area of study is finance and the markets would disagree with what NorthSider. The academic argument, and really the only one that makes sense, is that any kind of technical analysis that used to create profitable trading strategies will be copied almost instantly by the someone else and the market will price those things in. If you believe in any way that the efficient markets hypothesis is at all true the first thing to go is the success of trading through finding some sort of replicable strategy by technical analysis. I think there are many many good stories about people who this has happened to and modern finance theory completely supports it.

Theory would say that the market is able to perfectly price in all information and agrees on both the risk and size of return. The idea is that those who hold the right position would buy or sell until the price moves and hits the appropriate mark for the correct size and risk of return. Now where this can be off is when those who correctly understand the risk and size of return of an investment are so small in number that they cannot move the market to set the price correctly. If you fully believe that you have recognized some opportunities that every academic and highly paid professional at various trading firms around the world have not been able to recognize then I could see why you would take a position, but on the other hand that seems full of hubris. It also seems like there is tremendously more hubris in thinking not that you may have some non-illegal inside information or ability maybe to understand an industry from personal experience, but that you have been able to find some sort of untapped exploitable strategy simply from running tons of regressions on past prices is ridiculous. I'm sure you could find all sorts of connections between various price indexes that are in reality no way connected

Also giving the example that there was no reason for amazon to fall and then rise again on a certain day only shows your complete ignorance on why there are intraday price movements. You are on extremely shaky ground when your explanation for why prices move is that people are unreasonable. Among economist that's a cop out reason, and among traders that's a reason that'll get you blown up. Every price move has a reason and if you can't explain to some degree why you think it moved or at least have some insider experience into what causes those those small intraday moves, then you are definitely dealing with some things that you have no real knowledge of and whatever success you've had is most likely a lot more connected to luck and you are soon going to blow yourself up. I don't mean to be condescending or mean in any way however you might want to take some of this into consideration.

 
NorthSider:
jackbnimble:

lol.

indeed.

Of course I love the data you put forth and rigorous analysis you used to demonstrate what ive said to be fluff. Quite insightful indeed. I must specifically applaud your use of the variance ratio test clearly showing that stock prices are clearly exhibit a random walk over all intervals

This is the kid who was previously complaining about people condescending to him.

It's so blindingly obvious that you have no idea what you're talking about that "lol." is my only reaction, and it really isn't worth the effort arguing with you.

Rocco Pendola turned a fake $10k into a fake $40k in his simulated, paper trading account (i.e., he did not invest real money). His "strategy" was to toss out random, directional options bets on companies pre-earnings. Due to the effects of leverage, a couple of those paid off in multiples of what the initial position cost was. He wasn't generating a penny of alpha, just taking on copious amounts of risk in fake options positions, in which he explicitly admitted he is unsure if he would ever invest real money. What a prodigy, indeed.

Seeking Alpha? Is this real life?? Please, stop doing this before you cause real damage to your own future.

I was giving an example, of a good trader that posted ideas in real time. regardless of whether its real or not, his track record has been right on the money, and his articles and analyses are remarkably pretty good. I was providing this as proof that there are traders that post there ideas in real time. Twitter is full of them. I dont care to argue about such a silly side issue, nor do I care to entertain these childish ad hominem remarks.

Even if im wrong here and there are no good traders that post there ideas in real time, what is your point? just personal criticism? You can just PM me for that lol.

Please address whether or not there is short term predictability in the markets. That is the main purpose of this discussion.After that we can show what would be gambling and what is not. I am saying that there is indeed short term predictability and i cant tell if are arguing against this or not.

-thankyou

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1743608

More evidence of intraday predictability

"While in U.S. futures traded volumes decrease until the announcements are made, in Europe the expectation of new information coming from U.S. affects indexes price sensitivity providing arbitrage opportunities, due to the imperfect international integration of financial markets. "

"There is evidence in literature that price behavior makes arbitrage opportunities on futures and stock markets uncommon. However, there is also wide consensus that the realignment of prices in the two markets is not instantaneous and that stock indexes follows the corresponding future indexes with a time lag ranging from five minutes (Stool-Whaley 1990) to forty-five minutes (Kawaller et al. 1987)."

 

"There was nothing that has caused amzn to fall 8 cents on friday. Nothing besides people hitting the sell button. Nothing caused it besides a fluctuation in supply and demand. No cash flow, or fundamental issue, caused amzn to fall until 12:00 and then reverse upward."

Yes, there was. I was bored and decided to prove your little theory wrong on an example you cited.

The results: Hourly, there was a .80 correlation between AMZN and the SP 500 on Friday. Which suggests, AMZN was directly following the macro trends that day. Not simply supply and demand by one equity.

Excel File: Image and video hosting by TinyPic

 
jackbnimble:
whatwhatwhat:

pretty sure this dude has assbergers or something like that

is it bc I dont believe in technical analysis?

No, it's because you are socially retarded. Likely, mentally retarded as well.
 
whatwhatwhat:
jackbnimble:
whatwhatwhat:

pretty sure this dude has assbergers or something like that

is it bc I dont believe in technical analysis?

yeah absolutely. nothing to do with you completely missing the point on everything people mention in this thread and typing off-topic tl;dr responses

Im pretty shocked you would say this and not respond to the people who say TA dos not work. Because im pretty sure you mentioned working for a firm that made a "fuckton of money" as your evidence that technical analysis works ( and im the one thats clueless lol). Yet you blindly attack me, even though they clearly think the profits your firm made by technical analysis are out of luck. you should address that.

 
jackbnimble:
whatwhatwhat:
jackbnimble:
whatwhatwhat:

pretty sure this dude has assbergers or something like that

is it bc I dont believe in technical analysis?

yeah absolutely. nothing to do with you completely missing the point on everything people mention in this thread and typing off-topic tl;dr responses

Im pretty shocked you would say this and not respond to the people who say TA dos not work. Because im pretty sure you mentioned working for a firm that made a "fuckton of money" as your evidence that technical analysis. Yet you blindly attack me, even though they clearly think the profits your firm made by technical analysis are out of luck. you should address that.

once again, you are completely missing the point. where did i say that technical analysis was the sole factor in my firm's investment decisions? oh that's right, i didn't. also, focusing on what i previously said in this thread vs what i just posted proves my earlier point.

 
whatwhatwhat:
jackbnimble:
whatwhatwhat:
jackbnimble:
whatwhatwhat:

pretty sure this dude has assbergers or something like that

is it bc I dont believe in technical analysis?

yeah absolutely. nothing to do with you completely missing the point on everything people mention in this thread and typing off-topic tl;dr responses

Im pretty shocked you would say this and not respond to the people who say TA dos not work. Because im pretty sure you mentioned working for a firm that made a "fuckton of money" as your evidence that technical analysis. Yet you blindly attack me, even though they clearly think the profits your firm made by technical analysis are out of luck. you should address that.

once again, you are completely missing the point. where did i say that technical analysis was the sole factor in my firm's investment decisions? oh that's right, i didn't. also, focusing on what i previously said in this thread vs what i just posted proves my earlier point.

Ok.

 
madmoney15:

"There was nothing that has caused amzn to fall 8 cents on friday. Nothing besides people hitting the sell button. Nothing caused it besides a fluctuation in supply and demand. No cash flow, or fundamental issue, caused amzn to fall until 12:00 and then reverse upward."

Yes, there was. I was bored and decided to prove your little theory wrong on an example you cited.

The results: Hourly, there was a .80 correlation between AMZN and the SP 500 on Friday. Which suggests, AMZN was directly following the macro trends that day. Not simply supply and demand by one equity.

Excel File:
Image and video hosting by TinyPic

The fact that it is following macro trends, does not disprove that there is no predicatability, if there are is in fact no predictability how do you address the zerohedge article and the studies ive posted?

Im not arguing that stocks do not follow macro trends. Im arguing that there is predicability

 
jackbnimble:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id...

More evidence of intraday predictability

"While in U.S. futures traded volumes decrease until the announcements are made, in Europe the expectation of new information coming from U.S. affects indexes price sensitivity providing arbitrage opportunities, due to the imperfect international integration of financial markets. "

"There is evidence in literature that price behavior makes arbitrage opportunities on futures and stock markets uncommon. However, there is also wide consensus that the realignment of prices in the two markets is not instantaneous and that stock indexes follows the corresponding future indexes with a time lag ranging from five minutes (Stool-Whaley 1990) to forty-five minutes (Kawaller et al. 1987)."

Oh yes, consider us all corrected: obviously you are able to convert split-second arbitrage trades across domestic and international futures markets from the comfort of the MacBook in your dorm room, connected to the markets through your several seconds delayed Scottrade quotes.

WTF does this have to do with the predictability of intraday AMZN prices?

I don't even care to argue with you about whether there are short-term inefficiencies in the equity markets. But I am positive that YOU cannot predict the short-term direction of equity prices.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
jackbnimble:

The fact that it is following macro trends, does not disprove that there is no predicatability, if there are is in fact no predictability how do you address the zerohedge article and the studies ive posted?

Im not arguing that stocks do not follow macro trends. Im arguing that there is predicability

Newsflash, guys: Jack has just graduated to the big leagues. Now he argues that not only can he predict the intraday movements of individual equities, but he can also predict the direction of the entire market. Fascinating.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
jackbnimble:
madmoney15:

"There was nothing that has caused amzn to fall 8 cents on friday. Nothing besides people hitting the sell button. Nothing caused it besides a fluctuation in supply and demand. No cash flow, or fundamental issue, caused amzn to fall until 12:00 and then reverse upward."

Yes, there was. I was bored and decided to prove your little theory wrong on an example you cited.

The results: Hourly, there was a .80 correlation between AMZN and the SP 500 on Friday. Which suggests, AMZN was directly following the macro trends that day. Not simply supply and demand by one equity.

Excel File:
Image and video hosting by TinyPic

The fact that it is following macro trends, does not disprove that there is no predicatability, if there are is in fact no predictability how do you address the zerohedge article and the studies ive posted?

Im not arguing that stocks do not follow macro trends. Im arguing that there is predicability

Just post your portfolio growth and show the world your prowess. This way no one can say anything. Refusal to do so means you are basically talking s***

 
NorthSider:
jackbnimble:

The fact that it is following macro trends, does not disprove that there is no predicatability, if there are is in fact no predictability how do you address the zerohedge article and the studies ive posted?

Im not arguing that stocks do not follow macro trends. Im arguing that there is predicability

Newsflash, guys: Jack has just graduated to the big leagues. Now he argues that not only can he predict the intraday movements of individual equities, but he can also predict the direction of the entire market. Fascinating.

LOL.

I guess he will be rich soon!

 
jackbnimble:

To be fair, I think a lot of people come to the market, thinking they're going to make millions of dollars in easy stress free money by day trading.

The 5% statistic, is interesting, and I think shows ignorance and lack of understanding, when FA supporters, preach this. and here is why I think so- (if any statistician, thinks i am wrong/misled and wants to correct my logic please feel free,). I am also not taking transaction costs into account here-

1)FA supporters generally think that the market follows a random walk in the short term but drifts upward in the very long term.

2) if however the market is random in the short term then this would imply that people are randomly buying or selling, meaning your odds are 50/50 on each trade.
-So in the 6 month period most traders will break even in this case,

-and some will be slightly above even,

-and you would also see just as many people slightly poorer as those who broke slightly above even

-and some will lose all their money

-but you would also see the same amount of major winners, as those who lost all their money.

3) so the above would be the result of a random walk in the short term. However if 95% of daytraders are going broke, then you have to agree that the market is not a random walk, and that there is a way to beat the market at least in the short term. Finding out how newb daytraders think and making the opposite bet would be one way of beating the market.

I dont see how its possible in a random walk 95% of participants will go broke in the first few months. I think its just fear mongering, and boy am I glad I didnt listen to it. I tried fundamental investing, and it got me nowhere.

Im sure it works for some, but it does not suit me.

u missed the most fundamental idea. the question is which 95%, hence random

 

YOU CAN NOT PREDICT THE MARKET INTRADAY MOVEMENTS WITHOUT ESSENTIALLY JUST GUESSING. TYLER DURDEN HIMSELF: "a certain degree of price movement will always be random.."

In regards to predictability, I read the article in its entirely and to sum it up you're putting down money by what time it is and what type market it is currently. Can't say that's well advised.

But say it was a true alpha strategy, the article was written little under a year ago. The intraday strategy of what's effective could of completely been evaporated by now. If not, please show us your returns, you can black out your personal information.

 
jackbnimble:

3)I think I am very clear in saying, I can easily lose everything In 1 bad trade. Then I would have no degree and no money. I also dont claim to be extremely successful or confident either, I do however claim to know what I am talking about, however, and I do claim to know a thing or two about trading. I dont know how much I can boil it down.

Then you're not trading correctly. You should NEVER lose everything in one bad trade. That's terrible risk management. You'll be selling insurance fairly quickly if you trade like that.
 
NorthSider:
jackbnimble:

The fact that it is following macro trends, does not disprove that there is no predicatability, if there are is in fact no predictability how do you address the zerohedge article and the studies ive posted?

Im not arguing that stocks do not follow macro trends. Im arguing that there is predicability

Newsflash, guys: Jack has just graduated to the big leagues. Now he argues that not only can he predict the intraday movements of individual equities, but he can also predict the direction of the entire market. Fascinating.

actually this a complete strawman. Im arguing that there is nonrandomness. To what degree is a different story. I also provided good evidence of such, by posting the study that showed highly correlative behavior in certain securities during specific times of day. Maybe you can analyze the study and show that for example they had a data snooping bias, instead you have said nothing here. If you have a personal issue with me, or take issue with my demeanor you can PM me.

I never said I can predict the whole market. but I am arguing that there are short term anomalies that occur and the ZH article gives a good example of one instance of short term predictability. These anomalies can be found on the s&p 500 futures for instance as shown in the article, and I have found many on some liquid stocks. No where did I say anything parallel to what you rebutted me with. Really what response here again was just a personal attack lacking any real depth or analysis.

In other words you are clearly just putting words in my mouth, and you have not addressed the evidence in my favor.

 
kmgilroy89:
jackbnimble:

3)I think I am very clear in saying, I can easily lose everything In 1 bad trade. Then I would have no degree and no money. I also dont claim to be extremely successful or confident either, I do however claim to know what I am talking about, however, and I do claim to know a thing or two about trading. I dont know how much I can boil it down.

Then you're not trading correctly. You should NEVER lose everything in one bad trade. That's terrible risk management. You'll be selling insurance fairly quickly if you trade like that.

I guess that is highly subjective to each individual trader. To each his own.

 
madmoney15:

YOU CAN NOT PREDICT THE MARKET INTRADAY MOVEMENTS WITHOUT ESSENTIALLY JUST GUESSING. TYLER DURDEN HIMSELF: "a certain degree of price movement will always be random.."

In regards to predictability, I read the article in its entirely and to sum it up you're putting down money by what time it is and what type market it is currently. Can't say that's well advised.

But say it was a true alpha strategy, the article was written little under a year ago. The intraday strategy of what's effective could of completely been evaporated by now. If not, please show us your returns, you can black out your personal information.

Yes of course there is some randomness, by definition, however, if there is some randomness there must be nonrandomness as well. clearly the movements around an FOMC announcement have exhibited some predictability, and we should capitalize. Of course this strategy has probably been evaporated away, but there are other anomalies that open and occur, when old ones go away. I figured you would get the idea.

Yes of course there are some losses in daytrading due to randomness, just as fundamental investors also lose money, warren buffett buying airplane stocks is a great example.

 
jackbnimble:

Yes of course there is some randomness, by definition, however, if there is some randomness there must be nonrandomness as well.

WTF? Under what "definition" of randomness are you operating?

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
jackbnimble:
These anomalies can be found on the s&p 500 futures for instance as shown in the article, and I have found many on some liquid stocks.

Ohhhhhhhhhhhhhhhhhhhhhhhhhhhhh!!! You've found some "anomalies". Well that clears everything up.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
jackbnimble:

actually this a complete strawman.

No, it's not. You argue that the intraday walk of an individual equity (like AMZN) is predictable. Another poster demonstrates that the intraday walk of that equity is intricately correlated with the entire market. You reply that just because the entire market and the individual equity move in lock-step doesn't mean that the intraday walk is unpredictable. Therefore, if you can predict the intraday walk of AMZN, you can very closely predict the intraday walk of the entire equity market. Q.E.D.
"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 

the following is taken from Campbell Lo and Mackinleys econometrics of financial markets. page 80-

"the fine structure of securities markets and frictions of the trading process can generate predictability. Time varying expected returns due to changing business conditions can generate predictability." the rest of chapter 2 pretty much debunks the idiotic belief that prices are 100% random in the short term.

 
NorthSider:
jackbnimble:

Yes of course there is some randomness, by definition, however, if there is some randomness there must be nonrandomness as well.

WTF? Under what "definition" of randomness are you operating?

there are several ways to test for randomness in a time series, the box pierc q stat, variance ratio test, and dickey fuller test are the ones most referenced by academics.

 
NorthSider:
jackbnimble:

actually this a complete strawman.

No, it's not. You argue that the intraday walk of an individual equity (like AMZN) is predictable. Another poster demonstrates that the intraday walk of that equity is intricately correlated with the entire market. You reply that just because the entire market and the individual equity move in lock-step doesn't mean that the intraday walk is unpredictable. Therefore, if you can predict the intraday walk of AMZN, you can very closely predict the intraday walk of the entire equity market. Q.E.D.

I also showed an example of the predictability of the broader market around FOMC meetings. That was one example of predictability in the broader market and given that there is a correlation,as the poster showed, there can be predictability on the individual securities as well. There are various pairs trading strategies to take advantage of differences.

Another example of predictability in the short term was outlined in the paper I linked to showing arb opportunities, in that there was a lag in european indices vs. american indices during certain times of the day.

Please understand the gist of what im saying- that there is short term predictability in the financial markets.

You have picked minor things like this one to scuffle with me over, which are rather mundane in nature, which I used to give an example of a bigger picture. You have yet to disprove what I am fundamentally trying to show.

Edit- what is your background just out of curiosity?

 
jackbnimble:
NorthSider:
jackbnimble:

actually this a complete strawman.

No, it's not. You argue that the intraday walk of an individual equity (like AMZN) is predictable. Another poster demonstrates that the intraday walk of that equity is intricately correlated with the entire market. You reply that just because the entire market and the individual equity move in lock-step doesn't mean that the intraday walk is unpredictable. Therefore, if you can predict the intraday walk of AMZN, you can very closely predict the intraday walk of the entire equity market. Q.E.D.

I also showed an example of the predictability of the broader market around FOMC meetings. That was one example of predictability in the broader market and given that there is a correlation,as the poster showed, there can be predictability on the individual securities as well. There are various pairs trading strategies to take advantage of differences.

Another example of predictability in the short term was outlined in the paper I linked to showing arb opportunities, in that there was a lag in european indices vs. american indices during certain times of the day.

Please understand the gist of what im saying- that there is short term predictability in the financial markets.

You have picked minor things like this one to scuffle with me over, which are rather mundane in nature, which I used to give an example of a bigger picture. You have yet to disprove what I am fundamentally trying to show.

Edit- what is your background just out of curiosity?

Just post up your trades.

 
jackbnimble:

Another example of predictability in the short term was outlined in the paper I linked to showing arb opportunities, in that there was a lag in european indices vs. american indices during certain times of the day.

This is only an "arb" in an academic world where the operative assumption of "all else being equal" holds. In the real world all else is NEVER equal.

jack, again, I implore you to stop... With the sort of attitude you're demonstrating, you're heading for all sorts of unpleasantness.

 
Martinghoul:
jackbnimble:

Another example of predictability in the short term was outlined in the paper I linked to showing arb opportunities, in that there was a lag in european indices vs. american indices during certain times of the day.

This is only an "arb" in an academic world where the operative assumption of "all else being equal" holds. In the real world all else is NEVER equal.

jack, again, I implore you to stop... With the sort of attitude you're demonstrating, you're heading for all sorts of unpleasantness.

Jack, you're so lucky that someone on an ONLINE forum is STILL being nice to you. I literally hate almost every one of your posts because of your tone. and I'm only writing this because Martinghoul is awesome at being patient and humble and I'd like to see it recognized

 
jackbnimble:
kmgilroy89:
jackbnimble:

3)I think I am very clear in saying, I can easily lose everything In 1 bad trade. Then I would have no degree and no money. I also dont claim to be extremely successful or confident either, I do however claim to know what I am talking about, however, and I do claim to know a thing or two about trading. I dont know how much I can boil it down.

Then you're not trading correctly. You should NEVER lose everything in one bad trade. That's terrible risk management. You'll be selling insurance fairly quickly if you trade like that.

I guess that is highly subjective to each individual trader. To each his own.

There's nothing subjective about this. Ignoring risk management dooms you for eventual failure. This is the most important part of being a professional trader.

 
jackbnimble:

I also showed an example of the predictability of the broader market around FOMC meetings. That was one example of predictability in the broader market and given that there is a correlation,as the poster showed, there can be predictability on the individual securities as well. There are various pairs trading strategies to take advantage of differences.

Another example of predictability in the short term was outlined in the paper I linked to showing arb opportunities, in that there was a lag in european indices vs. american indices during certain times of the day.

So now you're arguing you can make top-down predictions of individual equity movements? Your earlier posts appeared to indicate that you were completing 'extensive research' on individual companies and investing based on 'supply and demand imbalances'.

The whole of your posts on this thread makes very little sense. "Extensive research on individual companies" sounds like fundamental / value-based investing, which is inconsistent with day-trading. "Supply and demand imbalances" sounds like some form of range trading or momentum strategies. Then you post a study detailing stat arb convergence trades between foreign and domestic futures markets that you couldn't possibly be exploiting on your budget / using your available resources.

I'm not having some philosophical argument with you about whether the market accords with weak-form EMH. I'm arguing that you aren't making money on market inefficiencies, despite your beliefs to the contrary.

Please understand the gist of what im saying- that there is short term predictability in the financial markets.

That's just it. You have no 'gist'. You're just linking random articles about debatable micro-inefficiencies in derivative markets that are completely irrelevant to your supposed strategies.

Edit- what is your background just out of curiosity?

You're welcome to PM me for more detail than is listed on my public profile.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
SirTradesaLot:

Which, if you respond, he will post publicly.

Good point.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 

Day trading is a joke. Watch CNBC for 45min and three commercial breaks. Every commercial is geared towards your dad and his nest egg and some kind of trading platform for derivatives. Are you shitting me?

Have you ever been to West Palm? All the old retired guys buy and sell equities and its straight gambling. It's all on "gut feelings." These guys have 10-20 positions so they never lose their shirt and they're rich enough to handle some losses. Half end up a little up and half lose out. Then they die (its west palm).

 
BCbanker:

Day trading is a joke. Watch CNBC for 45min and three commercial breaks. Every commercial is geared towards your dad and his nest egg and some kind of trading platform for derivatives. Are you shitting me?

Have you ever been to West Palm? All the old retired guys buy and sell equities and its straight gambling. It's all on "gut feelings." These guys have 10-20 positions so they never lose their shirt and they're rich enough to handle some losses. Half end up a little up and half lose out. Then they die (its west palm).

Day trading isn't a joke to the people who make mid six figures to millions every year doing it. Pick a high volume stock and watch the order flow for 3 months. If you can't find profitable patterns then you're brain dead. People just assume it's gambling, because they don't put in the necessary work to learn trading and are too busy looking for shortcuts like the latest piece of crap indicator to tell them to buy here and sell there. It doesn't work that way. It takes hard work to get good at it.

 
kmgilroy89:
BCbanker:

Day trading is a joke. Watch CNBC for 45min and three commercial breaks. Every commercial is geared towards your dad and his nest egg and some kind of trading platform for derivatives. Are you shitting me?

Have you ever been to West Palm? All the old retired guys buy and sell equities and its straight gambling. It's all on "gut feelings." These guys have 10-20 positions so they never lose their shirt and they're rich enough to handle some losses. Half end up a little up and half lose out. Then they die (its west palm).

Day trading isn't a joke to the people who make mid six figures to millions every year doing it. Pick a high volume stock and watch the order flow for 3 months. If you can't find profitable patterns then you're brain dead. People just assume it's gambling, because they don't put in the necessary work to learn trading and are too busy looking for shortcuts like the latest piece of crap indicator to tell them to buy here and sell there. It doesn't work that way. It takes hard work to get good at it.

I wonder, are you familiar with the concept of "survivorship bias"?
 

Don't think that survivorship bias can be properly attached to trading. Yes, many fail, but many succeed, same as hedgefunds. Interactive brokers posted win/loss ration of their customers accounts on FX market and it was almost 50/50 with slight variation around 5% each side, so the 95% loosing rule is bs.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.
 
kmgilroy89:
BCbanker:

Day trading is a joke. Watch CNBC for 45min and three commercial breaks. Every commercial is geared towards your dad and his nest egg and some kind of trading platform for derivatives. Are you shitting me?

Have you ever been to West Palm? All the old retired guys buy and sell equities and its straight gambling. It's all on "gut feelings." These guys have 10-20 positions so they never lose their shirt and they're rich enough to handle some losses. Half end up a little up and half lose out. Then they die (its west palm).

Day trading isn't a joke to the people who make mid six figures to millions every year doing it. Pick a high volume stock and watch the order flow for 3 months. If you can't find profitable patterns then you're brain dead. People just assume it's gambling, because they don't put in the necessary work to learn trading and are too busy looking for shortcuts like the latest piece of crap indicator to tell them to buy here and sell there. It doesn't work that way. It takes hard work to get good at it.

You won't make money watching the order flow in the age of dark pools. That edge was only effective until the 1990s.

Secondly, S&P stocks are correlated at almost 70%. It is futile to be a stock picker these days as the market moves so closely together. By trading mid- and large-cap equities you're essentially trading the S&P futures.

Lastly, create a random walk in Excel and you'll see patterns. Our brains were designed to find patterns but randomness can fool us considering our fallibility, Additionally, a lot of TA is based on the nature of the market. For example, reversal indicators (overbought/oversold oscillators, buy at support/short at resistance) will generally work in a sideways market. In a trending market momentum and relative strength work like gold, and so does buying at the lower range of x-day MA. IIt's not really skill that identifies these patterns as much as just being lucky in having the right style/bias personality towards trading. If beginner x trader read Turtle Trading in 2009 and adopted the trend-following system than this guy likely made $ by having the right approach by chance. A sideways market would've churned his account to death.

 
Arti:

Don't think that survivorship bias can be properly attached to trading. Yes, many fail, but many succeed, same as hedgefunds. Interactive brokers posted win/loss ration of their customers accounts on FX market and it was almost 50/50 with slight variation around 5% each side, so the 95% loosing rule is bs.

There's ample evidence that survivorship bias can be quite handily attached to trading. There's all sorts of literature on the issue.
 

I know plenty of guys at Chicago prop firms that essentially day trade (non-automated/algo) and make mid-six to seven figures+ and have done so for over 10 years. The thing is, they have years and years of experience, began trading at a time when the electronic marketplace was much different that it is now (which allowed them to witness the progression of automated trading - which is huge!), and have millions of dollars backing them. The manual day traders that are left learned to adapt to the changing landscape. When these guys find a legit edge, they press it as hard as they can. At the same time, they know it will eventually go away, and they need to be constantly trying to find something new. The guys that sit back on their heels wash out.

 
Martinghoul:
Arti:

Don't think that survivorship bias can be properly attached to trading. Yes, many fail, but many succeed, same as hedgefunds. Interactive brokers posted win/loss ration of their customers accounts on FX market and it was almost 50/50 with slight variation around 5% each side, so the 95% loosing rule is bs.

There's ample evidence that survivorship bias can be quite handily attached to trading. There's all sorts of literature on the issue.

Ofcourse you can use it in "trading" in general, but not realy in the case of the final outcome where the probability is around 50/50.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.
 
mb666:
kmgilroy89:
BCbanker:

Day trading is a joke. Watch CNBC for 45min and three commercial breaks. Every commercial is geared towards your dad and his nest egg and some kind of trading platform for derivatives. Are you shitting me?

Have you ever been to West Palm? All the old retired guys buy and sell equities and its straight gambling. It's all on "gut feelings." These guys have 10-20 positions so they never lose their shirt and they're rich enough to handle some losses. Half end up a little up and half lose out. Then they die (its west palm).

Day trading isn't a joke to the people who make mid six figures to millions every year doing it. Pick a high volume stock and watch the order flow for 3 months. If you can't find profitable patterns then you're brain dead. People just assume it's gambling, because they don't put in the necessary work to learn trading and are too busy looking for shortcuts like the latest piece of crap indicator to tell them to buy here and sell there. It doesn't work that way. It takes hard work to get good at it.

You won't make money watching the order flow in the age of dark pools. That edge was only effective until the 1990s.

Secondly, S&P stocks are correlated at almost 70%. It is futile to be a stock picker these days as the market moves so closely together. By trading mid- and large-cap equities you're essentially trading the S&P futures.

Lastly, create a random walk in Excel and you'll see patterns. Our brains were designed to find patterns but randomness can fool us considering our fallibility, Additionally, a lot of TA is based on the nature of the market. For example, reversal indicators (overbought/oversold oscillators, buy at support/short at resistance) will generally work in a sideways market. In a trending market momentum and relative strength work like gold, and so does buying at the lower range of x-day MA. IIt's not really skill that identifies these patterns as much as just being lucky in having the right style/bias personality towards trading. If beginner x trader read Turtle Trading in 2009 and adopted the trend-following system than this guy likely made $ by having the right approach by chance. A sideways market would've churned his account to death.

False. Many people make money watching order flow TODAY. I don't know of anybody who makes money trading off indicators. Where the dark pools are printing are huge tells. How it reacts to the market is a huge tell. You're too focused on that 70% rule. Focus on when it deviates.

 
Arti:

Ofcourse you can use it in "trading" in general, but not realy in the case of the final outcome where the probability is around 50/50.

I don't understand your point here at all. 50/50 is pretty much exactly what you'd expect in a generally upward-trending random walk marketplace.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 

Not sure why everybody is so defensive about their "trading prowess". Any experienced trader honestly wouldn't care what others think about their trading style because if it works, it works. Jackbnimble is obviously some amateur trading a couple thousand on some online brokerage like a "baller" and needs to make sure that everyone on the internet knows that. If you're looking for hard evidence on the mentality of a real successful trader, just read Jack's post and do the opposite.

Every serious trader have or will suffer a serious set back. The market will turn on you unexpectedly and lessons will be learned. The problem with posting "evidence", is that most people here are probably looking at the data and then making up some BS to claim that they're right. With about 72,000 symbols listed(Yahoo Finance), I'm sure you can find a case for every strategy.

If you're in college(Jack) then get someone to invest with you, I know someone who's managing 100k at my school and he doesn't create 3 pages worth of debate on the internet. Stop talking online and do something in the real world. You seriously think that someone posting their real time trades online is trying to prove their method works? They're doing it because any influence to get people to buy a stock that they just bought is money in the bank and it only requires some reasoning that doesn't sound dumb so the sheep isn't confused. The fact that you know people post real time trades on twitter means you actually read twitter for other people's stock trades... There's not much else to be said about that.

Let me spend 5 minutes to write a simple algorithm to find all the most successful trades this year and post it here as my own. I am getting a 1000% return in only 3 months! Let's go on for 10 more pages on why I am so awesome.

 
streetwannabe:

"History doesn't repeat itself, but it does rhyme."

this quote is so more true than you people realize...its the basis of a very successful intraday trading strategy...

I am a proprietary Govt Bond Trader...i post my comments on the mkt intraday at twitter...and longer articles on my blog. I've accumulated a lot of educational info in these blogs..so i highly recommend checking them out http://govttrader.blogspot.com
 
spoonfork:

I know plenty of guys at Chicago prop firms that essentially day trade (non-automated/algo) and make mid-six to seven figures+ and have done so for over 10 years. The thing is, they have years and years of experience, began trading at a time when the electronic marketplace was much different that it is now (which allowed them to witness the progression of automated, and have millions of dollars backing them. The manual day traders that are left learned to adapt to the changing landscape. When these guys find a legit edge, they press it as hard as they can. At the same time, they know it will eventually go away, and they need to be constantly trying to find something new. The guys that sit back on their heels wash out.

Perhaps I skipped over too much of the colorful commentary, but this post is relatively accurate based on my career experience. There is a rather significant swath of prop trading professionals that exist between retail piker and institutional flow monkeys that you rarely if ever read about on financial publications/industry conferences/forums. Unless you are operating out of similar offices/boutique Chicago clearing firms or interacting with these small networks, I have a really hard time understanding how any outsiders (regardless if you are BB desk, macro HF, fundamental, quant, TA, "Using The Force", etc) would know much of anything how we trade? Reality is, many of us are flat EOD, so I suppose "day-trader" connotation would be accurate. This is not something we self-apply, however, as it was a negative stigma term attached to all the brain-dead retail who crash & burned post-tech bubble volatility.

I've been a CME IMM for 7 years now, trading professionally as an independent for almost 11 yrs. Will on&off lease out my IMM seat depending on how high pace I anticipate my quarter. About 80% of my volume is flat EOD. Based on estimated income distributions I've seen, would wager I'm a leg up on more than 98+% of Wall Street BB/HF employees.

Also, it is 2013, not 2000, nor 2005. Data feeds, execution platforms, commissions are now easily accessible to even the intermediate retail level. This connotation that those without institutional resources are at a distinct disadvantage is patently false when interfacing with the most liquid xchange (lit) markets. Such off-the-cuff chatter is often by those that have spent little genuine time and effort outside their myopic bubble. You simply build your route from a different prospective. Plenty of guys making mid-seven/low-eight figures trading 100-500 ES emini lots intra-day on nothing more than $2000-$4000 monthly budget (ex, TT XTrader Pro/RTS Tango/CTS execution, CQG charting, IQFeed backup feed, custom strategy analysis platforms, R/Python/ opensource). You can lease an IMM for a measly $900/month, and clear Globex products at boutique firms for very cut-throat pricing. A mere 25,000 contracts/month + IMM, you can deal down to $1.35 round-trips, all in, ie ~1/10th of ES spread. Off the street retail pays $4.00. I've not heard of many using TA, but give a skilled trader a volume profile (multiple cumulative periods), VWAP, both unfiltered and aggregated time & sale, a DOM with some estimated place in que script, underlying uptick/downtick analysis, lot size per x trade frequency, etc and a 30-50ms public routed uplink... you wouldn't believe your eyes what type of ROC is possible year in/year out. Just like Paul Rotter at his early beginnings, you don't hear about these people as there is little incentive to discuss & share it. The key is preemptive adaptation. Rest on laurels, suffer a quick death.

I also don't understand why some felt the need to continue on discussing with what is clearly a young, inexperienced paper trader (if, that). Even though he was asking for it, waste of time with such an easy target, no?

Some simple advice I learned on the floor: stick to what you know. If you are a longer term macro/fundamental, don't even try to place an opinion on what may or may not be possible intra-session. For all intents and purposes, it's a completely different industry. Apply same in reverse. It takes many years of experience to understand why this is the case. You won't pick up on the inefficiencies that lead to edge without getting neck deep, it really is that simple.

 
HSigma:

... Some simple advice I learned on the floor: stick to what you know. If you are a longer term macro/fundamental, don't even try to place an opinion on what may or may not be possible intra-session. For all intents and purposes, it's a completely different industry. Apply same in reverse. It takes many years of experience to understand why this is the case. You won't pick up on the inefficiencies that lead to edge without getting neck deep, it really is that simple.

I think you misunderstood the commentary here... Most of the opinions, including mine, weren't about what may or may not be possible (I think I, for one, went to great lengths to stress this). It was more a question of what's likely.
 

its not gambling if you're willing to lose at the start and willing to learn. Also its legit if you're not trying to get rich quick. It IS gambling when at some of the "prop shops" they force you into bad trades to get commissions, and shove a "make a million bucks soon" attitude on you. Thing with the prop shops is, you really can't get the leverage up (100k buying power) for nothing: they want your commissions, as they'd rather you make a lot or lose a lot. If you're going to join a day trading firm thinking you're gonna make 50, 60k, what a first year IB analyst makes, think again.

 

I didn't have time to go through every post in this thread, but I wanted to make two comments.

As a professional intraday equity trader (certified by the mods):

  1. It is certainly possible to beat the market in short timeframes. Most traders will not succeed and a lot of situations are random, but edge does exist and the people I work with are consistently beating the market and have extremely long track records of doing so.

  2. I have exchanged PMs with Jackbnimble and I can confirm that he is in fact a moron.

That is all.

 

On a more serious and detailed note, HSigma probably had one of the more accurate posts in the whole thread.

There will be a lot of people on here saying that day traders can't beat the market and that the patterns are bullshit, etc, etc.

Manipulating a good ol Taleb analogy - you can say that black swans don't exist and it is impossible and that you've searched for them your whole life and never seen one, but as someone that works at the equivalent of a zoo with black swans, it is just so silly to see how futile it is to convince people otherwise.

Most can't beat the market and most never will be able to. It is extremely difficult. If it was easy, everybody would do it. That being said, that doesn't mean it is impossible, and there are a good bunch of people in the world making 6-7 figures year after year after year. It is a shame that no prop firm will make their trader pnl statistics available in aggregate form for academic study.

If you were to take the equity curve of 1,000 poker players and 1,000 traders you would probably find a very similar relationship. Everybody will lose money when they first start. Most will never make money. But a select few will take advantage of the psychology and opportunities when they do have a ton of edge and consistently beat everybody else.

It is the same with fundamental analysis. People like Buffet make it work. But most people that try to beat the market with fundamental analysis will still lose. You need to be the best of the best to win regardless of your strategy.

 

"...I dont see how its possible in a random walk 95% of participants will go broke in the first few months...." It's called the Probability of Ruin. I'm surprised no one has mentioned that. Or have they and I just haven't looked at all the comments. Any case, just sayin' The point is this: If you don't have an edge (RW 50/50) and you don't have much capital (most daytraders) then you is gonna go under sooner rather than later.

 

I was offered and opportunity to work at a major prop firm and I will tell you it is very very very difficult to gain a major edge in this market. Depending on your trading strategy you must be willing to put in the time and work to adapt to the ever changing markets. On top of that you must be faster than everyone else to get a good entry and exit on your trades. And you must be fast and on point to make the most of opportunities that the market may present to you like the "flash crash". This being the case I could not be consistent enough as a trader and so could not stay. I respect those few and proud that can do it though. It is very very hard I cannot stress that enough but for those that CAN TRADE they are very very skilled and intelligent.

 

Day trading is the act of buying and selling a stock within the same day. Day traders seek to make profits by leveraging large amounts of capital to take advantage of small price movements in highly liquid stocks or indexes.

http://www.brokersanalysis.com
 

The fundamentals of day trading is how money comes into and out of the market. The largest stigma is that anyone with money can open an account and call themselves a trader. In any event, it's not something I'd ever recommend for revenue or as a career path, just do it on the side because there's no sense in risking your career by making day trading your sole vocation.

 

one of the best pieces of advice I've heard from a user here (can't remember who) is to find a hedge fund (probably fundamental equity) or other fund whose manager you like (if you're an Icahn guy, for example), and simply invest alongside him. then, go back through his filings to see when he bought the stock and look through the company's financials to see what he saw before they took a position. it's not very creative, but it's better than constant buying & selling, which will eat up your account because of commissions and you won't really learn anything.

 

I'm going to make a guess that:

1) You do not understand basic math or 2) You are a troll

If you have an $800 account and you bet 100% on every trade, it costs 2% for every round trip for a discount broker that charges $8 per trade If you do just 3-4 trades per day, it costs you about 10% of your capital even if you are using a broker that only charges $8 per trade. By the end of the week, you've lost half of your money to a discount broker, assuming you didn't lose money on your trades. Which, is unlikely anyway.

 

Saw this on another board. I think most of the points are valid for most people.....simply because most fail at day trading. Those who actually make it, will of course not agree.

And obviously whoever wrote this, got killed pretty bad while attempting to daytrade.

BTW shorttheworld, have you noticed any increase in difficulty making good money when compared to a few years ago when you first started, other than because of the decline in volume ? In other words, do you "feel" the presence of the "mysterious" and "evil" HFT machines ?

 

I thought this one was good:

"My biggest regret in life is the hours I spent watching trades when I could’ve been making a website business or starting some other kind of business that could’ve actually been helpful to people. Like a doughnut store. Who am I helping by trying to snatch a few thousand dollars out of the market every day? If anything, its like I’m trying to pick someone’s pocket - the unfortunate, overeating, suicidal, bastard on the other side of my trade."

Kind of how I feel towards trading in general.

 

mrfuture - yeah a bit, i mean def not the crush it kinda days where id go out short 20k (shares) of IYR-related stocks and come in at the open and close the short for 3-4 points due to end of the day squeezes lol a lot of the free money now im not quick enough for but things are seeming to be getting a bit better but thats just always how it is.. and not sure if its just because of adjusting.. things arent retracing as much/as smoothly anymore though for sure

 
shorttheworld:
mrfuture - yeah a bit, i mean def not the crush it kinda days where id go out short 20k (shares) of IYR-related stocks and come in at the open and close the short for 3-4 points due to end of the day squeezes lol a lot of the free money now im not quick enough for but things are seeming to be getting a bit better but thats just always how it is.. and not sure if its just because of adjusting.. things arent retracing as much/as smoothly anymore though for sure

Thanks....is this pretty much what you are hearing from your fellow traders ? Is Trillium still under Shoefeld, and if yes, have you seen people being laid off ?

 

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Ea dolores inventore molestiae earum dolorem architecto. Velit iure nostrum corporis quod delectus. Omnis nihil laudantium illo et. Et voluptatem voluptas voluptas enim iusto odit repudiandae in. Adipisci itaque animi repellendus quidem eligendi soluta.

Tenetur quia voluptatibus similique sunt dicta asperiores. Qui tempora eveniet quibusdam quis temporibus modi ut. Qui maxime amet in aut. Deleniti qui inventore voluptates maiores autem. In esse aliquam perspiciatis et et quis modi. Minus ab eius eaque dolor ad ex. Dolores aliquam quidem illum quasi minima omnis quaerat.

 

Incidunt est nulla et et aspernatur voluptas. Voluptatem nemo eius deserunt eos. Eveniet aperiam beatae aut aut autem vitae quaerat. Architecto nisi quod accusamus minima eos. Corrupti rem asperiores alias alias omnis qui. Aut atque reprehenderit non alias porro vel neque voluptatum.

Sit sint ducimus ipsam id sapiente officia. Et temporibus deserunt repellendus esse sint illum non. Ex autem incidunt et ex consequuntur.

Libero dolorem mollitia expedita pariatur aspernatur corrupti. Corrupti minima omnis vitae quis dolores fuga pariatur id. Est earum quos qui dolores velit quo reprehenderit.

Let n be a fixed positive integer greater than 1...
 

Cum assumenda maxime aliquid minus vitae veniam. Repellat est laborum nam id distinctio rerum voluptates. Sed fugit molestias sunt iusto. Sunt ut repudiandae ducimus quibusdam reprehenderit quia doloremque. Voluptas autem ratione ut facilis. Qui ratione aut ullam.

Repellat minus incidunt sed pariatur. Eaque ut sit nihil ex eos et dolor. Minima labore distinctio illum non aut aliquam. Sed iste ipsam eligendi ad exercitationem excepturi repudiandae.

Cum ut et et enim voluptate. Impedit nostrum eum voluptas voluptate repellendus nemo velit. Hic deserunt neque placeat labore labore mollitia qui. Ut repellat culpa voluptates maiores vel. Molestiae dolores optio distinctio dignissimos dolore error. Officia magni sapiente quis ullam.

 

Ad facilis laborum quod est consequatur qui. Est magnam illo id quis. Eum a sapiente magnam dolorum. Dolores facilis debitis et consequatur. Consectetur ratione quia rerum excepturi ea nihil laborum eos. Pariatur nihil est eum autem minus.

Quos fugiat et minus ipsam omnis excepturi delectus sed. Rem est consequatur repellendus cum cumque eveniet voluptatibus nam. Quod tempore illum sunt libero id eveniet fugit. Debitis ut consequuntur tempora et occaecati facere eos. Aut commodi animi aliquam et. Perspiciatis accusantium harum debitis occaecati est. Dolorem impedit ut eum ea et rerum optio.

Quasi ut voluptatem commodi repellendus consequatur aut non minus. Enim numquam unde eveniet sit quia sint. Aut saepe omnis est harum libero dolor. Sunt porro autem odit harum distinctio dolorem laudantium qui. Dolor nisi reiciendis voluptates et. Debitis magnam consequatur possimus accusantium amet est magni. Et velit magnam fugiat quo aut omnis magni.

In 1976, James Hunt broke the sound barrier through Eau Rouge only to retire before the event finished... following the race he had sex with three Belgian nurses at the clubhouse near La Source.
 

Dignissimos nostrum est corrupti et est. Asperiores repudiandae eius tempora nihil doloremque qui. Saepe provident sit unde doloremque velit vel totam. A veritatis neque tempore nulla quaerat sit. Dolorum eum ut perspiciatis sit illo. Voluptas pariatur consequatur earum recusandae iste aut occaecati.

Culpa qui officia est unde repellat occaecati. Magni soluta repellendus inventore. Nostrum ducimus ipsam porro quod aut voluptatibus consequatur. Accusantium ducimus dolore qui consequuntur beatae aut consequatur. Rerum deserunt sit id voluptate. Nisi facere et impedit iure.

Odio odit atque commodi quia. Iusto quos eveniet eius delectus. Omnis dolores illum et aliquam temporibus commodi nihil. Ipsa temporibus necessitatibus eos ullam aut.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 

Quis autem ullam ipsam incidunt id est aperiam consequatur. Dolore tenetur sint quos ut. Ut ipsa asperiores eum veniam. Nobis delectus totam ex vel expedita.

Unde autem esse excepturi sit voluptate alias et repudiandae. Voluptatem accusamus iure quae quis officiis omnis omnis. Iusto praesentium placeat enim. Voluptatem voluptate cupiditate impedit ipsum iusto exercitationem. In harum deserunt et pariatur reiciendis explicabo praesentium ex.

 

Eveniet veritatis dolor impedit sapiente deserunt mollitia. Natus repellat magnam aut quis sit deserunt quo. Omnis quia itaque ut fugiat omnis recusandae quos. Perspiciatis accusantium aliquid nam necessitatibus possimus.

Similique cum asperiores dolor doloremque. Ad impedit id impedit minima. Eligendi quis voluptatibus quia cumque. Modi dolores enim ut enim. Non voluptatem cupiditate sapiente quidem eligendi.

Cupiditate ut et nemo quod molestias soluta soluta. Aperiam occaecati enim perferendis voluptas. Ut reiciendis quibusdam vel repudiandae voluptas hic.

"The higher up the mountain, the more treacherous the path" -Frank Underwood

Career Advancement Opportunities

March 2024 Investment Banking

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  • Goldman Sachs 19 98.8%
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Overall Employee Satisfaction

March 2024 Investment Banking

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