251–260 of 278 posts
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If your minimum bet is $1000, commissions are less than 1%. As long as you don't over leverage, the expected return should be positive relative to s&p if you sell options. But you got to hold them to collect some premium.
This was about daytrading, where you would be lucky to find a stock that moves 10% intraday.
Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She had to find ways to make money to support my sister and I through school so she turned to the only other place where she could earn some money - the stock market. She started with around 100k, read up about stock options, and decided that shorting calls and puts…
I might have taken this at face value if the houses weren't in LA and Oakland (well, maybe you mean condos, or cash for down payment only). To make that much money (>million?) with 100k means selling massive amounts of naked options. Theoretically it could all work out - but what broker let her take out so much risk?
Margin rules on options (including naked options) are highly standardized.
For naked options, you need a pretty strong stomach. Most of your trades will be winners but it's that overnight black swan event that's going to hurt you.
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This evidence all suffers from the problem that you are trying to prove a very difficult claim. Information about averages won't help you here.
"Essentially nobody" is admittedly not well-defined, but I don't take it to mean that a handful of guys doing better would disprove it (and in any case have trouble finding any data points in favor of the opposite position).
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I'm an avid FT reader and like that description, but have never seen it before. Any chance you can provide a reference?
Suggest Alphaville's coverage of Plus500: http://ftalphaville.ft.com/tag/plus500/
Excuse my meta-comment, but I notice that HN seems to have an obsession with proving that active trading is bad and that we should all buy low-cost indexes. And before anyone jumps on me, I 100% agree with that investment strategy and use it myself. I'd just like to comment on the intersection of that belief and tech enthusiasts. It seems to generally come from a place of binary/analytical thinking which we're all so…
Risk aversion or maybe laziness. I've had a similar line of thinking recently. Sure, average investors lose money on active trading. Well, let me tell you what an average investor looks like. They have little to no accounting background, no coherent thesis for their investments other than "it's hot", they lack even a rudimentary understanding of 101-level finance topics like NPV/IRR/cost of capital, they have no info…
Earlier quoted context omitted.
I think the individual retail trader is almost always outgunned informationally when it comes to intraday trades. Most short-term price action is driven by order flow and cross-asset correlations, which machines are very good at trading. They are often net trading cost earners due to rebates and capturing bid-offer spreads. That means their win rate doesn't need to be as high, so they can pull the trigger on a trade…
Event driven trades are definitely not done by humans, especially when they are scheduled such a economic releases or some other periodically released number. These are all computer driven. (I have written these for HFT shops for years now.) Working on the pro side too, I also just hold ETFs mostly. No way an amateur day trader beats me at my job except by luck or finding trades too small for me to really care about.
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Winning the lottery always happens to somebody. Just not many.
It doesn't sound like winning a lottery but rather like making a series of good investing decisions.
Excuse my meta-comment, but I notice that HN seems to have an obsession with proving that active trading is bad and that we should all buy low-cost indexes. And before anyone jumps on me, I 100% agree with that investment strategy and use it myself. I'd just like to comment on the intersection of that belief and tech enthusiasts. It seems to generally come from a place of binary/analytical thinking which we're all so…
Risk aversion or maybe laziness. I've had a similar line of thinking recently. Sure, average investors lose money on active trading. Well, let me tell you what an average investor looks like. They have little to no accounting background, no coherent thesis for their investments other than "it's hot", they lack even a rudimentary understanding of 101-level finance topics like NPV/IRR/cost of capital, they have no info…
Earlier quoted context omitted.
"Essentially nobody" is admittedly not well-defined, but I don't take it to mean that a handful of guys doing better would disprove it (and in any case have trouble finding any data points in favor of the opposite position).
I claim that the top 20% (as specified in the headline) could not be reasonably described as "essentially nobody". And the article you linked two posts ago found that more than 20% of funds beat the market.